Voluntary National Insurance: How to boost your state pension pot | Personal Finance | Finance
The amount of state pension one receives once they hit 66 depends largely on how many ‘qualifying years’ they have. However, these years don’t always have to be worked as they can also be bought through voluntary National Insurance.
A qualifying year is defined as a tax year during which a person has paid or been credited with enough National Insurance contributions to count towards state pension.
With the threshold rising, many will find themselves with more cash in the pocket as they now fall below the lowest tax bracket but it will in turn stop them from earning qualifying years through their work.
An alternative to working, or being credited, for National Insurance contributions, are voluntary contributions.
These can be bought at any point in one’s life, making it a life saver for many who get to state pension age and realise they are a few years short.
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Additionally, voluntary contributions can fill up one’s National Insurance record and potentially make them eligible for contribution-based benefits.
The deadline for paying voluntary contributions is April 5 each year.
Britons can pay these contributions to cover the past six years, but some circumstances may mean they can go further back.
There are different voluntary contributions rates as well, with class two and three counting towards both state pension and different contributory benefits.
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Currently the cost of voluntary contributions are as follows:
- Class two: £3.15 per week
- Class three: £15.85 per week.
Essentially, purchasing a years’ worth of state pension will cost £163.80 for those using class two contributions and £824.20 for those using class three.
These amounts are subject to change.
