FOR many people, the state pension is a crucial part of their retirement income.

Currently worth £221.20 a week, it adds up to a whopping £11,502.40 a year, and is set to rise significantly next year.

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The Pensions and Lifetime Savings Association says that singletons need £14,400 a year for a basic retirement, which means that the full state pension gets you 80% of the way there.

For a couple, it says that a basic retirement will costs £22,400, so if both partners get the full state pension then they will have already achieved that goal.

For a moderate retirement, it says that singles need £31,300 per annum and couples need £43,100.

If that’s your goal, then the state pension makes up 37% or 53% of what’s required.

And it’s still a significant chunk of what the PLSA calls a comfortable retirement, which it says costs £41,300 for singles and £59,000 for couples.

The state pension works out as 28% or 39% of that target respectively, if you get the full amount.

Every man born after April 6, 1951 and every woman born after April 6, 1953 can claim the state pension once they reach state pension age.

But to get the full state pension, you need 35 qualifying years on your national insurance record and to get anything at all you need at least ten.

Simple mistakes can mean that you don’t get everything you’re entitled to, which could leave you in financial trouble later.

Here are the most common errors to avoid:

Not claiming child benefit

If you’re responsible for a child who is under 16 (or under 20 and in approved education), you can get child benefit.

This is a sum of money that’s designed to help you with the costs of raising your family.

But another key benefit is that it also gives you National Insurance Credits.

That means that a stay-at-home parent can still build up their state pension entitlement, and could get up to 12 years’ worth of credits.

It also provides a boost for part-time working parents who do not earn enough to pay NICs.

One thing that often puts people off from claiming is the high-income child benefit charge, which essentially means if either partner earns over £50,000 you have to complete a tax return and start paying some of the child benefit payments back.

Over £60,000 and the higher earner has to pay the whole lot back.

However, you can make a claim to get the NI credits, and simply choose not to receive the payments, which avoids those problems.

You’ll get National Insurance credits automatically if you claim Child Benefit and your child is under 12.

If you do not need the National Insurance credits, you could transfer them to your husband, wife or partner.

Alternatively, you could apply for Specified Adult Childcare credits for a different family member who provides care for your child.

Not claiming other benefits

There are lots of other benefits that automatically give you NI credits.

That’s why it’s important to claim anything you might be entitled to.

These include:

• Jobseeker’s Allowance
• Employment and Support Allowance
• Unemployability Supplement
• Maternity allowance
• Carer’s Allowance
• Income Support
• Carer Support Payment (Scotland only)
• Working Tax Credit
• Universal Credit

Failing to claim NI credits on some benefits

There are some benefits or situations where you are entitled to NI credits if you need them, but these aren’t given automatically, and you need to apply.

Failure to do this could mean expensive gaps on your record.

These include:

• If you’re unemployed and looking for work, but not on Jobseeker’s Allowance, you can contact your local Jobcentre to claim Class 1 credits
• If you’re on Statutory Sick Pay and you do not earn enough to make a qualifying year.
• If you’re on Statutory Maternity, Paternity or Adoption Pay, or Additional Statutory Paternity Pay, and you do not earn enough to make a qualifying year.
• If you’re a foster carer, or a kinship carer in Scotland
• If you’re caring for one or more sick or disabled person for at least 20 hours a week
• If you’re over 18 and on a government-approved training course that lasts no longer than 1 year but you were not sent by Jobcentre Plus
• If you’re on Jury Service and you’re not self-employed
• If you’re married to or a civil partner of a member of the armed forces, went with your partner on an overseas posting after 6 April 2010, and are returning to the UK
• If you’re married to or a civil partner of a member of the armed forces, went with your partner on an overseas posting after 6 April 1975, reach state pension age on or after 6 April 2016, and are not getting Class 1 credits
• If you were wrongly imprisoned and your conviction was quashed by the Court of Appeal (or the Court of Criminal Appeal in Scotland) 

If you’re on Working Tax Credit, you might get credits automatically, but you need to check your record to make sure you’ve received them.

In most cases where you need to claim, you need to write to PT Operations North East England, HM Revenue and Customs, BX9 1AN, United Kingdom.

You should include your National Insurance number and say when the credits are for and why you’re eligible.

Not filling gaps in your record

If you’ve applied for all the credits you’re entitled to and your record is still not full, you can make voluntary payments to fill the gaps.

You might have missing years if you were:

• employed but had low earnings
• unemployed and were not claiming benefits
• self-employed but did not pay contributions because of small profits
• living or working outside the UK

However, you should only do this if you are unlikely to have enough years by the time you reach state pension age.

Otherwise, you’ll end up paying for more years than you need, with no extra benefit.

If you’re below State Pension age, you can check your State Pension forecast to find out if you’ll benefit from paying voluntary contributions and how much they will cost.

A gap of one year is typically worth 1/35 of the full pension rate. 

At this year’s rates, that’s £6.32 per week, £328 per year, or a little over £6,500 across twenty-year for every one year gap that you fill. 

You should check for gaps now, because the rules on how many years you can fill change from April 6.

Currently, you can go back to 2006, but after then you will only
be able to pay for the previous six years.

State pension errors

A series of government mistakes have meant that hundreds of thousands of people have been paid less state pension than they should have been.

Women have been hardest hit, but anyone can be impacted.
The main categories include:

• People who took time off work because of caring responsibilities between 1978 and 2010
• Women who reached state pension age before 2016
• Women who divorced their partners after state pension age
• Widows whose husbands died after March 17, 2008
• Anyone aged over-60
• Heirs and widows of people in the categories above
• Anyone who is getting less than £93 a week in state pension

You can find out more, including how to correct the errors and get a refund in our guide.

Do you have a money problem that needs sorting? Get in touch by emailing [email protected].

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