Age UK factsheet 19 April 2024
State Pension Page 21 of 28
12 National insurance contributions and credits
This section explains the types of National Insurance contributions and
credits you can use towards new and old State Pension entitlement.
12.1 Checking your NI record
Check for gaps in your NI record by requesting a statement from HMRC.
You can do this online at www.gov.uk/check-national-insurance-record or
call the helpline on 0300 200 3500. Request a State Pension forecast for
an estimate of how much you will get when you claim. See section 3.1
for more information.
12.2 NI contributions in work
Employees between 16 years of age and State Pension age pay NI
contributions depending on the level of their earnings. If you are an
employee with earnings of £123 a week or more (the level of the Lower
Earnings Limit in 2024/25), you build up qualifying years that count
towards entitlement to State Pension.
You do not start to pay NI contributions until your earnings reach £242 a
week. If you earn between £123 and £242, you are treated as though
you pay NI contributions and build up qualifying years that count towards
entitlement to the State Pension and other contributory benefits.
When this factsheet refers to people who have ‘paid’ NI contributions,
this includes people with earnings between £123 and £242 a week who
do not actually pay NI but are treated as having paid NI contributions.
Employees pay Class 1 NI contributions as a percentage of earnings,
and these are collected with Income Tax. Employers also pay NI
contributions. If you have insufficient NI contributions for a full State
Pension but have not reached State Pension Age, you may be able to
increase your State Pension by working and paying NI contributions.
Contracting out
A deduction is made from your State Pension if you were in a ‘contracted
out’ personal or workplace pension scheme – for example, a member of
a public-sector pension. This means you paid lower rate NI contributions
into a contracted-out pension, or because some NI contributions were
paid into your private pension rather than going towards Additional State
Pension. It was not possible to contract out of the basic State Pension.
You could you only contract out of Additional State Pension if you earnt
more than the Lower Earnings Limit and paid standard-rate Class 1 NI
contributions. Check if you were contracted out by looking at old
payslips. If the NI contributions line has the letter D, E, L N or O next to
it, you were contracted out. You were not contracted out if it has a letter
A. If there is a different letter or you are unsure, check with your
employer or pension provider.