A State Pension Check

 

In a pique of organisation, I actually completed and submitted my tax return a few days ago. It avoided my usual rush before the 31st January deadline and is making me feel very smug indeed.

Whilst accessing my online tax account, I thought I would take a peep at the National Insurance section and double-check that all is in order for payment of my state pension when I finally become entitled in a little over 4 months' time. Assurances by my financial advisor after I made a voluntary contribution at his suggestion and an official forecast several years ago suggested that I shall receive a full state pension at what has been an ever shifting qualification age. 

I confess that I had never explored the record in much depth, relying instead on professional advice and the calculations undertaken by the government and sent to me by letter. With hindsight, I perhaps should have left things to rest there.

However, when taking a glance (and breathing a sigh of relief that all still remains in order for commencement of payments at the full rate on my next birthday) I noticed too that it said I have 37 years of full contributions; that was a complete surprise, after retiring early. My work history may extend beyond my 10 fingers but I thought I could count well enough to know that I had completed only 35 full tax years.

When I was seriously contemplating the strategy for my retirement plans there was a change of government and a commitment to simplify the pension regime was announced. I had been basing my plans on the need for 30 years of contributions in accordance with legislation introduced in 2007 and at that time a gradual rise in the retirement age which meant that, instead of the 60 years that had applied during most of my working life, I believed that I would qualify at the age of 62. The simplification, however, drove a coach and horses through that timescale meaning that a new pensions law in 2014, the year I retired, deferred the age for qualification, in my case by another 4 years and, as is often stated, 35 years of contributions are now required.

You know how it is when you have to get to the bottom of something; no stone left unturned etc.. There is a useful breakdown of all your contributions online underneath the state pension calculation and trawling through it, panic set in. In my early days of employment as an Articled Clerk it seems that the earnings were so appalling (even if they were better than the days when you paid your Principal for the privilege of being articled to him) that my first year failed to count. Instead I appeared to have been credited with 3 years when I was at school but not at university. Were those credits an error and did I really only have 34 years of contributions?

The internet is a great resource but sometimes finding chapter and verse for historical structures that predate it can be tricky. However, I found the legislation that made clear that alterations to the system in 1977 imposed 44 and 39 years of contributions for men and women respectively but, to offset what was then a significant increase, those continuing in education  were given unearned credits if at school or in an apprenticeship for the years they attained 16, 17 and 18. Well I definitely hadn't appreciated that , but at least I could rest easy knowing that it seems I do indeed have the 37 years stated on my record.

But why 37 years and not the 35 that is referred to when you read about the simplified system? Simplification or not, it seems calculations remain a bit of a hotch potch (or should I say individualised) for anyone who paid national insurance contributions before 6th April 2016. Hardly surprising considering the number of times the system has been changed. Periods of contracting out (equivalent to 2 years off my state pension computation) and of low earnings are excluded, but various credits (including not working whilst caring for your children and those to which I have referred for continuing in school) are still honoured.

If you are unsure about your own position, it can of course be easily checked by  requesting a  state pension forecast or looking at your Government Gateway account. Remember too that, if eligible, there is an option to make up any deficit with voluntary contributions.