Maximising your State Pension and increasing retirement income


The rising cost of living is affecting most of us in some way, shape or form. One impacted group are those in retirement or approaching retirement, as retirees face many years of potentially lower or unknown levels of income.

Private pension income is crucial in supporting your goals in retirement, however, equally so is the State Pension.


How much State Pension will you receive?

Once you receive State Pension, it is a guaranteed income that increases annually, in line with the highest of either inflation (as measured by the Consumer Price Index), average earnings or 2.5% (known as the triple lock).

The maximum State Pension in the 2024/25 tax year will be £221.20 per week. Each individual must have 35 qualifying years of National Insurance Contributions to qualify for the full amount. However, many will fall short of the full State Pension and could be more financially vulnerable in retirement. Gaps in your National Insurance (NI) record will result in fewer qualifying years.


Why might there be gaps in your National Insurance record?

Life circumstances can lead to gaps in your NI record. These gaps may occur if you were:

  • Employed with low earnings
  • Unemployed without claiming benefits
  • Self-employed with minimal profits
  • Living or working outside the UK
  • ‘Contracted out’ of a pension scheme in the past


How to find out if you have National Insurance gaps?

First, review your NI record. This can be done online via the Government Gateway, by calling the Department of Work and Pensions, or by completing a BR19 form. This will highlight if you qualify now or are likely to qualify for the full State Pension by your State Pension Age by accruing enough years of National Insurance Contributions.

If you have gaps in your National Insurance record, you can explore National Insurance credits if you’re unable to work, unemployed, or a full-time caregiver.

Paying voluntary contributions can also fill gaps in your National Insurance record. This can ensure you have enough qualifying years for the full State Pension or other benefits.

Normally, it is only possible to make voluntary contributions for the past six years. However, there is an extension in place currently whereby eligible individuals can make voluntary contributions from 6 April 2006 to the present day.


Making voluntary contributions

Filling gaps in your National Insurance record is payable at the Voluntary Class 3 National Insurance rate in the 2022/23 tax year. This means that for every missing week for the year, the rate of voluntary contributions will be £15.85 per week. Some years will be partially full and this will be reduced accordingly, however, to fill a full year of National Insurance Contributions would cost £824.20.

Paying just one year could increase your State Pension by £275.08 per year. This means that in just under three years, you will “break-even” and make your money back.


Maximise your retirement income

The State Pension is guaranteed for life and is linked to inflation and as such, in many cases, it does make sense to maximise your state provision via voluntary contributions. However, this is not the only solution for those planning for retirement.

Private pensions and investments can also be used to increase your future retirement income; this involves strategic planning and understanding your options. With the introduction of auto-enrolment in 2012, many will have one or more workplace schemes that can be drawn upon in retirement. These can be used in conjunction with the State Pension to fund your retirement. Financial planning is crucial to understand what options are available to you and how sustainable or unsustainable your retirement goals are.

Retirement is a significant period of time and funding your retirement is an investment in your future wellbeing.

For advice and support, please get in touch with one of our specialists at Armstrong Watson to understand further what your retirement might look like. Call 0808 144 5575 or email  

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