The little known tricks that can boost your state pension by thousands

...and you don’t need to be retired to take advantage

AS the cost of retirement surges, getting as much as you can from the state pension is more vital than ever. A single person needs as much as £31,300 for a moderate retirement — up by £8,000 in one year alone, according to figures last week from industry body the Pensions And Lifetime Savings Association. the more of this that you can cover with the state pension, the less you have to save for yourself.

And after a lifetime of diligently paying National Insurance, it’s no wonder most people want to get their money’s worth. But fewer than half of the 12 million people who receive the state pension get the full rate of £203.85 per week, official figures show.

Follow Money Mail’s tips to maximise your state pension...

1. FIND OUT WHAT YOU WILL GET

the first step is to find out how much you can expect to receive from the state pension and when you can start claiming it. then, you can take action if it falls short.

Check your forecast by contacting the Government’s Future Pension Centre on 0800 731 0175 if you are below 66, or the Pension Service for those above pension age on 0800 731 7898. You can also access your forecast online at gov.uk/check-state-pension.

there are two types of state pension: the ‘basic’ pension paid to people who reached state pension age before April 6, 2016, and the ‘new flat rate’ pension paid to those after that date.

Anyone on the ‘ basic’ pension needed 30 years of National Insurance (NI) contributions to qualify for the full £156.20 a week. those on the ‘ new’ state pension need 35 years of contributions to get the full ‘flat rate’ amount — £203.85 a week. these rates will rise by 8.5 pc in April, to £169 and £221.20 respectively.

If you have not paid NI for enough years, you will get less than this. however, once you know what you are missing, you may be able to act to top up your NI record.

Beware, though, that not everyone can achieve a full state pension — even if you paid NI for more years than required.

those who were ‘ contracted out’ of the state pension by their employers are likely to receive less. Millions of people have spent at least a year paying into a contracted out pension, which is meant to replace part of their state pension. those who were contracted out by their employer paid less in NI contributions for those years. Instead, the money went into their company pension.

So they receive a smaller sum from the state, but a larger sum from their workplace pensions. Overall, they should be no worse off, and some may be much better off thanks to the growth of their company pension plans over time. Contracting out ended in 2016.

2. START FILLING IN ANY GAPS

YOU may be able to fill any gaps in your National Insurance record that will prevent you from getting a full state pension.

You do this by ‘buying’ missing NI contributions at a flat rate. this is unlike the NI contributions employed workers make each month — known as Class 3 contributions — which are paid as a percentage of your income. It costs £15.85 to buy one week’s worth, or around £824.20 for a year’s worth between 2006 and 2016.

taxpayers have until April 2025 to make the top-ups, after which it will no longer be possible to make these historical additional payments beyond the past six years.

Steve Webb, a former pensions minister and now partner at consultancy LCP, says the offer is ‘incredibly generous’ and that the vast majority would be quids in after four years and thousands of pounds in profit. ‘If you find you have gaps, you should prioritise any between 2006 and 2016 before addressing recent years,’ he says.

Currently, £824.20 boosts your state pension by £303 a year. that’s worth at least £6,060 over a 20-year retirement.

this rate will be frozen next tax year. those who are self-employed usually pay the Class 2 NI rate. Buying a year’s worth costs just £163.80, but generates the same boost in the state pension.

If you have a partial year, for example where you worked for some of the year but didn’t pay enough NI to make it a qualifying year, then the price of filling that year will often be a lot cheaper than a year you missed entirely.

Before making any payments, speak to the Future Pension Centre if you haven’t reached pension age — or the Pension Service if you have — and get them to confirm which years you can fill and how much it would cost.

If you transfer the money without checking first and you miscalculate, you risk losing that money as HM Revenue & Customs will not always reimburse you.

3. PUSH BACK RETIREMENT

YOU can delay your state pension by a minimum of nine weeks and get more money when it begins.

Under the system in place since 2016, your weekly stipend rises by 1 pc for every nine weeks you defer, adding up to 5.8 pc for every year you push it back. Your state pension increases for every week you defer, as long as it’s for at least nine weeks after you have reached state pension age. this means those who stay in work until age 70 and defer their state pension by four years need far less saved up to achieve the same lifestyle.

4. CLAIM MISSING CREDITS

SOME gaps in your NI record can be covered by ‘credits’ — and are likely to be free to claim. For example, during periods of unemployment or years bringing up children you can build up credits without making NI contributions.

Some credits can be backdated for years, such as the so- called ‘grandparent credit’. this is where a parent receiving child benefit is paying NI and is able to work because another family member is looking after a child under 12.

this does not need to be full-time care but could include, for example, dropping off at school or cover during school holidays. however, there are limits on other credits, including those associated with child benefit which can only be backdated three months.

5. BEWARE OF ERRORS

MAKE sure that you are receiving all of the state pension you are due. the Department For Work And Pensions has been embroiled in a catalogue of errors and it has come to light in recent years that it has miscalculated millions of pensions. Last year, Labour Party analysis of official documents found that as many as one in ten pensioners was short-changed by an average of £400 each.

the errors largely apply to women. In one major mis-step, an estimated 210,000 mothers are missing out on up to £1.3 billion in state pension because credits for time spent at home looking after children or vulnerable people were not added to their NI records.

to check if you can make a claim, go to: tax.service.gov.uk/guidance/Check-if-you-are-eligible-to-apply-for-Home-Responsibilities-Protection

■ HAVE you topped up your state pension? If so, contact j.beard@ dailymail.co.uk