How is entitlement normally built up?

The years during which you build up your entitlement to the basic State Pension are called ‘qualifying years’. If you are in paid work and you earn more than £91 a week (for 2004/05), you will pay standard rate National Insurance contributions for that week. This figure is called the ‘primary threshold’. Your employer takes these contributions out of your pay. If you are self-employed, you pay National Insurance contributions yourself.

In 2004/05, a person needs to have earnings of at least £4,108 (on which standard rate National Insurance contributions are paid, are treated as having been paid or are credited) to build up entitlement to a State Pension.

For each week that you earn between £79 (the lower earnings limit) and £91 (the primary threshold) in 2004/05, you will be treated as paying National Insurance contributions even though you do not have any contributions taken out of your pay. This means you will continue to build up entitlement to contributory benefits even though you are not paying National Insurance contributions.

The amount of State Pension you get will depend on the number of qualifying years you have built up before reaching State Pension age. If you are a man, you normally need to have 44 qualifying years to be entitled to the full (100%) basic State Pension. If you are a woman and will reach the age of 60 before 2010, you normally need 39 qualifying years to get the full basic State Pension. However, when the State Pension age becomes 65 for women as well as men in 2020, the number of qualifying years that a woman needs to get the full State Pension will increase to 44 years. You will not build up qualifying years if you are a married woman or widow and have chosen to pay reduced rate National Insurance contributions.

There are three ways to build up entitlement to the basic State Pension if you are not working – through National Insurance credits, Home Responsibilities Protection or voluntary National Insurance contributions (for more information, see Voluntary National Insurance contributions (CA08)). See the directory for details about how you can get a copy of this guide.

When you are not able to work, you may be given a National Insurance credit to help you build up entitlement to the basic State Pension. This could be because you are ill, or you are unemployed and registered as looking for work. You may get credits with certain benefits – for example, Jobseeker’s Allowance, Incapacity Benefit, Carer’s Allowance and Working Tax Credit – or if you are a man aged between 60 and 64 and do not have to pay National Insurance contributions. If you are getting a National Insurance credit, your basic State Pension is being protected automatically.

These credits are put into your National Insurance account and count towards a qualifying year for basic State Pension in the same way as a National Insurance contribution. There will be certain conditions you need to fulfil before you can get a credit, and these will depend on the reason you are not able to work.

Even if you are not getting National Insurance credits, you can protect your basic State Pension when you are not in paid work or your earnings are low (below £4,108 in 2004/05) and you are caring for a child or someone who has a long-term illness or disability. By ‘protect’ we mean that, in certain circumstances, we can take account of years when you were not in paid employment or your earnings were low when we work out your basic State Pension entitlement. This is called Home Responsibilities Protection. The section starting on page 26 of this leaflet describes how you can get this protection.