Basic State Pension

How do I build up entitlement to the basic State Pension?

If you are in paid work and you earn more than £91 any week (for 2004/05), you will pay National Insurance contributions for that week. This figure is called the ‘primary threshold’, and you only pay National Insurance contributions if you earn more than that amount. If you work for an employer, they take your National Insurance contributions out of your pay as well as making payments for you. If you are self-employed, you pay National Insurance contributions yourself. Each tax year that you have paid (or are treated as having paid or are credited with) enough National Insurance is called a ‘qualifying year’. Generally speaking, the more qualifying years you have, the more basic State Pension you will get when you reach State Pension age.

In 2004/05, a person needs to have earnings of at least £4,108 (on which standard rate National Insurance contributions are paid, or are treated as having been paid or are credited) for that year to be a qualifying year.

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 that you will continue to build up entitlement to contributory benefits such as the basic State Pension, even though you are not paying standard rate National Insurance contributions.

If you earn less than the lower earnings limit, you do not pay National Insurance contributions. However, you may still be able to protect your entitlement to the basic State Pension if you get certain benefits (click here for an explanation) or if you are a carer who gets Home Responsibilities Protection. We explain how Home Responsibilities Protection works below.

Once you start getting your basic State Pension, it is reviewed once a year and, when necessary, increased at least by the level of inflation. The increase takes effect in April each year.

How much basic State Pension will I get?

The tax years during which you build up entitlement to the basic State Pension are called ‘qualifying years’. 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. In 2004/05, the full pension is £79.60 a week for a single person. If you are a woman who 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 a woman needs to get the full basic State Pension will increase to 44. Years when a woman has chosen to pay the married woman’s reduced rate of National Insurance do not count towards qualifying years.

Some people do not get a full basic State Pension because they do not have enough of the qualifying years needed for a full basic State Pension. If you retire with less than a quarter (25%) of the qualifying years for a full State Pension, you won’t get any basic State Pension. You will also not be entitled to any refund of your National Insurance contributions, because contributions cover other areas of insurance (for example, sickness and unemployment) as well as the State Pension.

People who do not qualify for the full basic State Pension, but who have more than 25% of the qualifying years, will get a basic State Pension between the minimum (£19.90 for men or £20.41 a week for women in 2004/05) and the maximum (£79.60 a week in 2004/05).

If you want to know more about the basic State Pension, please see A guide to State Pensions (NP46). For more information on pensions for women, please see Pensions for women – Your guide (PM6). Click here for details about how you can get copies of these guides.

I have not always worked and paid National Insurance contributions – can I still get a basic State Pension?

There are special rules to help protect entitlement to the basic State Pension for people who have not paid, or been treated as having paid, National Insurance contributions throughout their working life. If you have been receiving certain social security benefits, for example Carer’s Allowance (called Invalid Care Allowance before April 2003), Jobseeker’s Allowance or Incapacity Benefit, we will have credited you with National Insurance contributions.

If you have been out of paid work, or you have not paid enough National Insurance contributions while looking after children and receiving Child Benefit, or while looking after a person with a long-term illness or disability, or while registered as a foster carer, we can take account of the years you spent caring if you were caring for a full tax year. This is called Home Responsibilities Protection, and both men and women can claim it. It can reduce the number of qualifying years you need to earn a full basic State Pension. However, for a full basic State Pension, Home Responsibilities Protection cannot reduce the number of qualifying years below 20. This will increase to 22 years for men from 6 April 2010, and from 6 April 2020, when State Pension age will be 65 for both men and women, Home Responsibilities Protection will not reduce the number of qualifying years needed for a full State Pension below 22 for men or women.

Only the person who has claimed and been awarded Child Benefit can get Home Responsibilities Protection for caring for a child. If you are the person who has been awarded Child Benefit, your name will be the first name on the order book or shown at the top of any letter from the Child Benefit Office. Click here for details about how you can change the person who has been awarded Child Benefit if you think you need to. You need to remember that someone has to be the person who has been awarded Child Benefit for a full tax year (from 6 April to 5 April) to qualify for Home Responsibilities Protection, so you should think carefully about when to change the name of the person who has been awarded Child Benefit.

For more information, see State pensions for carers and parents – Your guide (PM9). Click here for details about how you can get a copy of this guide.

If you are a married woman and you have not got enough National Insurance contributions to earn a basic State Pension of your own, we can use your husband’s contribution record instead when we work out your basic State Pension (as long as he has reached State Pension age and has claimed his State Pension). This State Pension will be around 60% of the rate of basic State Pension to which your husband is entitled. You do not have to be living with your husband to get this basic State Pension.

At the moment, a married man cannot get a basic State Pension on his wife’s National Insurance contributions record. However, this will change from 2010.

If you want to know more about state pensions for women, please see A guide to State Pensions (NP46) and Pensions for women – Your guide (PM6). Click here for details about how you can get copies of these guides.