On point paper:
Would you credit it – making the most of the National Insurance credits that can protect your state pension

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Entitlement to National Insurance (NI) benefits such as the state pension and bereavement benefits is generally based on a record of paying National Insurance contributions. In most cases, those who earn above a certain amount through employment or self-employment and are under state pension age have a legal duty to pay NI Contributions, and these help to build entitlement to benefit.

However, there are many situations in which people may not pay NI contributions in a given year for a variety of reasons including sickness, caring for a child or someone with a disability etc. It means that some people are contributing to society but not adding to their record of NI contributions which in turn means that they could lose out in retirement and on other NI benefits.

This paper highlights the different NI credits, and particularly those where there is a problem of entitled people not taking them up.

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Key findings include:

  • Claims for some credits can be backdated for many years; one credit (sometimes nicknamed ‘grandparents credits’) can be backdated nearly a decade, whilst another (for military spouses) can be claimed all the way back to the mid 1970s;
  • Some people can miss out on credits because the ‘wrong’ person claims the qualifying benefit. There is a particular problem with child benefit where it may be a mistake for the higher earner in a couple to be the main recipient of the benefit;
  • Those caring for disabled people do not have to be in receipt of a carers benefit to be entitled to carers credit; those doing 20 hours per week or more of caring can also qualify in certain circumstances;
  • One year of National Insurance contributions can easily turn into £5,000 or more in state pension over the course of a typical retirement. For those who would otherwise be short of a full state pension, it is therefore vital that they claim any NI credits to which they may be entitled;
  • The Government should to do more to publicise these credits and raise awareness of them, including using its own records where appropriate to notify people of their potential entitlement.
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