A reminder for anyone who doesn’t currently qualify for the full State pension: if you have gaps in your National Insurance (NI) record between 6th April 2006 and 5th April 2018, you have until 5th April to top up your contributions and potentially increase your State Pension.
After this date, you can only pay for the previous six tax years, limiting your ability to fill older gaps.
To qualify for the full new State Pension (£230.25 per week from 6th April), you typically need 35 qualifying years of NI contributions.
You may have a gap in your NI record if you:
– took time off to raise children,
– cared for someone full-time,
– had a career break,
– or were contracted out of SERPs or the State 2nd Pension.
How to Check and Pay:
- Check your NI record HERE.
- Get a State Pension forecast HERE.
- Make voluntary contributions before the deadline using the online service or by contacting HMRC.
How Much Does it Cost?
The amount you pay will depend on the year in which your record has a gap and the number of missing years.
For example, between 2006 and 2019 the cost of a missing week is £15.85 (£824.20 for the year). To top up the current tax year is £17.45 for a week (£907.40 for the year).
What’s The Benefit?
It may cost you several hundred pounds to a few thousand pounds but the payback could be much more if you live a long retirement.
Each complete year of NI you buy will provide £6.32 a week (£328.64 a year). Over five years, this would amount to £1,643 per year for a one-time maximum cost of £907.40.
If you have multiple years to purchase at a lower cost the return on your investment will be greater still.
The State Pension also benefits from the ‘Triple Lock’ meaning the return on the contribution you receive is likely to be greater still.
Other Considerations
If you are in ill health and don’t believe you will live beyond the payback period you may decide you won’t get the full benefit.
The State Pension counts as an income for tax purposes. The Personal Allowance covers most of it, but with the allowance frozen and annual State Pension increases, more of it may become taxable. Any other income will then be taxed at 20%, 40% or possibly 45% tax.
However, this is still a strong reason to maximise your retirement income by topping up your State Pension; it is better to have 80% of something rather than 100% of nothing!
