Thousands of people have topped up their state pension by taking advantage of a new service over the past year – but your chance to join them is fast running out.
Around 37,000 people have moved to maximise their state pension by making extra National Insurance Contributions (NICs) worth £35m since HM Revenue & Customs launched its digital top-ups service. But the window to fill any gaps in your NICs record as far back as 2006 will close at the end of the tax year on 6th April 2025. Here’s what you need to know.
What does National Insurance have to do with state pensions?
The number of national insurance qualifying years you have under your belt goes a long way to dictating your state pension entitlement at retirement. Many workers have gaps in their NIC records, such as those who have been living overseas or spent time out of the workplace taking a career break or raising a family.
How do I boost my entitlement?
If your NICs record is likely to be incomplete at state retirement age you have the option of topping up your NI credits by making additional voluntary contributions for one or more qualifying years.
This will typically cost you £15.85 per week to claim back credits for the 2006/07 to 2019/20 period, or £824.20 to buy back a full previous gap year. For every complete year of extra NICs you make you’ll get an extra £328 a year in the state pension, plus any annual increases that take effect. The costs are slightly higher for each year from 2019.
However, the actual cost of the extra contributions will depend on factors such as the class of contributions you qualify for and the tax years you want to buy back. Check out the government’s website for full details of the rules around voluntary contributions.
What’s changing?
Under changes that took effect in 2015, pensioners need a payment record of 35 years of NICs in order to qualify for the full state pension. You still need at least 10 years of contributions to get any state pension at all.
Usually, you can fill gaps in NICs for the past six years. However, a government concession allows you to also claim back to between April 2006 and April 2018. This concession was supposed to end two years ago, but it was extended to April 2025 due to difficulties meeting high demand. You’ll still be able to make voluntary NICs from 6th April 2025, but only for the previous six tax years.
Should I take advantage?
If you expect to be short of the NICs you need for the full state pension, making voluntary contributions is worth considering. But whether or not you should go down that road depends on your own circumstances. For instance, if your life expectancy is compromised (due to lifestyle factors or health conditions, for example) it might not be the best use of your money.
Keep in mind too that you need to be able to afford the extra contributions you make. Caution also applies if you’re eligible for Pension Credit, because additional NICs could push you over that threshold and result in losing eligibility for benefits such as the winter fuel payment.
Perhaps more obviously, don’t make any additional payments if you’re already on track for the full state pension, as you won’t get any extra state pension in return. Similarly, it’s not worth doing if you’ve still got plenty of time until you reach state pension age and you’re on course to reach the 35 year threshold.
I’m interested. What should I do?
A good place to start is to check your current state pension entitlement. If you want to pay voluntary NICs, this is the place to begin. But don’t hang around – the process can be slow, so leave plenty of time before the 5 April deadline if you want to make top ups for those extra years.
If you need more guidance, you can contact the government’s Pension Service if you’re already at state pension age (0800 731 0469) or its Future Pension Centre if you’ve yet to reach that point (0800 731 0175).
