State pension to increase to up to £10,600 this year – how to boost your sum | Personal Finance | Finance
The new state pension is currently £185.15, however, it will rise to £203.85 per week this year. It means those on a full new state pension can expect to receive roughly £10,600 per year to help with their costs.
Some may get less than the full new state pension if they were contracted out before April 6, 2016.
The old, basic state pension will rise from £141.85 per week to £156.20 per week.
It means an annual sum of £8,122.40 for those on the full basic state pension.
However, the ability to unlock a full state pension typically relies upon the National Insurance contributions a person has made throughout their working life.
READ MORE: Woman, 35, helps parents in saving £3,000
State pension top-ups
Former pensions minister Sir Steve Webb has pointed towards a Government scheme allowing people to fill historic gaps in their National Insurance record.
He states someone with 10 missing years could pay out a little over £8,000 to fix these gaps, resulting in a £55,000 boost over a typical 20 year retirement.
However, this is something only available for a limited time, as the scheme is set to end at the start of April.
Sir Steve remarked: “For many people, paying voluntary NI contributions can be great value for money and can help them boost their state pension in a cost-effective way.
READ MORE: ‘Turned £1,000 into £9’ – Savers lose billions as top Isa funds crash
“For people with gaps in their NI record going back more than six years, the window to fill those gaps will soon close.
“Some people have gaping holes in their NI record and this will be the last chance to fill them.
“Although topping up is not the right answer for everyone, and people should always check with DWP before handing over any money, for some people this could be by far the best rate of return they could get on any spare capital.
“Missing out could cost some workers thousands of pounds.”
Deferring the state pension
If a person wants to defer their state pension, they do not have to do anything as it will be done automatically.
For those on the new state pension, the sum increases by one percent for every nine weeks of deferral, working out as just under 5.8 percent for every 52 weeks.
The extra sum is paid out with one’s regular state pension payment.
For example, if a person gets the full state pension of £185.15 per week, by deferring for 52 weeks they would get an extra £10.70 a week.
Those on the basic state pension will see a deferral increase as long as this occurs for at least five weeks.
The basic state pension increases by one percent every five weeks – 10.4 percent for every 52 weeks.
These people can take their extra state pension as either a higher weekly payment, or a lump sum.
