Have You Checked Your National Insurance Record?
You need a National Insurance number before you can start paying National Insurance contributions. You pay mandatory National Insurance if you are 16 or over and are an employee earning over £184 a week or self-employed with profits of £6,515 or more a year (for the 2021/22 tax year). For the 2021/22 tax year, if you are an employee earning between £120 and £184 a week, your contributions are treated as having been paid to protect your National Insurance record. Class 4 contributions paid by the self-employed with profits of £9,569 or more do not usually count towards state benefits.
Your National Insurance contributions entitle you to certain benefits, including contribution-based Employment and Support Allowance (ESA), Maternity Allowance and Bereavement Support payment. Paying National Insurance contributions will also entitle you to the State Pension. When you reach State Pension age, you no longer pay National Insurance contributions, even if you are still working.
It is important to check your National Insurance record to see if there are any gaps.
Will I be entitled to the full State Pension?
To qualify for the State Pension, you need at least 10 qualifying years of National Insurance contributions or credits. You need 35 qualifying years to get the full new State Pension. However, once you have accrued the 35 qualifying years, you do not accrue any extra pension. For every missing year on your National Insurance record, your State Pension is reduced by one 35th. This means that, in the 2021/22 tax year, one missing year reduces your weekly pension from £179.60 to £174.47.
How can I check my National Insurance record?
You can check your National Insurance record here. You may have gaps in your record if you have lived abroad, were unemployed and not claiming benefits, were employed with low earnings or were self-employed with low profits.
What can I do if I have gaps in my record?
If you have missing years on your National Insurance record, you may be able to fill in the gaps by paying voluntary Class 3 contributions. These are charged weekly at a flat rate. For the 2021/22 tax year, Class 3 contributions are £15.40 a week. You only need to consider paying voluntary contributions if you know that you will not get the qualifying years you need to get the full State Pension at State Pension age or if you have reached State Pension age and want to fill in your National Insurance record. You can usually only pay for gaps in your National Insurance record from the past 6 years and the deadline is 5th April each year. If you are self-employed and not paying Class 2 National Insurance contributions through Self Assessment (due to your specific occupation or because your profits are below £6,515) you can pay voluntary Class 2 National Insurance contributions. Class 2 and Class 3 contributions count towards different benefits but both count towards qualifying years for the new State Pension.
Am I eligible for National Insurance credits?
Credits can help to fill gaps in your National Insurance record and it's important that you make sure you are receiving these if you are eligible. This is to ensure you will qualify for certain benefits including the State Pension.
You will either get credits automatically or you will have to apply for them. You may be eligible for credits if you are not paying National Insurance because you are a carer, in ill health, unemployed or on a low income. If you applied for credits but they are incorrect on your record, you will need to contact the office where you applied. Check your National Insurance record here to check if you have credits. If you are eligible to receive National Insurance credits, you will either get Class 1 credits or Class 3 credits. Class 1 count towards your State Pension as well as other benefits such as contribution-based Jobseeker's Allowance, whereas Class 3 credits count towards your State Pension only.
If you are claiming Jobseeker's Allowance and not in education or working 16 hours or more, you automatically get Class 1 National Insurance credits. You also automatically get Class 1 National Insurance credits if you are claiming ESA, Maternity Allowance or Carer's Allowance. If you are getting Universal Credit, have registered for Child Benefit for a child under 12 or you are on Income Support and providing regular and substantial care, you automatically get Class 3 credits. If you are not automatically given credits, it is important that you apply for them if eligible. This will protect your State Pension. If one of the following applies to you then please do not forget to claim your National Insurance credits.
You are unemployed and looking for work, but are not claiming Jobseeker's Allowance.
You are not claiming ESA but you satisfy the conditions for it.
You are on Statutory Sick Pay but do not earn enough to make a qualifying year.
You are on Statutory Maternity, Paternity or Adoption Pay, or Additional Statutory Paternity Pay, and you do not earn enough to make a qualifying year.
You are a foster carer, or a kinship carer in Scotland.
You are caring for one or more sick or disabled person for at least 20 hours a week.
You have attended court on jury service and you are not self-employed.
You are married to or a civil partner of a member of the armed forces, went with your partner on an overseas posting after 6 April 2010, and are returning to the UK.
The above was taken from the Government website. For full details on who is eligible to claim the credits and how to apply, please click here. If you have paid a qualifying year of National Insurance Contributions towards your State Pension, you can transfer your credits that you got from registering for Child Benefit to your spouse or partner who is living with you. Please see my article "Claim Child Benefit And Protect Your State Pension" for further information on Child Benefit.
It is important to check your National Insurance record to see if there are any gaps. Check whether you can make voluntary contributions to fill any gaps, if you are unlikely to have 35 qualifying years at State Pension age. If you are not making National Insurance contributions, check to see if you are eligible for National Insurance credits. If you are not receiving these automatically, don't forget to apply to claim the credits to protect your State Pension.
Please note that this is general guidance only and not advice. The information given relates to the tax year the article was written and tax and legislation may change in future years.