MILLIONS of households are being urged to claim a little-known DWP benefit, which could boost their state pension by up to £328 a year.
This warning is directed at unpaid carers who do not earn sufficient income to make National Insurance contributions, thereby risking their entitlement to a full state pension.
To qualify for any state pension, you need a minimum of 10 years’ worth of NI contributions, and 35 years are required to receive the full amount worth £221 a week.
Career breaks, such as those taken to raise children or care for relatives, can result in gaps in your NI record, potentially reducing your state pension entitlement.
Fortunately, you can claim free credits to fill these gaps before voluntarily buying back any missing years.
Experts at Mobilise, a community for unpaid carers, is urging the nation’s 10million carers to apply for ‘carer’s credit’ to ensure households they can get the full new state pension.
Carer’s credit fills the gap between caring and work.
It ensures any years where you’re not paying national insurance because of time spent caring are still counted.
It doesn’t require any payments to be made and helps unpaid carers continue to build up towards that 35-year target.
Each annual credit missed could cost you 1/35th of the value of your state pension, according to wealth manager Quilter.
So, by claiming the credit, you could potentially increase your state pension by £328 annually – adding up to over £6,000 over the course of a typical retirement.
Suzanne Bourne, care expert at Mobilise, said: “If you start work at 21 and stop working at 51 to care for your partner, you will only receive a partial state pension when you turn 66.
“This could come as a huge shock and could have been avoided with the carer’s credit.
“We’re encouraging everyone to check whether they are eligible as soon as possible.
“Carer’s credit can be backdated to the start of the previous tax year, even if the person we were caring for no longer has care needs or has passed away.
“So it’s vital that you don’t leave it too long to submit your application, if you think you’re eligible.”
Before making a claim, it’s worth checking your NI record.
CHECK YOUR YEARS
If you think you’re missing National Insurance years, the first thing to do is check your state pension forecast.
You can check this and your state pension age through the government’s new ‘Check your State Pension’ tool online at gov.uk/check-state-pension.
The tool is also available through the HMRC app, which you can download free on the Apple App Store and Google Play Store.
You’ll need to log in using your Personal Tax Account login details. If you don’t already have an online HMRC account, you can register at gov.uk.
It shows you how much your state pension could increase by and what NI years you’ll need to buy or free credits to apply for to achieve this.
CHECK YOUR ELIGIBILITY FOR CARER’S CREDITS
Before making a voluntary contribution, it is important to check if the gaps in your contributions can be filled with free NI credits.
For example, carer’s credits can help fill in gaps in your NI record if you’re an unpaid or low-paid carer.
To get carer’s credit you must be:
- Aged 16 or over
- Under state pension age (66)
- Looking after one or more people for at least 20 hours a week
The person you’re looking after must get one of the following:
- Disability living allowance care component at the middle or highest rate
- Attendance allowance
- Constant attendance allowance
- Personal independence payment (PIP) daily living part
- Armed forces independence payment
- Child disability payment (CDP) care component at the middle or highest rate
- Adult disability payment daily living component at the standard or enhanced rate
- Pension age disability payment
Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.
You can check the full list of people eligible to claim credits by visiting www.gov.uk/national-insurance-credits/eligibility.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.
CLAIM CARER'S CREDIT
CARER'S credits are available if you're caring for someone for at least 20 hours a week.
least 20 hours a week.
You have to be aged 16 or over and under state pension age, and the person you’re caring for must be on certain benefits – see gov.uk for the full list.
Credits aren’t paid in cash but instead they’re a NI credit that helps with gaps in your national insurance record.
This is important because how much you eventually get – if anything – from the state pension is based on your NI record.
To apply, download and send back the carer’s credit claim form on gov.uk.
You don’t need to apply if you get carer’s allowance or child benefit for a child under 12 as you’ll automatically get credits, and if you are a foster carer you should apply for NI credits instead.
TOP UP YOUR NATIONAL INSURANCE YEARS
If you don’t qualify for free NI credits in some cases, buying back missing years can be really valuable.
Voluntary contributions come at a price.
If you fill gaps between 2006/07 and 2015/16, you’ll pay the 2022/23 rates for contributions.
It is worth £15.85 a week, which means it costs £824.20 to buy one year of contributions.
As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year.
Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
Someone who was retired for 20 years would get back around £55,000 in total (before tax).
Anyone under 73 can make voluntary pension contributions, as it’s assumed everyone under this age will claim the new state pension.
If you’re below the state pension age, you can check your state pension forecast by visiting www.gov.uk/check-state-pension to determine if you’ll benefit from paying voluntary contributions.
You can also contact the Future Pension Centre by calling 0800 731 0175.
If you’ve reached state pension age, contact the Pension Service to find out if you’ll benefit from voluntary contributions.
You can contact this service in several different ways by visiting www.gov.uk/contact-pension-service.
You can usually pay voluntary contributions for the past six years.
The deadline is April 5 each year.
For example, you have until April 5, 2030, to compensate for gaps in the tax year 2023 to 2024.
The deadline has been extended for making voluntary contributions for the tax years 2016 to 2017 or 2017 to 2018.
You now have until April 5, 2025, to pay.
Find out how to pay for your contributions by visiting gov.uk/pay-voluntary-class-3-national-insurance.