Don’t miss out on the chance to increase your State Pension before April 5, 2025.
The government is offering a special deal that allows you to fill in any gaps in your National Insurance contributions to boost your pension. You can now go back as far as 2006 to make up for missing years, thanks to changes in the pension system. This offer was supposed to end in 2023 but has been extended due to high demand.
The Numbers That Matter
To get the maximum State Pension, you need 35 years of full NI contributions. The current maximum is £221.20 a week. Until April 2025, you can pay just over £800 for each missing year. In return, you’ll get an extra £328 per year on your State Pension. Over 20 years that adds up to £6,500 for each year you buy!
In simple terms, after just three years of receiving the extra pension, you’ll break even on what you paid. Every year after that is pure profit. This additional income is inflation-proof, meaning it will rise with the cost of living.
If you only missed a small part of a year, even by just a week, you can pay as little as £16 to top up that year and still get the full £328 more in pension benefits each year!
The Risks to Consider
Remember, there are some risks. If you pass away before receiving three years’ worth of the extra pension, you won’t have broken even on your investment. Additionally, the extra pension income is taxable, so it might affect your tax situation or other benefits you receive. Another risk is that the government could change pension rules in the future. They might raise the State Pension age, which could mean you receive it for fewer years. They could also change the “triple lock” policy, which currently ensures the State Pension rises with inflation, wages, or by 2.5%, whichever is highest.
Is This Right for You?
Here are the instructions in Plain English:
To find out if it’s worth doing, follow these steps:
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Go to the government’s website and check your National Insurance record. You’ll see which years you’ve fully contributed and where there are gaps.
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Get a State Pension forecast. This will show you what your weekly pension would be if you kept contributing until you retire. If it’s below £221.20 per week, you may be able to boost it by filling in the gaps.
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Decide whether to top up. If you’re nearing retirement and have gaps in your NI contributions, this could be a good way to boost your pension. If you’re under 40, it might not make as much sense unless you know for sure you won’t be able to fill the gaps (like if you’re working overseas for a long time).
If you’re not sure whether topping up will increase your pension, contact the Future Pension Centre at 0800 731 0175. They’ll help you figure out if it’s worth doing.
How to Top Up
If you want to fill in any missing years, you can do it online through the government website or the HMRC app, or you can call HMRC on 0300 200 3500. You don’t have to pay for all the missing years at once, but remember that years between 2006 and 2017 need to be bought before April 5, 2025.
