Anyone who has worked and paid enough National Insurance (NI) contributions for a set number of years should be eligible for the basic state pension. It is currently paid to women over the age of 60 and men over the age of 65. But be aware that from 2010 the qualifying age for women will be gradually increased, until it too reaches 65 in 2020.

State Pension entitlements

This year (2008/09), the full basic state pension is £90.70 per week for a single person and £145.05 a week for a couple.

Most people believe everyone receives the full basic State pension on retirement – but thousands do not. The amount you are entitled to depends on the number of years you have worked and the amount of National Insurance contributions you have paid.

The sums are complicated, but if you haven’t always been in work you may get less than you expect. Fortunately, it is possible to make up some lost ground if you are likely to lose out.

State Pension contributions

Men usually have to have been credited with contributions for 44 years and women for 39 years to qualify for the full basic State pension.

However, if you reach State retirement age after 5 April 2010, you will only need 30 years of “qualifying years” to be entitled to a full basic state pension.

Contribution shortfalls

You could be in for a shock if you have missed contributions – the fewer credits you have, the smaller your slice of the State pension will be. If you have 10 or 11 qualifying years you will get only 25% of the basic pension – if you have less than that you may get nothing.

Qualifying years

These are years in which you have received qualifying earnings and paid National Insurance contributions. In some circumstances you may be credited with earnings even if you were not working. This is likely if you are, or were, incapable of working due to illness, caring for someone or in receipt of certain benefits.

Making up shortfalls

You can make voluntary contributions to make up an incomplete contributions record. But you must do this within certain time limits. You must pay by the end of the sixth tax year after the one you missed. So you can make up only a maximum of six years of contributions.

If you reach State Pension age after 5 April 2010…

If you don’t qualify for the full basic State Pension, but have some qualifying years, you will get one thirtieth of the full amount for each qualifying year. You can get more information from your local pension centre.

Checking your entitlement

If you are coming up to retirement in the next few years, the best way to check is to get a State pension forecast using form BR19 from your local benefits agency or write to Retirement Pension Forecast and Advice Unit, Pensions and Overseas Directorate, Tyneview Park, Newcastle Upon Tyne, NE98 1BA. You can also fill in an application form online at the Department for Work and Pension’s website. The forecast will tell you the amount of basic pension you have already earned, and what you can expect at retirement taking into account what you might earn before you retire. It will also tell you if there is anything you can do to improve your pension, but you will have to follow this up yourself. If you are already retired and discover that you could qualify for a fuller pension by paying extra contributions, you can still do so – for up to six years.

Pension credits

The Government recently introduced pension credits, designed to help people who have a small private pension or savings (previously people with savings were exempt from extra State benefits which meant there was no incentive to save).

The credit is based on the amount of savings you have. For every £500 – or part of £500 – you have in savings over £6,000, you are entitled to £1 a week income. (This figure is over £10,000 if you live permanently in a care home).

It is essentially a top-up to your pension, which guarantees a minimum weekly income at a level the government deems is enough to live on.

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