Being a carer can make a significant difference to your state or personal pension, especially if you have to give up work to care.
Your National Insurance (NI) number is the number used to keep track of your NI contributions and your entitlement to benefits.
Your NI record, kept by Her Majesty's Revenue and Customs (HRMC), will determine your entitlement to many social security benefits.
- State Pension
- contribution-based Jobseeker's Allowance
- contribution-based Incapacity Benefit
- contributory Employment and Support Allowance
- bereavement benefits
To be entitled to one of these "contribution-based" benefits, you have to satisfy two contribution conditions (except for bereavement benefits).
The first contribution condition is that you have to have paid enough NI contributions in one or more past tax years (the tax year runs from April 6 to April 5 the following year).
The second contribution condition is that you have paid, are paying, or have been credited with enough NI contributions in the last two tax years before your claim for the benefit.
National Insurance contributions and credits
The NI record is built up from either actual contributions or contributions that are credited, or a combination of the two.
Contributions may be deductions from earnings while you are in paid employment. The deductions are made between the age of 16 and State Pension age if you earn more than a certain amount of money.
State Pension age is 65 for men. Between 2010 and 2020, the State Pension age for women will gradually rise from 60 to 65.
There are different classes of contribution depending on whether, for example, the contributions are made by the employee or employer, or by a person who is self-employed. Different classes of contribution give entitlement to different benefits.
In some circumstances you can be credited with earnings or "Class 1" contributions, which may help you satisfy the entitlement conditions for certain benefits.
If you are a carer receiving Carer's Allowance, you should be credited with Class 1 contributions for each week the benefit is paid. You may also be able to get credits if you're a carer but you're not eligible for Carer's Allowance - see Carer's Credit for more information.
You can also receive credits:
- for each complete week you receive Jobseeker's Allowance or you are available for work and actively seeking work - even if you are not entitled to Jobseeker's Allowance, signing on at a Jobcentre Plus office will help protect your contributions record
- for one or two complete tax years when you are on a course of full-time training, education or an apprenticeship
- for each week you receive either Statutory Maternity Pay or Statutory Adoption Pay
- for each week you receive the disability element or severe disability element of Working Tax Credit
Carers: protecting your pension
One in five carers is forced to give up employment so they can look after someone, and this causes gaps in their pension record. As a result, many carers struggle to make ends meet when they reach retirement age. This means that if you're a carer, protecting your pensions can be an important issue.
To receive a state retirement pension, you must have:
- paid enough NI contributions
- been credited with enough NI contributions, or
- a combination of the two
There are ways to ensure your pension is protected if you are a carer. These include NI credits or Carer's Credit. For example, for every week that Carer's Allowance is paid, you are credited with a NI contribution.
This helps people who are unable to work or have cut down their working hours as a result of caring. If you are not entitled to Carer's Allowance, you may be able to claim Carer's Credit instead.
You may also have a private or work pension, and may want to understand the range of pensions that exist and where to seek help if you're going to take a break from paying into a private or works pension.
Getting help with your pension
As a carer, your working years may be a combination of paid employment in full-time, part-time, well-paid or low-paid jobs.
There may be years when you haven't done any paid work or you've spent long periods in part-time or low-paid employment. You can still benefit from a private pension in addition to the State Pension.
There are many non-State Pension schemes on offer, and you may wish to consider them all before deciding whether you want to take out a personal or stakeholder pension. However, you can also get help making your decision from a financial adviser or specialist.
Financial Conduct Authority
All companies offering advice on pensions or other financial products must be registered by the Financial Conduct Authority (FCA). You can check if the person or company you're using is registered by calling the Money Advice Line on 0300 500 5000 or using the FCA online register.
The Pensions Advisory Service
The Pensions Advisory Service is an independent non-profit organisation that provides free information, advice and guidance on state, company, personal and stakeholder pension schemes.
The GOV.UK Pension Tracing Service can help you find a pension company you have lost track of, even if you don't have all the details.
For more information, see GOV.UK, the government's official online source of information on benefits and pensions.
Carer's Credit and gaps in your NI record
Carer's Credit is a NI contribution. It can help ensure carers do not lose out on some social security benefits, such as the State Pension, because of gaps in their NI record. It's available to people who look after someone for 20 or more hours a week and who do not get Carer's Allowance.
Carer's Credit can help protect your State Pension, and applies to both the basic and state second pension. The weekly Carer's Credit is designed to help if you would have difficulty building a State Pension. This might be because:
- you're caring for someone 20 hours or more a week
- you're looking after someone who refuses to claim disability benefits, or finds it extremely difficult because of their condition - for example, this might apply if you look after someone with a mental illness
- more than one person is looking after the person who is severely disabled and you're not the one claiming Carer's Allowance (only one person can claim Carer's Allowance for an ill or disabled person)
- you cannot claim Carer's Allowance because you're looking after more than one person, but do not care for any of them for 35 hours a week
To claim Carer's Credit, you must care for 20 hours or more a week for someone who gets any rate of Attendance Allowance or Constant Attendance Allowance, or the middle or highest Disability Living Allowance care component.
If the person you care for doesn't get one of these benefits, you'll qualify if you care for 20 or more hours a week for someone who has a signed certificate from a health or social care professional that confirms the level of care being provided is appropriate.
To apply for Carer's Credit, visit GOV.UK or call the Carer's Allowance Unit on 0845 608 4321.
Article provided by NHS Choices