There are just two days left to fill any gaps in your national insurance records (going back as far as 2006) if you want to boost your state pension entitlement.
Usually, people can pay voluntary top-ups for the past six years, but the last government opened this up so contributions can be filled in all the way back to 6 April 2006.
The deadline, though, is Saturday – after that, we’re back to six years.
Who can top up?
Men born after 6 April 1951 and women born after 6 April 1953 are eligible to make these voluntary NI contributions to boost their new state pension. You can find out more about making contributions online.
Why does it matter?
If you reached pension age after 6 April 2016 you need 10 years of NI contributions to get a state pension – and 35 years to get the full £221.20 a week. Before that 2016 date, it’s 30 years.
People may have gaps in their record for numerous reasons including being unemployed, on a low income, self-employed, having worked abroad, or having taken a break from work to raise a family.
How much could topping up earn you?
We answered this question for one Money blog reader who had a 10-year gap in his record.
We found it would cost £907.40 to cover all NI contributions from the 2023-24 tax year – each year is different but this was a good guide.
If he then went on to enjoy 20 years of retirement, he would get back £6,000. It would take just three years to get his original £907.40 investment back.
Who might want to think twice?
The first thing anyone should consider is if they’ll fill gaps naturally through working – in which case there’d be no point topping up – but check your state pension forecast here to see if that is the case.
There are lots of other things to factor in and you should seek independent financial advice.
Wealth management firm Charles Stanley says a key consideration is whether a higher pension would either:
- Drag you into paying tax when you retire;
- Mean you no longer qualify for certain benefits.
“You might not benefit from the full amount of extra money as some will be taken in income tax,” they say.
“In addition, boosting state pension income can affect entitlements to means-tested benefits. Notably, if you claim pension credit, which tops up the income of very low earners over state pension age, any increase in the state pension would normally reduce an award. This often means that you would be no better off paying voluntary contributions.”
Another consideration – and this isn’t something most people want to contemplate – is that if you don’t think you’ll live long enough into retirement (you might be in ill health or have a terminal illness) to benefit from topping up, then it’s probably not worth it.
People should also look into whether they could transfer contributions from their spouse or civil partner.
One more way to top up
Which? advises: “Ensure that you are getting any NI credits you are entitled to before contemplating paying voluntary NI contributions for a particular year.
“These are free and will apply, say, if you are caring for a child in the family as a parent or grandparent, claiming statutory sick pay or looking after a sick/disabled person.”
