Many people pay to fill gaps in their NI record – but for some mothers this may not be a financially sound move
Tens of thousands of mothers risk wasting money if they pay to fill gaps in their national insurance (NI) record in order to increase their state pension.
Eligibility for the state pension is earned by paying NI or collecting NI credits – for example by being on certain benefits – and people can pay to fill gaps in their record.
Currently, people can fill gaps in their NI record going back to 2006/7, but after April, will no longer be able to claim further back than 2018.
But former pensions minister Steve Webb has warned that many mothers could waste their money if they opt to do so, because they would likely be given the credits anyway without paying.
If people pay voluntarily for years that they are not going to get as credits, this is simply money that goes into the Government’s coffers.
Unless these people apply successfully for a refund (and there’s no information yet on whether this will be possible) this money will have been wasted – with people potentially losing thousands of pounds if they are filling more than one year.
Why is this happening?
The reason behind this relates to something known as the high-income child benefit charge.
This charge, introduced in 2013, means that high-income earners have to pay back some of their child benefit via a self-assessed tax return.
It also means those claiming the benefit would be issued with an additional tax bill.
In response, hundreds of thousands of couples decided that it would no longer be worthwhile to claim the benefit, but this posed problems for their state pension record, as claiming child benefit for an under 12 counts towards NI credits.
As a result, the Government planned that parents could get around this problem by ticking a box on the child benefit form to say that they wanted “credits only” rather than a cash payment.
How many credits do you need to qualify for a state pension?
The full state pension for those who build up entitlement after 5 April 2016 (when the state pension system was reformed) is £221.20 per week, or around £11,500 per year.
To qualify for the full amount, you need to have a National Insurance (NI) contribution record of 35 years, with deductions made for every missing year on your record.
You need at least a 10-year NI record to qualify for any state pension entitlement.
The quickest and easiest way for people to check a state pension forecast and find out if they can benefit from paying to fill NI gaps is by checking their NI record on GOV.UK or in the HMRC app.
But many parents were unaware of this, and so the previous Conservative government announced that it would create a new type of NI credit, for those who did not claim child benefit even though they were entitled to it.
It was unclear until recently whether the new Labour Government would implement this as planned, but in response to a parliamentary question last week, exchequer secretary to the Treasury James Murray confirmed it would do so.
“I can confirm that the new NI credit for parents who did not claim child benefit due to the high-income child benefit charge will be implemented as planned from April 2026 to ensure that affected parents and carers do not miss out on building entitlement to the state pension,” he wrote.
Former MP Sir Steve Webb said the Government needed to make it clear who would be entitled to the new type of credit, before the April deadline.
Now a partner at pension consultants LCP, he said: “It is good news that the Government has now confirmed it will press ahead with plans to create a new category of NI credits for parents who opted out of child benefit because of the high-income charge.
“But it also means that parents who were thinking of paying voluntary NI contributions before the 5 April deadline might need to think again, as they are at risk of wasting their money.
“It would be helpful if the Government set out – as a matter of urgency – precisely who will be entitled to these new credits so that parents know whether or not there is any point making voluntary contributions for these years.”
The rates for the 2024 to 2025 tax year are £3.45 a week for Class 2 and £17.45 a week for Class 3.
How do I buy NI years?
1. Check if you’re missing any NI years since 2006
You can check for unfilled years here – this shows your full NI record. For each year since you were 16, it will either say “Full year” or “Year is not full”. The “View details” link will give you more information. If you have “non-full” years since 2006, it could be worth paying to plug these to get a higher state pension.
2. Get your state pension forecast
If you have missing years or gaps in your NI contribution record, your state pension forecast will give you two pieces of information: how much state pension you’d get based on your NI record to date, and a forecast of how much you’re likely to get if you work up to your state pension age. If your forecast isn’t for the full £221.20 a week, and you have gaps in your NI record, you may be able to boost years to get to the full amount.
3. See if you can plug the gaps for free with NI credits
There are a range of scenarios that see you build up NI entitlement automatically, including caring for a child in the family, if you’re on statutory sick pay, or on jury service, or are unemployed and actively looking for work. Information on how to manually apply for any NI credits you’re due is on the Government’s NI credits page.
4. Find out if you have to pay yourself for voluntary contributions
The Future Pension Centre or the Pension Service may tell you you’ll have to pay to plug the gap yourself. Most of the time a full NI year costs £824, unless:
- You’re topping up the 2023/24 tax year, in which case it’s £907.40;
- You’re topping up either the 2020/21 or 2021/22 tax years, in which case it’s about £20 to £30 cheaper, as you pay the original rate for those tax years;
- You’re self-employed;
- You’re topping up a partial year, in which case it’ll cost less to make it a full year.
5. If you do, here’s how to pay
There are two ways to pay:
Online
Access the Government’s online service through the Check your State Pension forecast page on gov.uk. It’s also available through the HMRC app. Log in using your Personal Tax Account login details (this is your Government Gateway ID and password). If you don’t have an online HMRC account or Government Gateway ID, register here.
When you log in, you’ll be shown your full or partial NI years, and how much your state pension could increase if you choose to fill the gaps. You’ll be able to pay for these missing years securely online.
You need to pay for these in full via bank transfer or through ‘Open Banking’ – you can’t pay in instalments.
Phone
You don’t need to buy all the NI years you want in one go, though you will need to buy any between 2006 and 2017 before 5 April 2025.
Contact HMRC and get an 18-digit reference number to find the precise cost of the years you want to buy. They can give you this over the phone, or it takes 15 working days by post.
Once you have the 18-digit-reference number, you can purchase years through online or app banking or by sending money through your bank or building society account to this HMRC bank account. You can also pay by cheque, though HMRC says this takes longer to process.
Now, all you have to do is wait for the extra NI years to be credited to your record. The payment can take up to 60 working days to process, after which you should see your NI record change.
