Director-only company? You could significantly improve your state pension

Posted on Dec 12 2023

Are you a sole company director? If so, by outsourcing your payroll you could significantly improve the amount of State Pension that you receive.

As you may be aware, director-only businesses are not obligated to have a formal payroll scheme in place. However, doing this delivers significant benefits with only a small charge for the associated set up and management.

To receive any State Pension payments you’ll need to have made or been credited with at least 10 years of qualifying contributions on your National Insurance record. To receive the full State Pension requires 35 years of qualifying contributions or credits. If no formal payroll is set up, no qualifying years are gained on your National Insurance record.

How this works

The full amount of State Pension is £203.85 per week for 2023/24
Each qualifying year gives 1/35th of the full amount, equivalent to £5.82 per week of state pension.
For example, if you have 10 years’ qualifying contributions or credits you will receive £58.24 per week, 20 years would be £116.49 per week, and 30 years £174.73 per week

How we can help

We can set up and run your payroll scheme. For each year the scheme is running you will gain a qualifying year towards your State Pension. In addition, a further two employees (on monthly salaries) can also be included at no extra cost.