The State Pension can form the main source of income for many people in retirement.
Pension Credit – Could you or someone you know be eligible?
The latest data from the Department for Work and Pensions (DWP) shows that while 4.5 million older people currently receive the New State Pension, over two million (45%) do not receive the full entitlement of £230.25 per week, some £11,973 for the 2025/26 tax year.
The DWP data also indicates 200,721 pensioners receive less than half of that full weekly payment (£230.25). People need at least 35 years’ worth of qualifying National Insurance Contributions (NI) to qualify for the full State Pension, with a minimum of 10 qualifying NI years needed to be eligible for any amount.
New research from retirement specialists at Just Group has found that fewer than six in 10 (57%) adults of State Pension age or older knew how many years’ worth of NI contributions they need to claim the full State Pension.
READ MORE: New calls to exempt people from paying National Insurance Contributions after 35 yearsREAD MORE: State Pension age set to rise next year for people with specific birthdates
The research found that 13 per cent of people over 66 said that the State Pension accounted for over 90 per cent of their monthly household income with 44 per cent saying that it represented more than half of their household income.
Stephen Lowe, group communications director at Just Group, commented: “Before people claim the State Pension, we’d urge them to check if they will actually receive the full New State Pension and if not to review their NI record to see where they have gaps in their record.
“For some, it may make sense to pay extra to make the contributions voluntarily and retrospectively for the previous six tax years. The extra income over the course of a retirement may offset the initial cost of these contributions.
“For others who may have spent time out of the workforce on maternity leave or providing care for loved ones, for example, they may be eligible to claim NI credits which can help fill in gaps and build extra State Pension income for free.”
Gaps in National Insurance records can be backfilled by paying for voluntary Class 3 National Insurance contributions, however these can only be made for the previous six tax years.
However, before people start receiving the State Pension they can claim credits to backfill gaps in their NI records for various reasons such as maternity leave, unemployment, sickness or for providing caring responsibilities.
State Pension age changes
The State Pension age is set to start rising from 66 to 67 next year, with the increase due to be completed for all men and women across the UK by 2028. The planned change to the official age of retirement has been in legislation since 2014 with a further State Pension age rise from 67 to 68 set to be implemented between 2044 and 2046.
The contributory benefit provides essential financial support for nearly 13 million older people across the country, including more than one million retirees living in Scotland.
Many people approaching the official age of retirement this year (or next) and eligible to start claiming State Pension from the DWP, or those approaching 55 and keen to start withdrawing from a personal or workplace pension, may not be aware of a handy checklist produced by the Citizens Advice network to help navigate the unchartered territory of the road to retirement.
The nine-point checklist is a good place to start if you’re nearing the end of your working life and not sure what financial support is available in later life to help you enjoy retirement to its fullest.
Retirement checklist
Citizens Advice Scotland has a full guide to retirement planning which you can read here, below is a quick overview of what you should check as you approach retirement.
1. Work out what money you’ll have coming in and think about how your spending might change once you’re retired – the Citizens Advice Budgeting Tool can help with drawing up a budget.
2. If you get benefits, let the benefit provider know when you will be retiring – you may have to claim a different benefit or the amount you get might change.
3. Check whether you’re entitled to any new benefits – you might be able to get benefits like Carer’s Allowance, Carer Support Payment, Housing Benefit or a Council Tax Reduction.
4. Work out how much is left to pay on your mortgage (if you have one) – you might want to pay off what’s left with a lump sum, but you should get financial advice first
5. Get an estimate of your State Pension – the GOV.UK State Pension calculator can help you with this.
6. Track down any pension providers that you’ve lost contact with – the P ension Tracing Service can help with this. Call them on 0800 731 0193 or use their online form to find a lost pension.
7. Get in touch with all your pension providers and let them know you’re planning for retirement – they’ll usually send you important information about your pension.
8. Get financial advice or help from MoneyHelper (formerly Pension Wise) – if you have a personal pension so that you know all the options available to you. You may have to pay for independent financial advice, but it could be worth it in the long run.
9. Consider leaving your pension pot to someone when you die – there will be tax implications for doing this, so you should talk to your pension provider or an independent financial adviser.
Find out more about preparing your finances for retirement on the Citizens Advice Website here.
Check your State Pension age
Your State Pension age is the earliest age you can start receiving your State Pension. It may be different to the age you can get a workplace or personal pension.
Anyone of any age can use the online tool at GOV.UK to check their State Pension age, which can be an essential part of planning your retirement.
You can use the State Pension age tool to check:
- When you will reach State Pension age
- Your Pension Credit qualifying age
- When you will be eligible for free bus travel – this is at age 60 in Scotland
Check your State Pension age online here.