Time is running out to grab one of the best deals you are ever likely to find.
For the remainder of this tax period, consider buying extra National Insurance years to supplement State Pension benefits.
However, the clock is most definitely ticking as transitional arrangements, covering the switch to the upgraded pension system, finish on 5th April.
Prior to this date, and subject to affordability and it being appropriate to do so, an individual can “plug” any missing or incomplete years dating from 2006, but thereafter only back six years.
You will have to find roughly £824 for each missing year, but, in return, you get an additional RPI- linked pension of circa £275pa.
Broadly speaking, the breakeven point is three years after which an individual is ”in the £ seats”!
So, how does it pan out?
You need 35 years of National Insurance contributions to qualify for the full state pension, which is £185.15 a week in 2022-23. To qualify for any state pension at all, you require ten years’ worth.
Which is where we come to an age lottery.
If you’re a man born between 6 April 1945 and 5 April 1950 or a woman born between 6 April 1950 and 5 October 1952, you have six years after you reach state pension age to enhance your package. If you’re a man born after 5 April 1951 or a woman born after 5 April 1953, you can infill gaps between April 2006 and April 2016.
Consumer champion Which states: “A wide range of people can pay voluntary National Insurance contributions. Those in employment (Class 3) and the self-employed (usually Class 2); those who’ve reached state pension age, via Class 3; citizens living abroad and working (Class 2) or not working (Class 3).
MoneySavingsExpert notes: “The returns can be huge – spend £800 and you could get £5,500 back.
“For some who qualify and have the cash, paying to plug NI gaps is a no-brainer that could boost your pension by £1,000s. Though there are lots of ‘ifs’ and ‘buts’ that could mean it’s not right for you.”
Possible too that the same result can be achieved for nothing.
The web site goes on: “There are a host of activities that can get you a qualifying NI year.”
If you’ve been in any of these scenarios, you can apply for NI credits for that year:
- Statutory sick pay.
- Jobseeker’s allowance – you are/were eligible for it but not claiming it.
- Caring for a family member – as long as you are/were between 16 and state pension age and the family member is/was under 12 and not your child … also known as ‘grandparent credits’.
- Caring for a sick/disabled person – as long as it is/was for at least 20 hours a week.
- On statutory maternity, paternity or adoption pay.
Other scenarios too such as jury service, the spouse of a member of the armed forces, or on a Government-approved training course.
Check how much of the full state pension you are on target to get. Contact the Future Pension Centre on 0800 731 0175. If you’ve deferred your state pension or are already claiming it, then it’s the Pension Service on 0800 731 0469.
Nevertheless, ensure you are not robbing Peter to pay Paul.
MoneySavingsExpert cautioned: “If you’re likely to have a low income and will only rely on state pension, pension credit – a top-up for people of state pension age who don’t have a certain basic level of income – may cover the gap. That can include topping you up to roughly the equivalent of what you get in the full state pension.”