National Insurance: Plugging gaps in record could add thousands to your state pension | Personal Finance | Finance
To get the full new state pension, people need 35 years of National Insurance Contributions (NICs). If you have less than 35 years, then you’ll receive less. The full new state pension shouldn’t be confused with the basic state pension, as these people require 30 qualifying years to get the full sum. People can claim the new state pension if they are a man born on or after April 6, 1951 or a woman born on or after April 6, 1953.
People who receive it currently get £185.15 a week, which works out at £9,628 a year.
The majority of people build up National Insurance credits during their working years, but if they have had to take time out of work, they may have holes in their record.
At the moment, people can buy years to plug the National Insurance gaps back to 2006 however, the rules are changing from April 5, 2023.
After this date, people will only be able to buy back six years’ worth of National Insurance contributions.
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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 standard cost to make up a year of missing National Insurance contributions is £824.20, although the self-employed pay just £163.80.
In May, the Money Saving Expert founder Martin Lewis explained in the Money Tips newsletter that plugging the gaps could add up to an extra £275 each year to a person’s state pension.
He said: “If a man who’s reached age 66 lives the typical 19 more years, a woman 21 more years, then for each £800 spent, a man can expect to get £5,300 extra pension, a woman £5,800.
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For example, a year in which someone worked part-time and paid some National Insurance is cheaper to fill than a completely blank year.
The insurance company Saga recommended that people should consider topping up so they have the full 35 years and will be eligible to receive the full state pension.
This is because if someone has made 25 years of National Insurance contributions they would only get £132.25 a week.
The group explained, by topping up all the gaps would give an extra £52.90 a week or £2,750 a year, or roughly £55,000 extra in total, over a 20-year retirement.
People can check how much state pension they’re on target to get by using the Gov.uk state pension forecast calculator.
It is also highlighted that making voluntary contributions is not suitable for everyone, especially for those who do not plan to retire in the near future.
People can call the Department for Work and Pensions (DWP) Future Pension Centre on 0800 731 0175 to ask if paying extra contributions will boost their pension.
