The deadline for topping up your National Insurance record for gaps prior to 2019 was April 5. Unless you submitted an online callback form with HMRC, it’s likely you won’t be able to makeup for any missing National Insurance years further than the previous six tax years.
This could result in some individuals not qualifying for the full new state pension amount upon retirement.
To be eligible for the full new state pension, a minimum of 35 qualifying years is required, you can still receive a portion of the state pension if you have less but you need a minimum of 10 to get anything.
It’s estimated that about half of pensioners are not receiving the full new state pension of £230.25 per week.
A qualifying year is considered a full year in which you paid National Insurance or received National Insurance credits.
If you didn’t receive either, you can pay voluntary National Insurance to fill the gap, but only if the shortfall in your record is between now and 2019.
However, voluntary National Insurance contributions do come with a cost, which could sometimes outweigh any benefits it would provide you in retirement.
Therefore, before deciding whether to invest any spare cash into voluntary contributions, it’s crucial to check your National Insurance record and state pension forecast on Gov.uk.
This can show if you’re on track to meet the full 35 years needed for your state pension age and how much you might have to pay for voluntary contributions to reach either the 10 or 35-year threshold.
According to Tom Selby of AJ Bell, who spoke with The i Paper: “The first thing to consider is whether you are likely to naturally build up a 35-year NI record through work. It is also important to check that you cannot boost your state pension entitlement for free before paying voluntary NI.”
For instance, being out of work due to childcare or looking after elderly relatives could entitle you to National Insurance credits, which in most cases, are free to claim.
Making voluntary contributions currently costs about £907.40 per year, providing around £330 extra each year to your state pension.
To make this worthwhile, you’d need to receive the state pension for at least three years to recoup the costs.
Tom highlighted the Future Pension Centre, where professionals can evaluate your situation and advise whether voluntary contributions would help your situation.
Tom also cautioned people to check if increasing their state pension doesn’t inadvertently disqualify them from other benefits they may count on when they retire.
For example, claiming the full new state pension could mean exceeding the income limit for Pension Credit, leading to a loss of entitlements like the Winter Fuel Payment.
