How Much Can I Earn While Claiming the UK State Pension?

The UK State Pension is not means tested, so there is no limit on how much you can earn and still receive the full State Pension. That’s right, even millionaire professional footballers, movie stars and company CEO’s could be eligible for a full state pension.

It also means that, if you want to, you can keep working and earning additional income whilst you’re also receiving the full State Pension. 

With that said, not everyone is entitled to a full State Pension. The amount that you receive once you hit State Pension age will depend on the level of National Insurance contributions you’ve made over your life. In this article we’ll explain how your State Pension eligibility is calculated, and how to make sure that you’re going to get as much as you possibly can.

When Do You Get the State Pension?

The age at which you can get the State Pension has been changing. It used to be 65 for men and 60 for women, but has been slowly increasing over the last few years and will keep slowly increasing until it reaches 67 for all people eligible in 2028. 

If you won’t hit age 67 by 2028, then you will be able to start getting yours at age 67, but if you’re due to receive it before then, you can check your exact eligibility date here.

How Do You Become Eligible for State Pension?

As mentioned above, the State Pension isn’t means tested, which means that it isn’t assessed against your assets and income. Instead, you are eligible for State Pension based on how many years you either made National Insurance contributions, or had an exemption for things like disability or looking after kids.

The State Pension has changed a lot over the last 20 or 30 years, but the rules now mean that in order to get a full pension, you need to have paid (or been exempt from) National Insurance for 35 years. In order to get any pension at all, you need to have at least 10 years on your National Insurance record.

This is the reason why it’s important to apply for things like Child Benefit or Carer’s Allowance, even if your household has income that is above the eligibility threshold. You may not receive any actual money for the benefit, but it will still be recorded as an exemption year for the main parents National Insurance contributions.

How to Make Up for Missed National Insurance Years

If you don’t have a full National Insurance record, you are able to make additional payments to bridge this gap. These are known as Voluntary National Insurance Contributions, and you can make them on an ongoing basis via direct debit or you can make lump sum payments for each additional year of State Pension.

Covering these gaps obviously does cost you more money in the form of higher National Insurance contributions, but it also means that you will be eligible for a higher State Pension for the whole of your retirement.

The State Pension is guaranteed for life, and also has very strong cost of living/inflation protection built in. With this in mind, it often makes good financial sense to ensure you have a full National Insurance record before reaching your retirement age. As always though, it’s important to do your research or take advice to make sure that it’s the right thing for you.

Summary

You can earn as much as you want whilst claiming the State Pension. You can be incredibly wealthy and still be eligible for the full amount, as long as you have enough years of National Insurance contributions on your record.

Your National Insurance record is calculated based on the years you’ve been paying contributions, or years you were exempt through things like disability or raising children. If you have gaps in your record, you can pay extra to top these up, which can be a good way to increase your long term retirement income.