People have until April 5 to fill any gaps in their National Insurance going back as far as 2006.
Pension Credit – Could you or someone you know be eligible?
HM Revenue and Customs (HMRC) recently announced more than 10,000 payments worth £12.5 million have been made since last year by people using a new digital service to boost State Pension payments.
However, anyone keen to maximise their retirement income through the contributory benefit have just two weeks to fill any gaps in their National Insurance (NI) records going back as far as 2006.
Usually people can only pay voluntary contributions for the past six tax years, and after the April 5 deadline this year the normal six-tax year time limit will apply. In 2023, the previous government extended the deadline to pay voluntary NI contributions to April 5, 2025 for those affected by new State Pension transitional arrangements, covering the tax years running from April 6, 2006 to April 5, 2018.
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The extended deadline has allowed people more time to consider what is right for them and make their contributions.
Men born after April 6, 1951 and women born after April 6, 1953 are eligible to make voluntary NI contributions to boost their New State Pension.
Some people may be entitled to NI credits rather than needing to pay contributions, so they will need to check and consider what is right for them.
HMRC said further analysis of the use of the online service shows the majority (51%) of customers topped up one year of their NI record, with the average online payment being £1,193.
People can find out more about making voluntary contributions on GOV.UK here. People of working age can also check their State Pension forecast on GOV.UK here.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, said: “People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any state pension at all and at least 35 years to receive the full new State Pension – though they don’t need to be consecutive years.
“Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.
“Plugging gaps in your record is relatively straightforward since the Government rolled out its new NI payments services in April last year – a State Pension forecast tool that has been checked by 3.7m since its launch.”
She continued: “People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the Government’s digital channels.
“A short survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.
“Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Below are the two crucial checks everyone should complete, which don’t take long, and could identify possible gaps in your State Pension.
Check 1: Check your NI record
A quick check on GOV.UK will identify any missing years – you can do that here.
Check 2: Check your State Pension forecast
You can check your State Pension entitlement on the ‘Check your State Pension forecast’ page on the GOV.UK website here.
This will also tell you your State Pension age – when you can officially retire and start collecting payments.
If you do these two checks and are on track for the full, New State Pension, you don’t need to do anything more. If you do have missing years, now you can check if there are ways to boost it for free.
The three main ways to boost State Pension for free are:
- Child Benefit – check for missing NI credit.
- Grandparents providing childcare – if a family member looked after a child under-12 at any time since 2011, before they were State Pension age (even if they are now) as parents/guardians were working, then the parent can apply to transfer their child care credit to the family member.
- Carer’s Credit – this is a free NI credit for those aged 16 to State Pension age who provide unpaid care.
Buying missing NI years
If you can spare the cash, you can plug gaps in your NI record by buying voluntary class 3 NI contributions. Buying a full extra year costs around £825 or less, though partial years will be cheaper – as little as £16.
For each year bought you get 1/35th of a year’s State Pension – around £329. This means you effectively earn your money back in around three years, so it can prove very good value.
It is, however, really important to check it is worth your while paying for these credits so always check with DWP before doing so.
Find out more about plugging gaps in your National Insurance record on GOV.UK here.
Get advice before making a decision
Calculating whether to top up can be confusing and ultimately there is no point paying for more years than you need because you won’t get that money back.
The best solution is to call the UK Government’s Future Pension Centre on 0800 731 0175 to double check how many years you can buy and whether voluntary contributions will add to your State Pension.
Those who have already reached retirement age must contact the Pension Service on 0800 731 0469.
