Government to write to 100,000 people at risk of no state pension in retirement
At least 100,000 people will be sent warning letters to say they won’t receive a state pension if they do not make more National Insurance (NI) contributions before they retire.
In response to recommendations from the Work and Pensions Committee, the Government has agreed to write to certain people who are due to retire in the next decade to warn them they need to increase contributions in light of new state pension rules introduced in April 2016.
Under the changes, people need to have paid National Insurance contributions for at least 35 years to receive the full state pension, worth £155.65 a week. Those with fewer than 10 years’ worth of contributions may receive nothing at all.
However, other recommendations made by the Committee, such as setting up a dedicated phone number to answer questions about the state pension, have been rejected, leading to experts criticising the Government for not going far enough.
Steven Cameron, pensions director at Aegon says: “We welcome the Government having agreed to write individually to the estimated 100,000 individuals who don’t have sufficient NI contributions to qualify for the new state pension.
“But this is just a first step and we urge the Government to go much further and write directly to every individual to provide them with an estimate of what state pension they are on target to receive. This should then be updated periodically.
“Our research shows that millions of individuals have no clear understanding of how much or how little they may receive as a state pension. While people can now request a projection, the majority will not think of doing so.”
Everybody can use the free Check Your State Pension service to check their total National Insurance contributions, and the state pension they can expect to receive.
In addition, anyone over-55 can contact the Pension Wise service (pensionwise.gov.uk) to receive free guidance on what they can expect from the state pension.
A scheme originally established in 1944 to provide protection against sickness and unemployment as well as helping fund the National Health Service (NHS) and state benefits. NI contributions are compulsory and based on a person’s earnings above a certain threshold. There are several classes of NI, but which one an individual pays depends on whether they are employed, self-employed, unemployed or an employer. Payment of Class 1 contributions by employees gives them entitlement to the basic state pension, the additional state pension, jobseeker’s allowance, employment and support allowance, maternity allowance and bereavement benefits. From April 2016, to qualify for the full state pension, individuals will need 35 years’ of NI contributions.