Four ways to boost your state pension

1. Keep paying National Insurance contributions 

To be entitled to the full new state pension, you need to build up 35 qualifying years by paying National Insurance contributions or receiving NI credits over your working lifetime.  

If you have at least 10 but less than 35 years qualifying years of NICs or NI credits, you’re eligible to receive a reduced state pension. For example, if you have 30 qualifying years, your state pension is calculated as 30/35 of the full state pension. This would currently give you a state pension of £158.70 a week. 

The state pension age is currently 66 for women and men and rises to 67 by 2028. It is expected to increase to 68 and beyond. The Government is expected to review the timetable for changes to the state pension age imminently.

A higher SPA means that the state pension will start to be paid later, but the upside is that people will have longer to build up their entitlement to the full state pension.     

2. Apply for National Insurance credits 

NICs are typically paid when you are working, whether you’re employed or self-employed, but you can also build up NI credits for time spent out of the workplace, for example if you are claiming state benefits due to illness, disability or unemployment or you’re a carer.

NI credits also count towards your entitlement to state pension. Depending on the benefit, some credits are paid automatically while you have to claim for others.

Parents with children under the age of 12 claiming child benefit should automatically receive NI credits. Child benefit is paid tax-free as long as neither parent is earning more than £50,000 a year. If one parent earns more than this, they have to pay a “high income child benefit charge”.

This has led to some parents opting not to claim child benefit, but it means that the non-earner risks losing their NI credit and consequently ending up with a lower state pension. In this scenario a better approach is to make a child benefit claim, opt out of the child benefit payments, but tick the box accepting NI credits.   

NI credits can be transferred to grandparents (and others) who are under SPA and looking after children under 12 for at least 20 hours a week, where the parent is registered for child benefit. 

3. Pay voluntary National Insurance contributions 

Find out whether you are on track to receive the full state pension and whether you have any gaps in your NI record. 

If you do have NIC or credit gaps, it means that some years will not count towards your state pension. By paying voluntary NICs (“Class 3” or “Class 2” for the self-employed) it’s possible to fill these gaps and increase your state pension up to the full amount. You can still pay voluntary contributions even if you’ve reached pension age.

In this tax year, the rate of voluntary contributions is £3.15 a week for Class 2 NICs and £15.85 a week for Class 3 NICs. Be aware that the price of voluntary contributions could change in future years, as could the voluntary NIC payment rules.  

You normally have six years from the end of the relevant tax year to make voluntary payments, but if you wish to make up a NIC gap for the years between 2006-07 to 2015-16 the payment deadline is 5 April 2023 for men born after 5 April 1951 or women born after 5 April 1953. 

A word of warning – paying voluntary contributions will not necessarily increase your state pension so always check with HMRC’s Future Pension Centre before making any payments. You may end up making voluntary payments, and then working long enough to qualify for the full amount anyway. As an overriding rule, once you have 35 years of full NIC or credits, extra years don’t increase your state pension.

4. Delay taking your State Pension 

Alternatively, you can increase your state pension by delaying claiming it for at least nine weeks from your SPA. The new state pension is increased by 1pc for every nine weeks delay, which works out as just under 5.8pc for 52 weeks. In my example, based on 30 qualifying years, the state pension of £158.70 a week would increase by £9.20 a week to £167.90 if delayed for a year. 

State Pension increases 

One thing to be aware of when deciding the best way to increase your state pension is that the various elements of the pension increase at different rates.

The new and old state pensions are currently increased in line with the “triple lock” (the highest of the increase in inflation, average earnings or 2.5pc). Other elements, including any extra pension you gain as a result of delaying payment, increase in line with the rate of inflation. This April, all elements will increase by the rate of inflation – 10.1%.

Reader Service: Do you know how much you should pay into your pension? Learn how to boost your pot by consolidating your pensions.