How many years you need to work to receive Full State Pension in retirement

An alarming proportion of young workers in the UK have no plans for their future retirement in place, it has been revealed. It comes after a period of uncertainty stemming from the 18-month lockdown which saw 11.7 million employees out on furlough leave, at a cost of £70 billion.

But, the easing of restrictions has provided the economy and most of the industry to recoup their financial positions.

A recent survey of 1,000 people carried out by Opinium on behalf of Hargreaves Lansdown revealed that over one-third (34 per cent) of people aged 45-54 have no plans in place for their remaining working years. Meanwhile, around a quarter of those aged 25-34 and 35-44 have no plans for working between the age of 50 and reaching retirement, the Daily Record.

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Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown: “These findings point to a worrying lack of planning among those closest to retirement on how they plan to spend their remaining working years. The pandemic may well have played a part in this with the economic upheaval potentially causing chaos for people’s retirement planning with many older workers retiring early after being made redundant.”






© Gareth Fuller/PA Wire
Many young people have no plans in place for their retirement

Roughly 42 per cent of those in the 45-54 age group said they planned to continue in their current job and work-full time while 10 per cent said they would stay in their current role but move to part-time hours. Only five per cent of respondents said they planned to stop working completely.

“There’s also the chance that the investment market volatility we saw earlier in the pandemic has had an impact on people’s pensions causing them to put off their plans for retirement a while longer,” Ms Morrisey added.

“Easing into retirement by working part-time is often a better way of managing such a huge change from a financial and emotional wellbeing perspective.”

For many workers with a workplace or private pension, this can be encouraging. But there are many who may have chosen to opt-out of the pension or didn’t meet the £10,000 minimum requirement for auto-enrolment.

In this case, a State Pension may be their best option for a retirement income, but eligibility is not automatic. The State Pension is a contributory payment and data from the DWP revealed that less than half of the 1.1 million people who claim the new State Pension receive the full amount of £179.60 a week.

In October 2020, the UK Government raised the State Pension age to 66 for both men and women with plans to increase this to 68 over the coming years. Your income from the pension will depend on your National Insurance contributions – but how much do you need to contribute to qualify for the ‘full’ pension?

For starters, you will need at least 10 qualifying years on your NI records to receive any amount of State Pension but these don’t have to 10 consecutive years of working. This means for 10 years at least one or more of the following applied to you:

  • you were working and paid NI contributions

  • you were getting NI credits for example if you were unemployed, ill, a parent or a carer

  • you were paying voluntary NI contributions

In fact, you may still be able to qualify for the pension if you have lived or worked abroad. You may also qualify if you have paid married women’s or widow’s reduced rate contribution. You will need 35 qualifying years to receive the new full State Pension if you do not have a NI record before 6 April 2016.

People who have contributed between 10 and 35 years are entitled to a portion of the new State Pension.

Qualifying years if you are working

When you’re working you pay NI and get a qualifying year if:

  • You’re employed and earning over £183 a week from one employer

  • You’re self-employed and paying NI contributions

You might not pay NI contributions because you’re earning less than £183 a week. You may still get a qualifying year if you earn between £120 and £183 a week from one employer.

Qualifying years if you are not working

You may get NI credits if you cannot work – for example because of illness or disability, or if you’re a carer or you’re unemployed.

You can get NI credits if you:

  • Claim Child Benefit for a child under 12 (or under 16 before 2010)

  • Get Jobseeker’s Allowance or Employment and Support Allowance

  • Receive Carer’s Allowance

If you are not working or getting NI credits

You might be able to pay voluntary NI contributions if you’re not in one of these groups but want to increase your State Pension amount. Find out more on the GOV.UK website here.

What if there are gaps in your NI record?

You can have gaps in your NI record and still get the full new State Pension.

You can get a State Pension statement which will tell you how much State Pension you may get. You can then apply for a NI statement from HM Revenue and Customs (HMRC) to check if your record has gaps.

If you have gaps in your NI record that would prevent you from getting the full new State Pension, you may be able to:

  • Get NI credits

  • Make voluntary NI contributions

Check your National Insurance record here.

Check your State Pension age

Check your State Pension age using the free Gov.uk online tool here.

This will tell you:

  • When you’ll reach State Pension age
  • Your Pension Credit qualifying age

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