Thousands could miss out on state pension cash if they don’t apply for out of work benefit now

THOUSANDS of Brits could miss out on extra state pension cash if they don't apply for a major out of work benefit.

At the moment, you need 35 qualifying years of National Insurance to receive the full new state pension, which is worth £221.20 a week.

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This is what the state pays those who reach state pension age after April 6, 2016.

To get any State Pension at all, you will need at least 10 years on your National Insurance record. 

However, these rules can make it problematic for those who need to take time off work due to illness or disability.

It could mean someone forced into early retirement could miss out on the full new state pension worth £11,502.40 a year.

However, households can get free years with National Insurance credits.

Getting just one year of these credits can add over £325 per year to your eventual state pension.

Those claiming certain benefits, including Universal Credit, qualify for these credits automatically meaning they won't miss out.

Eligibility for this benefit is limited to working and non-working households with low incomes and savings of less than £16,000.

Another benefit they may qualify for instead is "new-style" employment and support allowance (ESA), which can be claimed regardless of income or savings.

You can apply for new style ESA if you are under state pension age (66) and have a disability or health condition that limits your work ability.

You must also have worked or been self-employed and paid enough National Insurance contributions, usually in the last two to three years.

By claiming the benefit, you could get weekly payments worth up to £138.20 a week on top of the free National Insurance credits.

Steve Webb, a partner at pension consultants LCP, fears that thousands of people who cannot work miss out on vital NI credits by not applying for new style ESA.

He said: "If you are unable to work because of disability, it's vital to make sure you are claiming the correct benefits in order to protect your National Insurance record and to make sure you get a good state pension.

"It is only by claiming either Universal Credit or what is called 'new style' ESA that you get vital NI credits. 

"Even if you've been told on the phone that you may not qualify because you or a partner has too much income or savings, you should still apply simply to get the NI credits.

"Not doing this can leave a gaping hole in your National Insurance record and leave you short in retirement."

What is new style ESA?

New style ESA is for people with an illness or a disability that restricts their ability to work.

Claimants on certain incomes can receive a fortnightly payment, which can be claimed separately or at the same time as Universal Credit.

However, unlike Universal Credit, your (or your partner's) savings will not affect your pay.

Most of your income is also not considered, but a personal pension can affect the amount you may receive.

While you receive new style ESA you'll earn Class 1 National Insurance credits.

When you claim ESA, you must undergo a work capability assessment to find how your illness or disability affects how much you can work.

This outcome will decide how much you can get in benefit payments, but not everyone will be eligible for this part of new style ESA.

How much is the benefit worth?

If you don't receive an income from a personal pension, you could get weekly payments worth up to £138.20 a week.

However, your payments will be affected if you get over £85 a week from a private pension.

Half of your private pension income over £85 will be subtracted from your weekly ESA payments if you do.

For example, if you get £100 a week from a private pension, then £7.50 will be subtracted from your weekly ESA payment.

What if my pension income is too high?

If your private pension income is high enough, you will get no ESA payments.

For example, if you get over £350 a week from a private pension, you'll be unlikely to qualify for weekly ESA payments.

However, individuals in this scenario can still claim the benefit to qualify for the free Class 1 National Insurance credits.

This will help build up their National Insurance years ahead of reaching 66, ensuring they get a higher state pension amount.

Steve Webb added: "The 'credits only' award has been part of the system for decades.

"But information about it is scant, and people on DWP phone lines often don't even mention it.

"Even if someone on the phone tells you that you won’t get the benefit itself, you should still apply to get these essential National Insurance credits."