UK State Pension Calculator

A qualifying year for National Insurance is a tax year in which you've paid or been credited with enough National Insurance contributions to count towards your State Pension.

Ways to build up qualifying years:

1. Working and paying National Insurance: If you're employed and earning above the Lower Earnings Limit (£6,240 for 2024/25), you'll pay National Insurance and build up a qualifying year.
2. Self-employment: Paying Class 2 National Insurance contributions if you're self-employed.
3. National Insurance credits: These can be awarded automatically or you may need to apply for them. Credits can be given for:
   • Claiming certain benefits (like Jobseeker's Allowance or Universal Credit)
   • Caring for a child under 12 (Child Benefit related)
   • Caring for someone who is sick or disabled
   • Being unable to work due to illness or disability
   • Being on jury service
   • Being on an approved training course
4. Voluntary contributions: Paying voluntary Class 3 National Insurance contributions to fill gaps in your record.

A tax year runs from 6 April to 5 April the following year. You normally need National Insurance contributions or credits for at least 10 qualifying years (not necessarily consecutive) to get any State Pension.

You can check your National Insurance record online through your personal tax account to see if you have any gaps and how you might be able to fill them.

'Contracting out' was a system that ended on 6 April 2016 where employees could give up their right to the Additional State Pension (also known as the State Second Pension or SERPS) in return for either:

• A higher private or workplace pension, or
• A rebate of National Insurance contributions into a personal pension

How contracting out affects your State Pension:

If you were contracted out before 6 April 2016:

• Your starting amount for the New State Pension may be reduced by a 'Contracted Out Pension Equivalent' (COPE) amount
• This is because you paid lower National Insurance contributions during the contracted-out period
• In exchange, your workplace or private pension should include an amount that replaces the foregone Additional State Pension

You may have been contracted out if you were a member of:

• A private sector defined benefit (final salary or career average) pension scheme
• A public sector pension scheme (like NHS, teachers, civil service)
• Some defined contribution (money purchase) pension schemes before April 2012

Even if you were contracted out, you can still build up qualifying years towards the full New State Pension for any years from 6 April 2016 onwards, as contracting out was abolished when the New State Pension was introduced.

You can check if you were contracted out by looking at your old payslips (which may have the letter 'D', 'E', 'L', 'N', or 'O' in your National Insurance number) or by checking with your pension provider.

Yes, if you have gaps in your National Insurance record, you may be able to increase your State Pension in several ways:

1. Pay Voluntary National Insurance Contributions:

• You can usually pay voluntary Class 3 contributions to fill gaps from the past 6 tax years
• Special arrangements currently allow some people to fill gaps further back (to 2006 in some cases)
• For the 2024/25 tax year, Class 3 contributions cost £17.45 per week (£907.40 for a full year)
• Each full year you buy typically adds 1/35th of the full State Pension to your weekly amount (about £6.32 per week in 2024/25)

2. Check for Missed National Insurance Credits:

• You might be entitled to NI credits for periods when you were:
  • Claiming benefits due to unemployment or illness
  • Caring for someone for at least 20 hours a week
  • Raising children (via Child Benefit claims)
  • On jury service
  • On approved training courses
• Some credits are applied automatically, while others require an application

3. Continue Working or Getting Credits:

• If you haven't reached State Pension age yet, you can continue to build up qualifying years by:
  • Working and paying National Insurance contributions
  • Getting NI credits through benefits or other circumstances
  • Paying voluntary contributions for current years

Before paying for any gaps, check if it will actually increase your State Pension by getting a State Pension forecast and contacting the Future Pension Centre. Not all gaps will affect your final pension amount, especially if you already have 35 qualifying years or will build them up before reaching State Pension age.

Use our Private Pension Calculator to see how much you might need to save additionally to ensure a comfortable retirement.

For most people, the State Pension alone will not provide enough income for a comfortable retirement:

Current State Pension rates (2024/25):

• Full New State Pension: £221.20 per week (£11,502.40 per year)
• Full Basic State Pension (old system): £169.50 per week (£8,814.00 per year)

Retirement income needs:

According to the Pensions and Lifetime Savings Association (PLSA), for a 'moderate' retirement lifestyle in 2024, a single person would need around £23,300 per year, while a 'comfortable' retirement would require about £37,300 per year.

The gap:

This creates a significant gap between the State Pension and recommended retirement income:

• For a 'moderate' lifestyle: Gap of approximately £11,800 per year
• For a 'comfortable' lifestyle: Gap of approximately £25,800 per year

Additional income sources:

To bridge this gap, you'll likely need additional sources of retirement income such as:

• Workplace pensions
• Private pensions (like personal pensions or SIPPs)
• Other savings and investments
• Property (rental income or equity release)
• Continuing to work part-time

We recommend using our suite of pension calculators to help plan your complete retirement strategy:

• UK Pension Calculator - For a comprehensive retirement plan
• Private Pension Calculator - To see how much you need to save
• Savings Calculator - For additional retirement savings

The earlier you start planning and saving for retirement beyond the State Pension, the more comfortable your retirement is likely to be.