Martin Lewis said it is ‘the most lucrative thing many can do with their money’
Martin Lewis has urged anyone with missing National Insurance (NI) years to boost their State Pension before this weekend. The deadline to buy lost NI years is this Saturday, April 6 – after this date credits from before 2019 will be lost.
The Money Saving Expert has warned that people between the ages of 40 and 73 can add thousands to their State Pension by paying as little as £180 – and in some cases for free.
The amount of State Pension you get depends on how many ‘qualifying’ NI years you have – you need at least 10 years to claim any State Pension. You earn a qualifying year through working, looking after children, or claiming certain benefits.
But many people may be missing past NI years, either from spending years abroad, being on low incomes, taking career breaks, or not claiming credits. By buying these years back you boost your State Pension – sometimes by £10,000s.
To buy a full old year costs around £800 – or £180 if you’re self-employed – and may gain you an inflation-proof £5,400+. Each missing NI year you get adds an inflation-proof £329 to what you receive in State Pension every year, but even missing a week of credits can mean you get nothing for that year.
As the deadline to buy credits from 2006 is this weekend, Martin Lewis is urging people to make the purchase while they can, claiming it is the ‘most lucrative thing many can do with their money’.
Writing on Money Saving Expert, he said: “While ‘boosting your State Pension’ doesn’t sound sexy, it’s the most lucrative thing many can do with their money. Yet for likely millions across the UK, the door closes this 5 April, and it’s not a quick process.
Think of National Insurance (NI) as a bit like a token you can earn each tax year. The more tokens you get, the bigger the proportion of the £221.20 a week State Pension you receive once you hit that age.
Over a typical tax year, you earn NI credits from working, looking after children, or while on certain benefits. Once you’ve got enough credit in the tax year, you’ve then qualified for that tax year’s National Insurance (ie, you’ve got the year’s token).”
Mr Lewis explains that you need at least 10 qualifying NI years to get some State Pension and around 35 to get the full State Pension amount – £221.20 a week – but will very depending on different reasons. Between the 10 and 35 years, the more qualifying years you have, the higher your State Pension will be.
But to claim a NI year, the full year needs to be over the threshold. If you’ve not worked for a full year and/or didn’t earn over that year’s threshold, you won’t get that year’s NI.
If you are only just short of a full year, you can buy it for a small cost – and you may only need to pay for a week or two’s credits to get the whole year.
Mr Lewis added: “You can currently buy missing years back to 2006, but from 6 April you can only do it to 2019. This is all about what’s called the ‘new’ State Pension, introduced in 2016. It only applies to (if you’re older this isn’t for you)…
- Men born after 5 April 1951 (so max age 73)
- Women born after 5 April 1953 (so max age 71)
“At this ‘new’ State Pension’s launch, transitional arrangements were put in place allowing you to buy back any missing NI years for longer than normal – all the way back to 2006.
“These arrangements end this tax year. So the last day you can buy them is 5 April. After that the buyback rule reverts to the usual six tax years, so that’ll then mean just back to 2019. So miss the deadline & you lose the chance on 13yrs’ worth.”
For those under 45, you generally have time to fill in the gaps by working, so buying missing years is usually not necessary. But if you can buy a cheap partial year, it may be worth it as a type of insurance against not earning NI years in future.
Originally these transitional arrangements were due to end in April 2023, but have been extended by two years because of government systems getting clogged up by the amount of people applying after Money Saving Expert highlighted the issue – with numbers jumping from 300 to 12,000 a day.
But Mr Lewis said: “I can’t see another extension happening – though some contingency plans are in place (see below) – so I think this is it. So check NOW. Leave it to nearer the deadline and if the systems get clogged, it could be very cumbersome to make it work.”
There are certain ways you can get unclaimed NI years for free, including technicalities with child benefit claims, if grandparents below the State Pension age have provided childcare in the past, or if you didn’t claim carer’s credit you were entitled to.
If you submit a request by the April 5 deadline you will still be able to pay voluntary National Insurance contributions after the deadline has passed.
To request a call back to pay voluntary National Insurance contribution, visit the gov.uk website.
