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Pension funds

Number making state pension top ups rises 85 per cent after introduction of new state pension

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New data from Quilter, the wealth manager, shows that the number of people making Class 3 National Insurance Contributions (NICs) rose 85 per cent following the introduction of the new state pension in 2016.

Class 3 NICs enable someone to fill gaps in their National Insurance record by making up one or more qualifying years by paying voluntary contributions entitling them to more or the full state pension when they retire.

Freedom of Information data analysed by Quilter shows that following the introduction of the new state pension on 6 April 2016 the number of people making contributions rose from 62,000 in 2015/16 to 115,000 in 2016/17. A further 115,000 made top ups the year after until the number of people started to drop.

Over the nine years of data available, the average contribution was GBP665 although in the 2017/18 the average contribution rose to a nine year high of GBP928.

The new full state pension is only paid out to those who have at least 35 years of NI contributions. The firm writes that you can claim the new State Pension at State Pension age if you have at least 10 years National Insurance contributions and are: a man born on or after 6 April 1951 or a woman born on or after 6 April 1953. If you were born before these dates you will get the basic State Pension instead. Pay-outs on the full state pension increased from GBP175.20 per week to GBP179.60 in April 2021.

However, retirees stand to receive a much larger increase in April 2022 thanks to strong earnings growth following the end of the furlough scheme, which is forecast to be as high as 8 per cent. Should the government keep the triple lock in its current form, an 8 per cent increase in pension income would push the new state pension up to GBP193.95 per week next year.
 

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