As the UK government has recently launched its new online state pension checker tool, Ryan Gordon reminds us of the April 2025 deadline to ‘top up’ missing National Insurance years dating back to 2006.
While the state pension should not be relied upon solely in retirement, it does provide a guaranteed income that can form part of a retirement income. The sum you may receive from it varies based on your age and the amount of National Insurance (NI) contributions paid. Usually, the government has a strict ruling that you may only ‘plug’ gaps within your contribution history for the previous six tax years. However, due to transitional arrangements, this six-year window has been extended back to 2006, for those who are of the correct qualifying age. This transitional opportunity is only available until April 2025, meaning those who may stand to benefit need to act now.
The new state pension guarantees that, providing, in general, that you have at least 35 years of National Insurance contributions (NIC), you shall receive the full state pension which currently equates to approx. £11,502.40 pa (£221.20 pw) at the national state pension age (currently age 65). Note that it is important that you check your state pension age as this can vary. The minimum amount of qualifying years to benefit from any state pension is 10.
What if there are gaps in NI contributions?
For most, the qualifying number of years of state pension contributions is achieved long before we reach our state pension age. However, it is not uncommon for gaps to occur within our NI contribution history. For those aged between 40 and 73 (men born after 5 April 1951 and women born after 1953), you have an opportunity to buy back any lost NI contribution years between 2006 and 2016. In doing so, you are able to potentially increase your final state pension, which, depending on the number of the years you live past state pension age, may provide you with a significantly greater sum than had you elected not to pay the price of the voluntary contribution. The cost varies depending on the year purchased, but ranges from £795.60 pa to £907.40 pa (£15.30/week to £17.45/week).
This transitional opportunity is only available until April 2025, meaning those who may stand to benefit need to act now.
We recommend checking the government website to see your contribution record from age 16. It is important to mention that, in some cases, you may find that a year is not ‘full’ due to a period of the year where NI contributions were not recorded. In these instances, the missing voluntary contribution may be simply for a few weeks and can easily be made full for a minimal cost.
Secondly, it is worth checking whether gaps in your record may be filled with NI credits. There are a number of scenarios where individuals qualify for credits, such as childcare benefits, statutory sick pay credits, job seekers’ allowance credits or jury service. In utilising any credits available to you there is a potential to fill partial years of contribution for free.
Checking your entitlement and topping up your state pension online is relatively straightforward; however our Wealth Planning team can help you to assess your own personal circumstances to determine whether doing so is likely to be the right option for you.
The information provided in this article is of a general nature and is not a substitute for specific advice with regard to your own circumstances. You are recommended to obtain specific advice from a qualified professional before you take any action or refrain from action.
