People are being warned they could be missing out on tens of thousands of pounds they are not claiming.
New research from pension consultants LCP has revealed that as many as seven million people are making mistakes with their pensions that will see their payouts cut, Mirror Online reports.
And while the state pension pays out £175.20 a week, every week, from the day you retire, people could see the money they get drop to potentially nothing at all.
In order to claim the full state pension, you need to first chalk up 35 “qualifying years” of National Insurance credits – each of which is worth £250 a year in retirement.
People need at least 10 to get any payout at all.
However, millions of people are missing out on some credits they are due simply because they don’t know they can claim them.
There is still time to sort that out, though, as long as you have not yet hit retirement age.
Steve Webb, partner at LCP and former pension minister, said: “The system of National Insurance credits is vital in helping millions of people to protect their state pension at times when they are not in well paid work.
“But far too many people – and women in particular – are missing out on the credits that are there to help them.”
For a start, National Insurance credits can be earned for much more than just having a job.
Bringing up children, caring for a disabled person and even serving overseas as a military spouse all qualify you for credits.
What is more, claims for some credits can also be backdated for several years.
One can be backdated nearly a decade – and another all the way back to the mid 1970s.
The key thing, though, is to claim.
Furthermore, some people miss out on credits because the ‘wrong’ person claims the qualifying benefit.
Webb added: “Parents need to make sure that they claim National Insurance credits even if they are on a high income, and couples need to make sure that they put their child benefit in the name of the lower earner.
“Carers should also claim credits even if they are not on carers allowance, as long as they are spending 20 hours a week looking after someone.
“There are billions of pounds in state pension rights being thrown away every year and the Government needs to do much more to make sure people take up what they are entitled to”.
The main areas of non take-up of National Insurance credits are:
- Carers not on Carers Allowance – people caring for 35 hours a week and claiming Carers Allowance automatically get credits. Those doing 20 hours of caring can also claim a credit, but take-up is not great. The DWP estimates that at any one time just 10,000 to 15,000 people are claiming this carers credit out of more than 100,000 who could benefit
- Couples not claiming child benefit to avoid a tax charge – the right approach for those in this position is to claim just for the credits. Get a move on, though – new claims can only be backdated three months.
- Couples where the higher earner is also claiming the child benefit – if the higher earner in a couple has their name on the child benefit claim, the person who needs the credit could be missing out. In fact, HMRC has estimated there are around 200,000 couples where the ‘wrong’ person is claiming benefit and the other partner is missing out as a result.
Other areas LCP point to where people could claim include:
- Grandparents and other family members caring for a child
- During maternity/paternity/parental leave
- During sickness / unemployment / low income
- Low paid employment
- Military spouses
Don’t worry, though – LCP has produced a guide to understanding what credit you could be missing out on.
-- to www.walesonline.co.uk
