Men under the age of 72 and Women under the age of 70 may be able to buy a state pension ‘boost’ to fill their National Insurance (NI) gaps.
This is urgent because there is a deadline to fill your National Insurance (NI) gaps from over six years ago. This means that you could go back as far as 2006.
The deadline was originally the 5th April 2023. However, this has now been extended to the 31st July 2023. After this deadline, you will only be able to travel back six tax years to fill in these gaps in your National Insurance (NI) Contributions.
This could mean that you lose the chance of going back as far as 16 years.
What do we mean by filling in the gaps in your National Insurance Contributions?
The new state pension was introduced on the 6th April 2016. To qualify for the full state pension, you will need 35 qualifying years of NI Contributions. The minimum years to qualify for the state pension is 10 years but this will not give you the full amount of state pension.
If you do not have these 35 qualifying years, you will have gaps that you can seek to fill. This effectively means ‘buying back’ tax years that have been lost.
These gaps in your NI Contributions could have occurred for a number of reasons, for example: living abroad for some years, periods of low income or even a career break.
According to Saga, filing these gaps could add another £275 a year to your state pension. People who have 30 years of contributions paid before 2016/17 may find it is only worth paying extra contributions to fill gaps from that year onwards. The rules are very complex.
Before you buy any years, you should check if you are due ‘free credits’. This could be the case if you were a carer or had childcare responsibilities or illness. You can check via the ‘National Insurance Credits’ section on the gov.uk website.
How do you check if you are missing any years and don’t qualify for the full state pension?
You can simply go to https://www.gov.uk/check-state-pension and check your state pension forecast. After entering your details, you can hopefully see whether your pension is forecast to be the full state pension or not.
The full state pension should be £185.15 per week, £805.07 per month or £9,660.86 per year.
You can also check your NI record at https://www.gov.uk/check-national-insurance-record. This will provide you with a summary of how many full years of contributions and how many years (if any) that you did not contribute enough. By having these two documents, it will show you if there are any gaps that can be filled and the costs of doing so.
If you do find that you have gaps in your NI Contributions, you will be able to buy more years. One year’s voluntary contributions – called Class 3 – costs £15.85 a week or £824.20 for a year, or slightly less for the two most recent years.
If the gaps are from 2006 to 2017, be aware that you will no longer be able to fill these gaps after the July deadline.
If you want additional help with this, you can contact the Department for Work and Pensions’ Future Pension Centre on 0800 731 0175 for bespoke calculations.
As with everything, it is really important that you seek individual professional advice.
If you are unsure about anything, please do let us know. We recommend that you start by checking your state pension entitlement as shown in this article – as opposed to trying to guess your numbers.
This article is for information purposes only for the benefit of Thomas and Thomas clients and does not constitute ‘financial advice’.