The government has moved the deadline for filling gaps in national insurance records for tax years 2006 to 2016 from April 5th to July 31st, 2023. People with gaps in their records now have more time to decide if they want to fill them in, potentially boosting their state pension by thousands of pounds.
After July 31st, 2023, individuals can only top up any missing national insurance from the previous six tax years (2017-2023).
Receiving the full new state pension requires 35 years of national insurance contributions, but this may vary based on age and record. You can check your pension forecast to confirm.
To top up missing national insurance contributions between 2006 and 2016, individuals have until July 31st, 2023.
Those who are unsure whether this applies to them or who need to top up their NI contributions should first contact the government's Future Pension Centre (FPC) for guidance.
The cost of topping up one full year is £824, and it will cost less if it's a partial year. Each year bought will provide an additional £275 in state pension each year.
To calculate the benefits of topping up missing national insurance years, individuals can use a breakeven point analysis. For example, if someone had six incomplete years between 2006 and 2016, it would cost around £4,944 to purchase those years, providing an additional £1,650 (before tax) in extra pension each year. This would lead to a breakeven point of approximately three years.
For those who have not yet reached state pension age, the first step is to check their state pension forecast. If extra years are needed, they can consider purchasing missing years before July 31st, 2023, by contacting the FPC for a personalized quote.
Making ongoing national insurance contributions each year as a non-resident can be achieved by making Class 2 or Class 3 level contributions using this form: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1102905/CF83.pdf
Individuals already in receipt of their state pension or in deferment can contact the Government's Pension Service to consider topping up their pension.
The income you receive is a key part of any retirement financial plan; contact our wealth planners to discuss how this can be a part of your financial planning strategy.