The time available for individuals to top up their State Pension entitlement by way of voluntary National Insurance (NI) contributions, going back up to 16 years, has been extended by a further two years.
It was initially announced that eligible Britons with gaps in their National Insurance record could make voluntary ‘top up’ payments up until April 2023. This was then extended until 31July 2023 but has now been extended further until 5 April 2025.
The extension comes after reported problems with processing existing requests. There have also been some concerns raised that lack of phone capacity at the Department for Work & Pensions (DWP) have not allowed enough people to discuss their options as recommended.
The extra time will allow people to consider whether top up payments are right for them, and also to spread the cost of doing so.
- To obtain the full State Pension, an individuals’ NI record must contain 35 qualifying years.
- Gaps in an individual’s NI record can be filled by way of voluntary payments.
- If you want to make voluntary contributions for the tax years 2016 to 2017 or 2017 to 2018, the deadline has been extended. You now have until 5 April 2025.
- Men born after 5 April 1951 and women born after 5 April 1953 have until 5 April 2025 to pay for any eligible gaps between the tax years April 2006 and April 2016.
- After 5 April 2025 you will only be able to pay for voluntary contributions for the past 6 years.
- The current cost of topping up gaps in National Insurance records is up to £3.45 per week for class 2 contributions (£179.40 pa) or up to £17.45 per week for class 3 contributions (£907.40 pa).
- If the gap in your NI record was between 6 April 2016 and 5 April 2023, the rates were frozen at the 2022/23 tax year and are up to £3.15 per week for class 2 contributions (£163.80 pa) or up to £15.85 per week for class 3 contributions (£824.20 pa).
Eligible people should check their NI contribution status to identify any gaps of missed ‘qualifying years’ in their record. This information is easy to access via the Government Gateway which provides an individual’s NI record and information if any additional NI credits are required to receive the full entitlement.
In the right circumstances, filling in gaps in National Insurance records can be a great way to bolster income in retirement.
However, the move may not be suitable for all individuals, depending on their age and health. For example, top ups may not be worthwhile for younger workers that still have plenty of time to make up the 35 qualifying years. Individuals approaching retirement, and not in good health, may need to consider if NI top ups are the best use of financial resource, where life expectancy is compromised.
Where the minimum earnings threshold for NI is not reached in a year, it may be that NI credits are available. There are a number of circumstances in which NI credits can be obtained, including for periods of maternity leave, parents that are registered for Child Benefit for a child under 12, and those on Carer’s Allowance. The full list of allowances for NI credits can be found here https://www.gov.uk/national-insurance-credits/eligibility.
It is worth noting that grandparents or other family members might be entitled to receive NI credits for caring for a child under 12 while their parent (or main carer) is working. Retrospective claims for ‘Specified Adult Childcare credits’ can be made back to 2011 via the CA9176 form
Where a person is unlikely to meet the full 35 years of NI contributions needed to obtain a full State Pension, making voluntary contributions is likely to be beneficial. Depending on the age of the individual and their plans for continuing work/retiring, it may be worth investigating any gaps and considering whether a lump sum voluntary contribution would in fact be beneficial.
In any event, checking your record can highlight gaps in your NI record for which a credit should have applied. Where an error has been made or a year has been missed, it may be possible to apply for a credit for the missed year(s).
We would always recommend people regularly obtain their State Pension forecast and National Insurance record to ensure they are on track for a full State Pension. Notwithstanding the topic of this email, it isn’t always the right thing to pay voluntary National Insurance contributions. Therefore, we recommend contacting the Future Pension Centre Helpline on 0800 731 0175, who can assist you in this matter.