The State Pension explained

Sarah Pennells: Hello, I'm Sarah Pennells and I'm the Consumer Finance Specialist here at Royal London.

Clare Moffat: And I'm Clare Moffat and I'm Royal London's Pensions and Legal expert, and we're going to spend the next 45 minutes or so talking about the State Pension. Sarah, it's a big topic and there's so much we could talk about.

Sarah Pennells: It really is and when we publicised this webinar, we included a link where you could submit a question in advance and we received over 90 questions, which is absolutely fantastic. So, we've used these questions, we've gone through them, and we've used some of the most popular questions to help us, sort of, frame this webinar and we'll be answering them throughout the webinar, but if you'd like to ask a question as we go through though, then we'd love to hear from you, but as with all our webinars, we can't answer questions about specific Royal London products, or about your specific circumstances, but do leave a comment or a question in the Slido link, and before we go any further though and before we get into the webinar, I'd just like to remind you that we are recording this webinar and we will send you a link in the future. So, everybody who's registered will get a link so they can rewatch or indeed watch the webinar. So, let's get on with the webinar then, Clare.

Clare Moffat: Okay. So, let's start with the basics. What is the State Pension and how much do you get?

Sarah Pennells: Well, the State Pension is a payment that you get from the government once you reach State Pension age, and I think before we talk about how much you'll get, we got so many questions about the State Pension age, I think it's worth spending a moment or two talking about when you get the State Pension, but before that, I think it would be a good time for our first poll. So, the question is, 'Do you know your State Pension age?' So, please vote in our poll.

Clare Moffat: Okay, it's interesting watching the numbers going up and down.

Sarah Pennells: Yes, I mean, it's, it's positive at the moment that so many people do know their State Pension age because, you know, with the State Pension age having changed, it wouldn't be surprising if a lot of people were quite confused, but it's-, we'll leave it for a second or two more, because the votes are still coming in, but definitely, the majority of people say they do know. About 8%, so, sort of, one in twelve, saying they're hoping to find out today, which is also great. Okay, I think it's probably settled down now, so 77% are saying they know their State Pension age, 15% say they don't, and 8% say, 'Hoping to fund out today.' So, let's hope that we can give you some information about that, but we did have a lot of questions on this, including one from Anita who asked what the State Pension is at the moment, and it's a really good question because, as I just mentioned, the State Pension age has been rising. So, it used to be 60 for women and 65 for men, but now, it's 66 for both men and women, and that simply means that you have to be 66 years of age before you can claim the State Pension, but because the State Pension age has changed both for men and women, you know, you may know people who are older and who've been getting their State Pension since they were 65 if they're men or even as early as 60 if they're women, and because the State Pension age is rising, in the future, some people may have to wait until they're 67, 68, or possibly even older before they can claim their State Pension. So, anyone born after April 5th 1960 will be affected by the rise in State Pension age from 66 to 67, and under the current timetable, anyone who's birthday falls between April 6th 1961 and April 5th 1977 will have a State Pension age of 67.

Now, we got another question which was from Vanessa and she wanted to know, 'What's the cut-off date for the rise in the State Pension age between 67 and 68?' Now, currently the law says that the State Pension age will rise from 67 to 68 between 2044 and 2046, so that effects those people born after April 5th 1977, which I just mentioned a moment ago. However, there was a review by the government a few years ago that recommended that this timetable was brought forward by almost ten years. It suggested that the State Pension age should rise from 67 to 68 between 2037 and 2039. Now, that new earlier timetable isn't currently the law, but it could be in the future, or there could be a different timetable, because 1st December, the current government launched a review into the State Pension age, and that is due to publish it's results by next May, at the latest. Now, we had a few questions about the State Pension age, so I hope that's answered most of them.

Clare Moffat: And you don't get the State Pension automatically either, do you? You've got to claim it.

Sarah Pennells: Yes, that's absolutely right, but I think that, sort of, confuses some people or they're not aware of it. So, when you're a few months away from your State Pension age, you will be contacted by the Department for Work and Pensions, and it will tell you how to claim the State Pension. It should get in touch with you no later than two months before you reach State Pension age, but Clare, what happens if you don't reply to this letter?

Clare Moffat: Well, if you don't do anything, then you won't get your State Pension, it, it's as simple as that. If you don't want your State Pension, once you reach State Pension age, then you don't have to take it. So, instead you can delay or put off claiming it. Now, that's sometimes referred to as deferring your State Pension. Now, you'll get a bit extra by delaying claiming your State Pension, but if you want it as soon as you're entitled to it, you do need to claim your State Pension.

Sarah Pennells: So, if you are currently 65, you know, you've sent back your letter to claim your State Pension, do you get your first payment on your 66th birthday, kind of, like, 'Happy Birthday from the DWP'?

Clare Moffat: Not quite. So, the State Pension is usually paid every four weeks and it's paid in-arrears. So, that first payment you'll get will be for the previous four weeks, and we had a question from Alison who asked whether she can take her State Pension when she's entitled to claim it and still carry on working. So, Sarah, what's the answer?

Sarah Pennells: Well, the short answer is yes. Your State Pension age and the age that you retire at are completely separate. So, you don't have to retire when you take your State Pension and you don't have to take your State Pension when you retire.

Clare Moffat: Yes, we'll talk more about delaying your State Pension a bit later on as well.

Sarah Pennells: Well, we talked about what the State Pension is and when you might get it, and the fact you need to claim it, but we haven't discussed how much it is, and in order to explain that, we need to talk about the two different types of State Pension. So, anyone who's reached State Pension age on or after April 6th 2016 will receive what's called the new State Pension, and to get the full amount, you need to have paid or been credited with 35 years of National Insurance. If you reach State Pension age before then, you'll come under the basic State Pension system, and in that case, to get a full State Pension, you need 30 years of National Insurance, but under the basic State Pension system, you may also get an additional State Pension, a second State Pension that, kind of, sits on top. So, Clare, talks us through the figures. How much might someone get either under the new or the older basic State Pension system?

Clare Moffat: Okay, so let's look at this chronologically. So, for people who retired under the old basic State Pension system, if they're entitled to the full amount, they'll get £141.85 a week, and if you're married, in a civil partnership, or living together, you'll each get that amount, as long as you've paid enough National Insurance. Now, for people who built up an additional State Pension, under the basic State Pension system, they could also get a significant amount more each week. Now, how much you get will depend on how many years you paid National Insurance for and how much you earned among other things. When you claimed your basic State Pension, you'd automatically receive this additional pension as well. Now, for people who come under the new State Pension system, they'll get £185.15 a week, again, if they're entitled to the full amount.

Sarah Pennells: So, what does that work out at on an annual basis?

Clare Moffat: Well, I mentioned that the full basic State Pension is £141.85 a week. So, you'd think that the annual State Pension would be 52 times this, but that's not quite right. To find out the basic State Pension as an annual amount, you divide the weekly figure by seven and then multiply it by 365.25. Now, that extra .25 is to account for the leap year, and when you do that, it gives you the annual basic State Pension amount of £7,367.61. Now, for the new State Pension, where the weekly amount is £185.15, the annual amount is £9,660.86. Now, as we heard in the Autumn Statement, both of those payments will go up by September's inflation rate, so that was 10.1%, from next April. So, that will mean that once that increase kicks in next April, someone getting the full basic State Pension will get £156.20 a week or £8,150.29 a year. Someone receiving the full new State Pension, well, they'll receive £203.85 a week or £10,636.60 a year, and Sarah, we've had a question from Cheryl. Now, she wants to know whether she'll be able to survive on the State Pension. Now, obviously, it'll depend on Cheryl's circumstances, but you had a glimpse on what it was like to live on the State Pension, didn't you?

Sarah Pennells: Yes, that's right. So, in the summer, I was joined by five of our customers and we tried to live on the equivalent of the State Pension amount for a week, and I have to say that it was quite a challenge, and we did it in summer, and so, that was without winter bills, and I think we all found it quite tough, accounting for, you know, trying to live on that budget, but I think the real thing that I took away from it was that, although it was, sort of, doable for a week, although it wasn't the kind of life that necessarily you'd want to have in retirement but it was, you know, doable, there was absolutely no slack in the system. So, you know, things like your boiler breaking down or if you've got a car, you know, car needing repair, it was really hard to get the money for those kind of bills. If you want to find out how I got on and the customers who joined me, then we've got videos on our State Pension hub. You can just see our daily videos, how we got on. We'll give you the address of the State Pension hub in a moment. Now, we had a question from John that was submitted in advance and he wanted to know why there are two different rates of State Pension. He says, you know, 'All pensioners use facilities like shops, they don't charge people who are on the basic State Pension less.' So, Clare, what's the answer to that?

Clare Moffat: Well, we could devote a whole webinar to this, but the short answer is that people who retired under the old State Pension, after April 2010 but before 2016, only had to have 30 years of National Insurance to get the full amount, whereas the new State Pension, well, it needs 35 years, and under the basic State Pension system, some people did very well. So, if they had the chance to build up an additional State Pension, but many women didn't get the full basic State Pension, never mind anything on top. So, part of the overall thinking behind changing the State Pension system was that it would be fairer overall, but Sarah, I hear from people who get very different amounts to these, so why is that?

Sarah Pennells: Well, there could be several reasons. So, if somebody's getting less than the full basic or new State Pension, then that could be because they haven't paid or been credited with enough National Insurance. If someone's getting more, then it could be because they reached State Pension age before April 2016 and were entitled to an additional pension on top of their basic amount, or it could be to do with what's called your starting amount. So, when we moved from one State Pension system to another, so from the basic State Pension to the new State Pension, there were protections put in place, to make sure that people who'd built up a bigger pension than the full new State Pension amount weren't worse off as a result of this changeover. Now, those rules meant that on April 5th 2016, there was effectively a snapshot of your State Pension entitlement at that date, and that snapshot looked at how much you would've built up under the old basic State Pension system, how much you would've built up under the new, new State Pension system, and it took the higher of the two amounts. Now, whichever was the higher of the two amounts became your starting amount. Now, then, any State Pension that you built up after April 2016 was under the new system.

So, if your starting amount was higher than the new state, State Pension amount in 2016, which then was about £155 a week, you would keep that, and then, you'd build up more State Pension, either through paying National Insurance, if you're employed, or self-employed, or getting credited with National Insurance, perhaps because you're out of work and claiming benefits, for example, or if you're getting child benefit instead, and you could increase that amount further by delaying taking your State Pension, and we'll discuss that in a moment, but Clare, I think it's worth just spending a few minutes talking about how you get National Insurance contributions for your State Pension. What do the rules actually say?

Clare Moffat: So, let's talk about National Insurance contributions while you're working, first of all. So, we pay National Insurance contributions until we reach State Pension age to qualify for certain benefits and State Pension and-, is one of those. Now, we start paying National Insurance if we earn around £12,500, but if you earn between, between just under £6,400 and £12,500, the-, then even though you don't actually pay National Insurance, you are treated as having paid National Insurance, to protect your National Insurance record. So, that's called a qualifying year, but if you don't earn as much as the £6,400 amount, then that won't count towards your National Insurance, so there will be a gap. You also qualify if you're self-employed and pay something called Class 2 National Insurance contributions.

Sarah Pennells: And if you're not working, you may be entitled to something called National Insurance credits?

Clare Moffat: That's right, Sarah. So, you can get National Insurance credits even if you aren't working. Now, sometimes, these credits happen automatically, so, for example, if you're on Universal Credit, Job Seeker's Allowance, or Employment Support Allowance. You might have to claim it, in certain scenarios though. So, for example, if you're on Statutory Sick Pay and you're not going to earn enough to have a qualifying year. So, that-, around that £6,400 amount I mentioned. Now, you will get National Insurance credits automatically if you're a parent or a guardian who is registered for child benefit for a child under twelve, even if you don't receive child benefit. Now, that sounds a bit odd. That's all to do with something called the Child Benefit Tax Charge. It was introduced about ten years ago. So, in households where one person has income over £50,000 and children live in that household and child benefit is claimed, the person who has that income of over £50,000 will receive a tax charge. Now, once they've got income over £60,000, that tax charge is the same as the amount of child benefit that would have been received. So, so, many people decide not to register for child benefit, because they'll have that tax charge, but if one spouse is going to be a stay-at-home parent, it's essential that it's that person who registers for child benefit for each child born and they tick the box that says they don't want to receive the child benefit payments. So, they're notifying of those credits happening, but they're not actually receiving any money monthly for child benefit. Now, that triggers those National Insurance credits, and it also triggers a National Insurance number being sent out to the child when they're approaching sixteen.

Sarah Pennells: So, it's really important that the right parent, as it were, applies for child benefit, but what happens if the other parent has applied?

Clare Moffat: Yes, so we're finding a lot of people who don't know about this, and the parent who's working filled in the form and said they didn't want child benefit, but you can transfer credits from one parent to another using an online process. It's also worth stating that it's possible for a grandparent or certain other family members to claim National Insurance credits when they're looking after grandchildren. So, maybe they stopped working to help out with childcare, but they don't have their 35 years of contributions. Now, the parents have to agree to this, but these credits can be back-dated to 2011, and they also cover non face-to-face contact during the lockdown period. So, if the grandparents amused the children via Zoom, for example, that would count. Now, if you want to know more about that, then the gov.uk website has lots of information on National Insurance credits.

Sarah Pennells: So, we talked about how much you get and the State Pension age, but it's a good idea to find out when you'll be able to claim the State Pension and how much you might personally get. So, time for our second poll, Clare. What's the question this time?

Clare Moffat: So, the poll question is, 'Do you have a copy of your State Pension forecast?'

Sarah Pennells: Wow, okay, so this is interesting. Most people, at the moment, I mean, we're still getting a lot of the votes coming in, so I'll it just-, let it settle, but about six in ten are saying they don't have a copy of their State Pension forecast and about 35-36% are saying, yes, they do. So, we'll, we'll let this run, just for a moment longer, but I think that's really interesting, because people were very confident about what their State Pension age is, which is great, I mean, that's a really good first step, isn't it? But not so much about actually what they might get when they reach State Pension age. So, I think it's settling down, so six out of ten say no, and just under three out of ten say that they, they have got their State Pension forecast. So, if you'd like to find out when you're going to get your State Pension and what you'll get, you can do this on the gov.uk website. So, if you go to gov.uk/state-pension-age and put in your date of birth, it will tell you the date that you'll be able to claim your State Pension and how old you'll be, but it won't tell you how much you'll get. So, in order to find that out, you need to go back onto gov.uk this time /check-state-pension, it's on-, the information is on the slide. Now, if you've got a government gateway account, then you can fill in an online form that tells you how much State Pension you're going to get when you reach State Pension age. If you don't have a government gateway account, you'll need to set one up. Now, it's actually fairly straightforward to do, but there are a few steps involved and you will, for example, need an email address so you can get a confirmation code. Now, we've written a four-step guide on how to get your-,

Clare Moffat: So, I think we've lost Sarah there, briefly. So, we've written-, as Sarah said, we've written this four-step guide on how to get your State Pension forecast online, and that's on our State Pension hub, and there's lots of information there on what you need to do to create that government gateway account. Now, there are two other ways of getting your forecast. So, applying online is the quickest way, but if you can't look at the internet, then you can fill in the form BR19 and send that off by post, or you can phone up the Future Pensions Centre and ask them to send it out to you, but you have to be reaching State Pension age in more than 30 days to do that, so don't wait until it's too late. So, I think it's worth talking through the information that you'll get on your State Pension forecast. Now, first of all, your State Pension forecast will tell you when you reach State Pension age and how much you're on track to get as weekly, monthly, and annual amounts. So, you can see that on screen, but these amounts are not guaranteed. It's made very clear in a disclaimer that the State Pension forecast isn't a guarantee and is based on current law, and it doesn't include any increase due to inflation. Now, I think it's probably worth checking your forecast a, a few times, especially if you've been contracted out at any point, and I'm going to explain what that means in a minute. Now, the next figure on your State Pension forecast, well, it's an amount that you're entitled to based on your National Insurance record.

Now, that's so far, and below that, an amount that you would get if you continue to pay National Insurance, or to be credited with it, until you reach State Pension age. Now, your forecast will-, it's also going to tell you, you that if you're working until to reach State Pension age, you still have to carry on paying National Insurance. So, what-, why is that? Well, I think this puzzles a lot of people. Now, the reason for this is that National Insurance that we make are used in part to fund the NHS and also to pay state benefits, including the State Pension. So, so, if you've already got a full National Insurance record of 35 years and you're due to get your full State Pension of £185.15 a week, you can't just decide not to pay National Insurance, unless you're not working or you don't earn enough to pay National Insurance in the first place. However, while the rules say that you have to continue to pay National Insurance until you reach State Pension, pension age if you're working, you don't have to pay National Insurance once you reach State Pension age. So, say you decide to carry on working beyond your State Pension age, well, there's no National Insurance to pay. Now, there is an exception to that, and that's if you're self-employed and paying Class 4 National Insurance. So, you'd pay that if you have profits over around £12,000. Now, if that's the case, you'll actually carry on paying Class 4 National Insurance until the end of the tax year that you reach State Pension in. Now, there's one figure on the State Pension forecast that we're really keen to explain and that's the COPE figure, or Contracted Out Pension Equivalent. Now, what's that?

Well, if you worked for an employer and you joined their pension scheme, this is particularly common with public sector final salary pensions, but it used to be the case with some private sector pensions too, then you may have been contracted out. Now, don't worry about the jargon here. Contracting out, well, it just means that you and your employer paid less National Insurance contributions, but there was a promise that the occupational pension you were in, well, it had to pay a certain level of benefits, or if it was a defined contribution pension, where you build up a fund, then the savings were held separately. Now, similarly, if you were self-employed, you also paid less National Insurance. Now, in these scenarios, you would be entitled to the basic State Pension, but not additional State Pension. So, what does that all mean? Well, your State Pension might be lower, but you'll have additional benefits in your private pension, and this is where it can get very confusing for people, because you could have paid 35 years of National Insurance but not be entitled to the full new State Pension amount because you were contracted out. So, in that case, part of your pension, now that's that COPE, COPE, Contracted out Pension Equivalent, that's going to be paid by your occupational pension scheme when you retire. So, you're not going to get that from the Department for Work and Pensions in the same way that you receive the rest of your State Pension, and I, I think it's confusing, the way this information is set out on your State Pension forecast and, and some of the people I've spoken to, well, understandably, they think they've to take the COPE figure off whatever their State Pension forecast is telling them they'll receive, but that's not the case.

That COPE figure amount, well, it's just for information only. So, you don't need to subtract it from the State Pension amount. Now, we had a lot of questions about being contracted out, both from people who want to know what it means and how it works and from people who want to know if there's anything they can do to improve their pension, and for those who are further away from retirement, then they might have enough years before they get to State Pension age to mean that they could get so it could get the full State Pension and their COPE amount too.

But what about if retirement's a little bit closer? Well, you might be able to increase the amount of State Pension you get and receive the COPE figure. So, how does that work? Well, that brings us quite neatly onto voluntary National Insurance contributions, and again we had a lot of questions about this. So what are they and, and what might you, you pay them or when might you pay them? Well, you might be able to make voluntary National Insurance contributions for years where you haven't already paid National Insurance, or where you've paid it but maybe you don't have a full qualifying year. So your State Pension forecast will tell you whether you're on track to get that full State Pension amount, but it's not going to tell you the years where you have gaps in your National Insurance record. So in order to find that out you need to check your National Insurance record. Now, you can do this online, on the Gov.uk website if you've got that Government Gateway account that Sarah mentioned, or you can telephone the National Insurance enquiry line. Now, it's something that's really worth doing, and I know that Sarah checked her National Insurance record for the first time about fifteen years ago and she found some gaps in her National Insurance record and she wasn't even aware of them. So if she'd known earlier then she would have been able to fill those gaps, but she's going to be working long enough to pay the National Insurance anyway but of course not everyone is going to be in that position.

Now, I think this will answer the question that we had from Nigel, which is if you only work for part of a tax year and therefore you only pay National Insurance for part of a year, does that count as a full year for your State Pension and does it depend on how much you earn? So, it does depend on what you earn. So say you work for half of a year and not for the other half of a year. Now, if in that six months that you work you have more than 52 times £123, now that £123 is a weekly minimum amount and that, that will make that an annual figure that that's, that's that £6,400 I mentioned earlier, well then you don't pay contributions but you are treated as having paid them. And it doesn't matter about the other six months when you didn't work. You don't need to pay for voluntary National Insurance contributions or to be officially unemployed. But say you only had £5,000 of earning in that six months then that wouldn't be enough. So if you find that there are gaps in your National Insurance record you might be able to make voluntary National Insurance payments, and again we had lots of questions on this so we're going to try and answer a couple now. Now, one of the questions asked by Tony, was that if buying voluntary National Insurance, well, is it good value? When is the best time to buy? So, what's the answer to Tony's question? Well, it's worth finding out how much it would be to buy additional years, now these are often very good value. So you pay a lump sum to buy back one extra year and then you get one 35th of the full pension, so around £300 a year from April.

So if you're quoted £824 for a year for example, so that's the rate of class three voluntary contributions for the current tax year, then you only need to survive for three years once you receive your State Pension for this to be worthwhile, although it does depend on your tax situation. Now, the cost of those voluntary National Insurance, it does depend on the class you're buying, whether it's class two or class three, and the tax year you're buying the voluntary National Insurance for. So, if you're going back six years for example it's going to cost less because you're plugging a gap. Sorry, less because-, than it would to plug a gap in the current tax year. Now, it's worth saying that paying a voluntary National Insurance well it doesn't always leave you better off, so it is worth speaking to someone about that. So for example if you don't have any other pensions from a workplace or a private pension, for example, if you pay voluntary National Insurance, well, you might get the full State Pension amount but you could disqualify yourself from being eligible for a benefit called pension credit. Now, if you're still some years from retiring then paying for voluntary National Insurance, well, it can be a waste of money if you're going to carry on and paying National Insurance too. Now, you can find out whether or not you'll benefit by ringing the Future Pension Centre, and if you want to know whether you'll benefit from voluntary National Insurance and you haven't yet reached State Pension age. If you have reached State Pension age then you need to ring the pension service. So both those numbers are on screen now.

So there's two other points that I think are worth making, and that's that you can normally only go back six years to plug any gaps in your National Insurance record, but until April 5th next year, so 2023, you can go back further, potentially as far back as 2006. After April 5th next year you'll only go back-, you'll only be able to go back six years which is the standard. But those extra years only apply to those born after April 5th 1951, if they're a man, and after April 5th 1953 if they're a woman. And remember that probably if, if you're around, kind of, the age 45 mark then you're probably going to have enough years so it might not be worth doing this until you're a bit older and check your record again. We had another question from Gary. Oh, I think we might have Sarah back. I'll just carry on talking about the question, Sarah, I-, we've not got any sound I don't think yet.

Sarah Pennells: Can you hear me now?

Clare Moffat: Yes, we can. So do you want to carry on talking through the question?

Sarah Pennells: Yes, I think I'm back in the room. My computer just turned itself off which has never happened but, anyway, there you go, so thanks for holding the fort. But as you say, we had a question from Gary who wanted to know how beneficial it would be to delay taking his State Pension. And, you know, we mentioned delaying taking your State Pension a bit earlier in the webinar but I do think it's worth talking through the numbers as to how much extra you'll get if you don't take your State Pension once you reach State Pension age. So the rules say that you can delay taking your State Pension by as little as you want to, but you'll only get any extra money if you delay taking it by at least nine weeks. If you do delay it by nine weeks you'll get an extra 1% of your State Pension amount for every nine weeks you delay taking it. So if you delay taking it for one year then that works out at just under 5.8% extra, and on a State Pension of £185.15 a week, that works out at an extra £10.70 a week. Now, under the old basic State Pension system, that extra amount that you got by deferring was, first of all, more generous and you could take it as either a lump sum or an additional weekly amount. But under the new State Pension system you don't have that choice. But, Clare, why would someone delay taking their State Pension? What's the advantage of doing this?

Clare Moffat: Well, you, you might still be working. So you receive your State Pension free of income tax, but it's still the first chunk of income when we look at the order of taxation. So then any income you receive from working, well it will just sit on top of it. So say I had part time earnings of £12,000, well I wouldn't be taxed on that because it's under the personal allowance, but if then I reached my State Pension age and I took my State Pension, then that State Pension would come first. It would use up most of my personal allowance apart from about £3,000 of my earnings would then make up to that personal allowance figure but then I would be paying income tax on the rest of my earnings, basic rate tax. So if you don't need it then it might make sense to delay taking it until you do need it.

Sarah Pennells: Are there any calculations though about, you know, breaking even? Putting it crudely, how long you need to live for in order for it to be worth your while delaying taking your State Pension?

Clare Moffat: So there are calculations that, that can put a figure on this. So for example saying that if you live seventeen years it will be worth the delay, but it's actually more complicated than that because it depends on your income tax saving as well. Now, Sarah, we had a question from Karen as well. Now she said that her mum's 67 and she's been getting her State Pension for the last year, she gets £102 a week. She's divorced and she's heard she might be able to use her ex-husband's National Insurance record to boost the amount of State Pension she gets. So what's the answer?

Sarah Pennells: Well, I'm afraid the answer may not be the one that Karen wants, but just to explain why, under the old system before April 2016 man and women could use their spouse, ex-spouse or late spouse or civil partners' National Insurance record to boost the State Pension they received. Now, there are different rules about how you could use that and, and in reality it was mainly women who did this because they were far more likely not to have a full National Insurance record and so wouldn't get that full basic State Pension. So if Karen's mum had reached State Pension age before April 2016 she would have been able to use her ex-husband's National Insurance record if it was better than her own and claim a basic State Pension based on that. Now, her ex-husband wouldn't have received any less as a result of this and he wouldn't have to give his permission for her to use his National Insurance record. Once Karen's mum told the Department for Work and Pensions it should have happened automatically and she'd have received that State Pension for the rest of her life. However, the rules changed when the new State Pension came in, and since then women who reach State Pension age from April 6th 2016, only those women who paid the reduced rate of National Insurance, it's often referred to as the married women's stamp, only those who paid that married women's stamp in the last 35 years are able to use their ex-husband, husband's or late husband's National Insurance record. Now, that reduced rate of National Insurance was actually abolished for new users in 1977, but some women who had elected to pay that married women's stamp before 1977 did carry on doing so.

Clare Moffat: One other point to make is that when a couple divorce, additional State Pension, well, it can be part of the financial assets that are shared on divorce, but this can only happen at the time of the divorce when the financial settlement is being dealt with. Now, this can be a really valuable asset. All pensions are a valuable asset to share on divorce, so don't forget about additional State Pension.

Sarah Pennells: Well, Clare, would Karen's mum be able to pay voluntary National Insurance contributions or is it too late for that because she's already taking her State Pension?

Clare Moffat: No, she can get hold of her National Insurance record and, as we described earlier, if she's got any gaps then she might be able to pay voluntary National Insurance contributions. So as she was born after April 5th 1953 she'd actually be entitled to go back until 2006, remember that option is only available until April 2023 though. After April she would only be able to go back a maximum of six years.

Sarah Pennells: Now, it is also worth saying that if Karen's mum's weekly income is below £182.60 a week, and that's from the State Pension and any private pensions that she may have, she may be able to claim a benefit called pension credit, which was mentioned very briefly earlier on. Now, this is a means tested benefit for people who are of State Pension age or older and it can be worth around £3,300 a year. Now, the pension credit itself isn't worth that much but it's what's called a gateway benefit and it means you're then eligible for other help such as with housing costs, if you're over 75 you get a free TV license and so on. So, it's definitely worth looking into, and again you can do that online on the gov.uk website. Now, we had several questions about your State Pension if you're abroad, so we had one from Gary, Vanessa and Andrew. So, I think we'll look at this one, which was one-, someone who said she has seven years of State Pension from working in countries in the European Economic Area and eleven from working in the UK, and she has twelve years to go before she retires. Now, she says, 'I know I have reached the ten minimum years for the new UK State Pension but is there a way to pay missing years to reach the full 35 for the UK?' So this is what we've just been discussing about-, well you have anyway, about buying voluntary National Insurance contributions, but as you said it's not always the case that paying for voluntary National Insurance contributions will benefit you.

So it definitely is worth checking with the Future Pensions Centre before you do that. Now, we had another question, Clare, about the State Pension abroad which is from Roman, who wants to know about the State Pension-, the UK State Pension being paid in EU countries. What's the situation there?

Clare Moffat: So you can choose to be paid your State Pension into a bank account in any country that you want it to be paid, but your State Pension will only increase each year if you live in the European economic area, so the EU plus another few countries, Gibraltar, Switzerland, and countries that have a social security tax agreement with the UK. So an example of a country with a tax agreement is the United States, so you will get your State Pension increase if you live there. Now, there is no agreement with Australia though, so if you live in Australia you won't get an increase to your State Pension. Now, confusingly there is a tax agreement with Canada and New Zealand, but you won't get an increase there. So I think that highlights that it's worth checking what would happen if you're thinking of retiring abroad and, you know, which country you're thinking of retiring to. Now, if you did move back to the UK though then it would go back to the current rate, so with those increases.

Sarah Pennells: Okay, well thanks very much Clare. So I think we've got some time for some questions, and I know some questions have been coming in although I can't see them as I'm talking to you via my phone. So, Clare, do you want to pick the first question?

Clare Moffat: Yes, I'll-, they're on my phone as well so I'll have a look. So the top question we have in popularity is from Ian and he says, 'How do I find out how many years of National Insurance contributions I've made and if they're sufficient to qualify for the basic State Pension?'

Sarah Pennells: So I don't know whether just to kick off with that, so we mentioned obviously getting your State Pension forecast earlier on, and that's definitely a really good starting point. Because that will tell you whether you are entitled or on track to get the full State Pension because it will tell you what you've built up so far and what you're going to be entitled to or likely to be entitled to or likely to be entitled to once you reach State Pension age. Now, it does make certain assumptions such as normally that, you know, you're carrying on paying National Insurance or being credited with it. But I think it's also really important as well to get your National Insurance record, which I know Clare talked you through a moment ago, because that will actually show you as well whether there are any gaps, and specifically whether you could go back and make up those gaps. Clare, anything else that Ian should think about?

Clare Moffat: No, I think that is probably most things, isn't it? I mean, Ian, sort of, mentioned the basic State Pension but if he's not retired then he'll be on, you know, the new State Pension as we mentioned earlier. But I think, you know, it's always worth finding out whether actually, you know, making voluntary contributions is going to be worth it or not.

Sarah Pennells: Yep, so-,

Clare Moffat: Okay, so the next question is from Karen. So, 'Why is it that you might not get full State Pension when you've got more than 35 years of National Insurance contributions?' Now, I think we've got a few questions that are like this as well, and someone else is mentioning what happens, what's the effect of contracting out, someone mentions a specific scheme. So, just again to, kind of, to summarise that, Sarah, do you want to deal with this or?

Sarah Pennells: Yeah, so as, as you explained when we-, a bit earlier on in the webinar, if you were-, I think the thing that's confusing about being contracted out is that it's not a personal decision because it depends on the scheme you were in and is-, I know you mentioned it's mainly the public sector schemes that were contracted out but it could have been a private sector scheme as well up to a certain point. But you didn't actually as an individual make a decision to contract out, although you would have benefited from paying a lower rate of National Insurance, as would your employer. So I think this bit can come as a bit of a surprise because, you know, if you get your State Pension and you're under the new State Pension system it, kind of, looks like you're not getting full amount but it's just, as we explained earlier on, that you're getting that from your-, basically from the pension scheme that you were contracted out of. So that could be why it looks like you're not going to get the full State Pension, it's just you're not getting the full amount from the state. But as you I know explained, Clare, maybe it just worth, sort of, reiterating, you can make up those gaps.

Clare Moffat: Yep. Malcolm asks, 'How soon before my 66th birthday should I apply?' Guidance is vague and he's heard that it can take months to process it. Now, Sarah, you mentioned about that DWP will send you a letter out a couple of months before your birthday. I suppose the problem is that not everybody lives in the house that, you know-, records aren't always complete and that's why people might wonder, 'It's my birthday today, I've not received my State Pension,' kind of, 'What's, what's happening?'

Sarah Pennells: Yeah, and there were some issues I know at the start of the year with some people have delays to getting their State Pension. So, as I said, the DWP should contact you a few months before you reach State Pension age and if it hasn't contacted you two months from when you reach State Pension age it's definitely worth getting in touch with them because, you know, people obviously wait for their State Pensions. The last thing I think especially in the current cost of living climate people want is to-, is to have that delayed. If they've decided they want to take their State Pension when they can, which obviously many people do, then you don't really want to be waiting for that payment. So I would say it's, you know, if you're a couple of months away and you've not heard from the DWP then do get in touch with them. And then they can tell you how you can claim the State Pension and fingers crossed there won't be any delays to your payment.

Clare Moffat: There's also been a few questions about saying can you get the State Pension earlier than your State Pension age?

Sarah Pennells: Yes, I mean, the short answer to that is no. It is actually something that has been discussed I think off the back of the State Pension age for women rising from, well, as was initially planned from 60 to 65 between 2010 and 2020, and then that was actually brought forward because of the State Pension age rise in both men and women to 66. And there have been various reviews into not just how much the State Pension age rises by in the future but actually whether the system itself needs to be changed in more subtle ways, and one of the proposals that was made a few years ago, I think possibly back in 2017, was that women could elect-, well women and men, sorry, could elect to maybe get a lower amount of State Pension before State Pension age but that was never taken forward. As I mentioned earlier on, we do have another review that's into the State Pension age now and we should get the results of that before next May, so there may be something in there to allow people to take a state-, a lower State Pension early but I don't know that's on the cards. I don't know, Clare, whether you've heard anything?

Clare Moffat: No.

Sarah Pennells: It's certainly nothing people can do at the moment.

Clare Moffat: Same as you, kind of, there's been rumblings about this for, for quite a few years and it does feel like you could have people who maybe are-, have ill health and things like that and they would want to receive it earlier than, than other people. But, yeah, I think we'll wait and see what's in the review that comes out but I think, you know, as you quite rightly said the answer is, no, your State Pension happens at your, your State Pension age. That's the current law. I think quite a few questions about topping up contributions, kind of, when's the right time to do it, and I think just to reiterate, if you do need more than 6 years of contributions and, you know, you satisfy those age criteria, so 1951 for a man, 1953 for a woman, then you've only got until April 2023 to get more than 6 years worth of contributions. So check what your gap is, check whether you'd still be working long enough to maybe you don't need to top up the contributions, because if you're working for another fifteen years then you might be able to fill that gap. So investigate that but do that sooner rather than later, because if you do need to top up more than six years then now is the time to do it.

Sarah Pennells: And I think it is also worth saying, I mean, you mentioned that you may not need to pay for voluntary National Insurance if you're still working and you'll-, essentially you'll be paying them anyway because you're employed or self-employed, but I mentioned pension credit when referring to Karen's mum's situation but also, you know, there is no point frankly in buying extra national-, voluntary National Insurance contributions if that just means you're going to mean you're not eligible for a benefit, core pension credit. So that's also worth looking at and I think that's why it's such a good idea to try and ring the Future Pension Centre because that's what they will-, you know, they will tell you whether it's something that you can benefit from. And I did actually ring them the other day just to check that you can get through on the phone number, and certainly when I tried you can. So we gave you the number in the webinar so that's definitely worth looking up.

Clare Moffat: Okay. So, I think-, I think that, kind of, generally, I think there's quite a theme, a general theme, and I think we've probably covered most of the questions during the session or when we've just spoken about them now. As I said, most of them are, kind of, related to contracting out and topping, topping up. So, yes.

Sarah Pennells: Okay, fantastic. Well, thanks very much for all the questions and thanks to you Clare also for stepping in when my computer decided to go on strike. But before we go I think there's just one final poll we'd like to do. So the question for this last poll is will this webinar encourage you to do something about finding out about your own National Insurance record? So, I can't see what people are voting so, Clare, you're going to have to fill us in here.

Clare Moffat: Yes, okay. So just wait and let people put their votes in. Really high number, definitely, sitting about 94, 92 just now. Some people might be a good idea and 1% or 2% doubt that they will.

Sarah Pennells: Okay, well-,

Clare Moffat: So we'll just give it a minute or two to see if that settles down. Okay, so I think that's probably about us. So 88% said that they would definitely be finding out about their National Insurance record. 10% said that might be a good idea and about 3%, 2%, 3%, still moving a little bit, said that they would doubt it.

Sarah Pennells: Okay, well 88% is fantastic and I would have said, if my computer hadn't died, but I found it so useful getting my own National Insurance record so I'd really-,

Clare Moffat: I said that for you, Sarah, so-,

Sarah Pennells: Brilliant. Well, it is, it's just such a good thing to do so brilliant that almost nine out of ten people say that they'll get their National Insurance record. So thanks very much indeed for listening and to everybody who submitted a question either in advance of this webinar or whilst we've been doing it, and I'm sorry that we haven't been able to answer all of your questions but we will read them all and we will maybe try and incorporate some of them into, kind of, future articles or future webinars. We will get back in touch with you by email in the coming days and we'll send you a link to the recording of the webinar, and of course we'll be doing more webinars next year. So until then, thanks very much for joining us.