Britons warned their state pension could be slashed due to a key July change

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State Pension: Expert outlines criteria to qualify

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The major change set to occur in just one month relates to National Insurance contributions, which tie in to the state pension. From July onwards, the National Insurance contribution threshold is set to rise.

It will increase by £3,000 to a total of £12,570.

The rise has been welcomed, as it means employees will keep more of their earnings before tax kicks in.

However, it could have long term impacts on the state pension, according to one expert.

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, has issued a warning to those earning less than £12,570.

She states these individuals may lose their access to vital National Insurance contributions.

As the state pension often hinges on National Insurance contributions made throughout a person’s lifetime, this is key.

For the new state pension, Britons typically need at least 10 qualifying years of NI to get anything at all.

While 35 years are traditionally needed if individuals want to unlock the full state pension – currently £185.15 per week.

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Some may get less than this sum if they were contracted out before April 6, 2016.

If a person earns an amount too low to pay National Insurance they may not contribute enough towards a state pension.

It could leave them with gaps in their record, and thus less than they perhaps expected when they reach retirement.

Ms Morrissey shared her thoughts while speaking to the Daily Record.

She said: “Ordinarily a worker should receive an NI credit even if they earn below the threshold as long as they have earnings of more than £120 per week or £6,240 per year.

“However, it is worth checking to make sure this is the case.

“It is vital people worried they may no longer be getting National Insurance credits check to see what benefits they are entitled to, so these credits can be made.”

The Government website suggests people may be able to pay voluntary contributions to avoid gaps in their record.

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However, this can only be achieved if a person is eligible to do so.

Individuals can usually only pay for gaps in their National Insurance record from the past six years, but there are some exceptions.

Men born after April 5, 1951 and women born after April 5, 1953 have temporary reprieve.

The Government states: “You have until April 5, 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if you are eligible.

“After April 5, 2023 you’ll only be able to pay for voluntary contributions for the past six years.”

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