Building up sufficient qualifying years before you reach state pension age will entitle you to receive a basic state pension. Qualifying years for the basic state pension are based on the amount of National Insurance Contributions paid during a year, which runs from 6th April one year to 5th April the next year.
The number of qualifying years required for a basic state pension will depend on your gender, your state pension age and the date when you reach state pension age.
If a male who has a state retirement age of 65 reaches this age before 6th April 2010, 44 qualifying years are required to receive full basic state pension. A female who has a state retirement age of 60 and reaches this age before 6th April 2010, will need 39 qualifying years. The full basic state pension for 2011-12 is £102.15 a week. This amount will be reduced if you don’t have sufficient qualifying years. Self employed individuals pay Class 2 National Insurance Contributions to build up sufficient qualifying years for a basic state pension. Not paying Class 2 National Insurance Contributions may affect your future entitlement to state benefits, including the state pension.
Class 2 NICs are payable weekly, monthly or annually by direct debit or a quarterly bill. If you are self employed and your earnings fall below £5072 per year, you may apply for exemption from paying Class 2 NICs. However, this will also make you exempt from any state benefits while you aren’t paying contributions, including basic state pension.
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