Why you should make the most of your State Pension

Andrew Mence

The State Pension is going to become a political ‘hot potato’ in the next election. The jousting over its affordability has already begun – the triple lock has effectively meant people of State Pension Age have received a 10.1% pay rise in 2023 and will receive a further 8.2% in 2024. To existing pensioners these increases have proven welcome because of the increased cost of basic living. Furthermore, many pensioners don’t receive the full State Pension and those who claimed the State Pension before April 2016 under the old system may have received less. 

To simplify inequalities the new State Pension was modernised and streamlined in 2016. It is a single tier and in 2023/2024 equates to £203.85 per week provided the individual has achieved 35 “qualifying years”. Those with less than 35 years receive a pro-rated amount, subject to them having at least 10 qualifying years. Those with a long pre-6 April 2016 National Insurance (NI) record may have achieved a full state pension with less than 35 years of NI.

Why is the State Pension so important?

The rationale is twofold: 

  1. Our employer cannot afford to manage our retirement planning for us. Only 1,013 of the UK’s 6,400 final salary pension schemes remain fully open to employees (source: Pension Protection Fund 2023) meaning the responsibility of saving appropriately falls to the individual – although employers must automatically enroll eligible employees into a qualifying scheme (usually a Defined Contribution pension, unless you work in the public sector.)
  2. We do not save enough for retirement even though it is to our clear economic advantage to do so. The average UK pension pot is £50,000 (source: Aegon). This is not going to fulfil an ideal retirement income for long – leaving almost total reliance on the State Pension and other income sources. 

Check if you’re entitled to the maximum State Pension

On the basis the State Pension is “guaranteed” to be received at some point, it forms the foundation of an individual’s retirement planning. You should check to ensure you’re on track to qualify for the maximum pension. This can be done via the Government Gateway; completion of a BR19 form or phone the Department for Work and Pensions on 0800 731 0175 (freephone). If you’re on track you’ve nothing to worry about. But it doesn’t hurt to check.

You may not qualify for the maximum State Pension if you have gaps in your contribution history, for reasons such as: 

  • you were employed with low earnings for some time 
  • you were unemployed and not claiming benefits 
  • you were self-employed but didn’t pay contributions because of small profits 
  • you lived outside the UK.

Some State Pension facts

Previously unclaimed child benefit

The government has moved to protect parents who brought up children but didn’t claim child benefit as their partner earned more than £50,000 per annum. Not claiming child benefit meant parents were missing out on national insurance credits and consequently impacting the amount of State Pension they might receive in later life putting them at a significant disadvantage. Interestingly, whilst the government has pledged to resolve this issue no precise measures have been announced as to how these pension credits can be reclaimed. Parents are advised “they do not need to take any action immediately”. Watch this space! 

It’s possible to plug gaps in your NI record between 2006-2007 to 2015-2016 provided it’s done by 5th April 2025. Apart from that, you’re only able to cover gaps in the previous 6 years. The process of filling the gaps isn’t quick or easy. If you’re below State Pension age you have to contact the Future Pension Centre. If you’re at State Pension age you need to contact the Pension Service and then HMRC to get a unique 18 digit reference number. This is the most certain way of confirming which “incomplete” years are worth filling or to make your payment with an appropriate reference number. In view of current levels of service 2025 will come about quickly so don’t delay. 


And finally, is buying extra years worth it?

It’s an impossible question because it is an expensive outlay (£907 to add an extra year of voluntary contribution via Class 3) and you might die before you get the value. For the outlay you’ll get an extra £5.82 added to your weekly State Pension, or £302.64 per annum – the equivalent of £6,053 over a 20 year retirement. Taking the example one step further buying 5 years of national insurance via Class 3 contributions for £4,535 will boost your retirement by £30,264 over 20 years – a healthy return, especially if you have the cash and were thinking of investing it in something else. (Source: MoneyHelper)

Irrespective of whether you believe the State Pension is good value or not it’s likely to form the basis of your retirement planning. It’ll arrive in your bank account every four weeks, it’ll rise in line with the triple lock (debatable for how long), and you can be sure the Government will do its utmost to protect it as it knows you are more likely to vote! 

Andrew Mence
About the Author

Andrew has spent over 17 years accumulating considerable experience providing financial advice, helping individuals create wealth, retire and pass it on to future generations. Andrew focuses on building a deep understanding of his clients' objectives and what makes them so important as this enables him to tailor bespoke financial plans designed to achieve these goals. Andrew’s clients are a combination of business owners, professionals and retired individuals – many of whom he’s worked with through the course of his career. Outside of work Andrew is happily married, an avid ball sports fan and to keep fit is willing to take on challenges to raise money for various charities.