Martin Lewis has explained the state pension 10-year minimum rule for National Insurance contributions eligibility, warning that falling short of the threshold means you will receive nothing – but topping up your NI record could boost your state pension significantly
Martin Lewis has shared guidance on working out your state pension entitlement. He gave comprehensive advice following a question from a listener to his BBC podcast regarding National Insurance contributions. He also discussed how state pension regulations might evolve going forward, including the potential shift towards a means-tested approach.
You generally require 35 years of National Insurance (NI) contributions to be eligible for the complete new state pension, which currently sits at £241.30 weekly, or £12,547.60 annually. These amounts increased by 4.8% in April thanks to the triple lock mechanism. The triple lock ensures yearly rises to the state pension matching whichever is the greatest: 2.5%, the rate of inflation, or average wage increases. A podcast listener contacted him with an enquiry as she was considering paying to fill some holes in her NI record.
You can choose to buy contributions if your record contains any gaps from the past six tax years. The listener revealed she had two years of absent contributions due to periods spent studying and residing abroad, reports the Mirror.
He explained she is currently 36, and if she bought the two years of contributions, this would boost her total to 10 years. She questioned whether Mr Lewis believed it was worth purchasing those two years now, given she’ll probably contribute the 35 years needed for the complete new state pension throughout her working career. According to the current regulations, her state pension age will be 68, so if she carries on paying National Insurance until then, she would contribute a further 32 years, taking her total to 42 years of contributions if she paid for the two missing years. This would likely be more than adequate to qualify for the full new state pension under the present system.
The minimum you need to pay in
In his response, Mr Lewis outlined the fundamental rules worth grasping. He said that the “minimum number of years” needed is 10 years to receive any state pension when you claim the benefit.
He explained: “That is the minimum. If you have less than 10 years, nothing counts.” Mr Lewis then detailed why topping up NI contributions can prove incredibly advantageous for increasing your state pension.
He added: “An extra National Insurance years is worth around £360 a year of state pension for you. So if you’re going to retire on less than the full state pension and you can buy a year, even if it costs you £1,000, because it’s going to add £360 a year to your state pension, even if you live just a few years once you get your state pension, you make your money back.”
Buying a single National Insurance year typically increases your state pension entitlement by £6.89 weekly, equivalent to approximately £358 annually. The price of purchasing NI years differs depending on which tax year the contributions relate to. For the previous two tax years, you’ll pay the original rate for that period, while for any earlier years, you’ll pay the current year’s rate.
These are the current rates you would have to pay:
Mr Lewis also pointed out to listeners that, thanks to the triple lock boosting payments annually, maximising your state pension is often “completely unbeatable” in terms of potential returns. However, he included a note of caution here to younger individuals that “the current system could change” before they reach retirement age.
Worth checking online
Addressing the woman’s specific situation regarding her two missing years, Mr Lewis advised her to first check her state pension projection. You can do this on the gov.uk website.
He recommended checking whether she’s on track to receive the full state pension upon retirement. Offering his thoughts on her situation, Mr Lewis explained: “If you are, I think this is probably overkill, because it’s not like once you get to the full state pension, you earn more National Insurance years, you get an even bigger state pension. It doesn’t work like that.”
He said there is a common misunderstanding here: “Many older people complain saying, I’ve now got enough for my full state pension, why do I have to keep paying National Insurance? That’s because National Insurance is a tax in reality, it’s just a tax that happens to be demarked as your contributions towards getting your state pension when you are older.” Although he recommended against purchasing the two years in the woman’s situation, Mr Lewis highlighted one exception to this rule, particularly “if you can buy these years really, really cheaply”. He clarified: “If any of these are part years, where you’ve almost got all the contributions you need to get a year but you’re not quite there. It is binary.
“I know people who have been able to buy part years for £15. Normally a full year is going to cost you around £900, but if you could buy a part year for £15, £20 or maybe even £50. Even at your age, just in case something happens in future as you can only buy back a certain amount, you can only buy back six years, I would be tempted just to do it just on the off chance I might need it in the future.”
Changes to the state pension
Nevertheless, Mr Lewis suggested that given her age and the potential for state pension alterations, it might not be worth paying to bridge the shortfall. He said: “You are so young at 36 for doing this.
“There are a lot of risks that you are just going to buying money, throwing it away. There are big risks for you that the state pension might become means tested once you’re older.
“We don’t know that. I don’t think that’s going to happen imminently, I don’t think it’s going to happen for people who are retiring now, but you’re talking about retiring in 30 to 35 years, and who knows what will be happening to state pensioners in the UK in 30 to 35 years. So there are a lot of risks in doing it now.” Alterations to state pension eligibility are currently being introduced, as the qualifying age is climbing progressively from 66 to 67 between April 2026 and April 2028. Legislation is also already in place for a subsequent rise from 67 to 68 between April 2044 and 2046.
An additional worry is whether the triple lock could be scrapped and substituted with a less generous yearly uplift system. Labour has committed to preserving the policy throughout this Parliament, meaning it will remain in effect for at least the next few years.
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