Help with your pension
If you have given up work to care for someone, your State Pension may not be your first concern. However, if your working life is interrupted because your paid job ends it can have a devastating impact on your State Pension longer term.
This information applies to people living in England, Wales, Scotland & Northern Ireland.
Many people are shocked to find out that not everybody automatically qualifies for a full basic State Pension on reaching retirement age. The amount of State Pension you get usually depends on how many qualifying years of National Insurance (NI) you have built up. If you miss paying these because you have taken time out of paid work, then you may lose out.
The good news is that if your employment ends because you are caring for someone who is disabled, ill or frail then the state will credit your NI contributions for you. However, this isn't automatic and only happens if you claim the right benefits and take the right action.
The new State Pension was introduced on 6th April 2016, and anyone who reaches state pension age after this date will claim the new State Pension. Anyone who reached state pension age before 6th April 2016 (including those who have deferred claiming their pension) will stay on the ‘old system’ i.e. they will keep the State Pension they already have. No-one will be transferred on to the new State Pension. Your State Pension will still be uprated each year in the same way as now.
How carers qualify for a State Pension
How much State Pension might I get?
There are now two set of rules for working out how much State Pension you will be entitled to.
Anyone reaching State Pension age on or after 6th April 2016 will qualify for the new State Pension, sometimes called the ‘flat rate pension’. So women born on or after 6th April 1953 and men born on or after 6th April 1951 will get the new State Pension.
The new State Pension has been set at a maximum of £155.65 a week (2016/17 rate).
When you claim your State Pension the government will carry out two calculations to work out how much pension you will get.
- firstly they will work out how much State Pension you would have got under the 'old rules', based on your National Insurance (NI) contributions and NI credits before 6th April 2016 - this is called the ‘starting amount’
- secondly they will work out how much State Pension you would have got had the new State Pension rules been in place since the start of your working life
You will get the higher of the two amounts, even if it is higher than the maximum of £155.65 a week.
If your ‘starting amount’ is lower than the maximum amount of the new State Pension, and you are still paying NI contributions or getting NI credits, then your contributions can be combined, but only up to the maximum amount of the new State Pension.
What were the 'old rules' for qualifying for a State Pension?
People reaching state pension age before 6th April 2016 (both women and men) needed 30 qualifying years of NI contributions or NI credits to receive the full basic State Pension. Those with less than 30 qualifying years get a proportionate amount.
Many people receive more that the basic State Pension, because the 'old rules' included an Additional State Pension (previously known as SERPS or the Second State Pension). It is paid to people who have paid over a certain level of NI contributions per year, or who have received the right benefits, or who have had their contributions paid for them.
What are the 'new rules' for qualifying for a State Pension?
To get the maximum amount of £155.65 a week you must have paid NI contributions or had NI credits for 35 years. Anyone with less than 10 years will get nothing. Those with between 10 and 34 years of NI contributions or NI credits will get a proportionate amount of the maximum new State Pension.
Unlike under the 'old rules' the new State Pension does not have any additional amounts.
How much NI do I need to have paid each year for it to count towards my State Pension?
In each tax year there is a minimum amount or ‘lower earnings limit’ that you have to be earning in order to make the right amount of NI contributions. The lower earnings limit is £112 a week (2016/17 rate), so for a whole tax year this is £112 x 52 weeks = £5,824. If you have earned at least the required amount in any year, that year will usually be a qualifying year and will count towards the total qualifying years needed.
What if carers don’t pay NI because they are not earning?
Certain people are ‘credited’ with NI contributions. This means that a contribution is put on their record equal to the lower earnings limit in each week that they fulfil certain conditions or receive certain benefits, including:
- Carer’s Allowance
- Jobseekers Allowance
- Employment and Support Allowance
This means if you get one of these benefits you do not need to take any action to protect your pension. It is done automatically.
What happens if you have not been in receipt of earnings or benefits?
Most carers in this situation can claim something called Carer's Credit. This will protect your right to a State Pension even if you are not working or claiming benefits. See the Carer's Credit section for further information.
Warning signs that you may have gaps in your NI record
- if you have had breaks in paid employment that are not totally covered by benefits
- if you have spent time caring without realising you were entitled to benefits
- if you have had periods on low level earnings i.e. paid below the level at which you pay NI contributions
Five steps to maximise your State Pension
Step 1: make sure you receive all the relevant benefits you are entitled to - contact the Carers UK Adviceline for a benefit check
Step 2: if you are not paying NI contributions through employment, and are not receiving benefits which will give you NI credits, check whether you can claim Carer's Credit (see the Carer's Credit section for further information)
Step 4: ask for a State Pension forecast either online, by contacting the Future Pension Centre on 0345 3000 168 (textphone: 0345 3000 169) or by writing to the Future Pension Centre (you can download the form and see the address here)
Step 5: look into what else you could be doing for your State Pension - contact the Pensions Advisory Service for impartial adviceback to top
Carer's Credit is a way of protecting pension rights for people who are caring for someone but are not paying National Insurance (NI) contributions through paid work and are unable to claim Carer's Allowance. If you already get Carer's Allowance then you do not need to claim Carer's Credit as your pension is already protected.
You could benefit from Carer's Credit if you are in one of these situations:
- you care for one or more people for 20 hours or more a week but miss out on Carer's Allowance because you don't care for any one of them for 35 hours or more a week
- where there is more than one of you caring for someone, and someone else is getting the Carer's Allowance for that person
- you care for someone who can't or refuses to claim disability benefits, or if the disability benefits of the person you are caring for have stopped due to them being in hospital or residential care
- you are within 12 weeks of claiming Carer's Allowance and/or within 12 weeks of your claim for Carer's Allowance stopping
Who is eligible for Carer's Credit?
To claim Carer’s Credit you need to be looking after someone for a total of 20 hours or more a week (although see below for the rules on breaks in care). The person you are looking after must normally be getting one of the following:
- the middle or the higher rate of the care component of Disability Living Allowance (DLA)
- the daily living component of Personal Independence Payment (PIP) (at either rate)
- Attendance Allowance (at either rate) or Constant Attendance Allowance
- Armed Forces Independence Payment (AFIP)
If the person you’re caring for doesn’t get one of these benefits, you may still be able to get Carer’s Credit. When you apply, fill in the Care Certificate part of the application form and get a health or social care professional to sign it.
Carer’s Credit can also help with breaks in your caring role. You can claim Carer’s Credit for any week within 12 weeks before the date you become entitled to Carer’s Allowance or following the week you stop being entitled to Carer’s Allowance. This is without meeting the 20 hour condition. This means you could have a break in caring for up to 12 weeks without losing your NI contribution credit.
Sue cares for her brother Alfred. Alfred receives Attendance Allowance and Sue claims Carer’s Allowance for looking after him. Alfred goes into hospital and his Attendance Allowance stops after 28 days. This means that Sue’s Carer’s Allowance will also stop after 28 days. Sue can claim Carer’s Credit for up to 12 weeks after her Carer’s Allowance stops.
How do I claim Carer's Credit?
In England, Wales and Scotland you can download a claim form online or you can contact the Carers Allowance Unit on 0345 608 4321 (textphone: 0345 604 5312) and ask them to send you a claim form .
In Northern Ireland you can download a claim form online or you can contact the Disability and Carers Service on 0300 123 3356 (textphone: 028 9031 1092) and ask them to send you a claim form.
Your Carer's Credit application must normally be received before the end of the tax year following the tax year to which the credits relate, although this time limit can sometimes be extended if it is considered reasonable.back to top