Can I boost my State Pension?

Individuals have less than six months to fill any gaps in their NI records from 2006 onwards to maximise their State Pension.  People have until 5 April 2025 to maximise their State Pension by making voluntary National Insurance (NI) contributions to fill any gaps in their NI record between 6 April 2006 and 5 April 2018. Normally it’s only possible to fill gaps from the previous six tax years and this situation will be reinstated from 6 April 2025 onwards.

The State Pension you receive is based on your National Insurance Contributions (NICs) record. The most common way to complete your record is by paying Class 1 (employed individuals) and/or Class 2/Class 4 (self-employed individuals) contributions during your working life. If you have gaps in your record, it may be possible to pay a third type of contribution – called Class 3 – to top up your record and boost your entitlement.

How much more State Pension could I receive?

Under the new system, introduced in 2016 for those reaching State Pension Age on or after 6th April 2016, each qualifying year of National Insurance Contributions entitles you to 1/35th of the full State Pension amount. In the 2023/2024 tax year, the full amount is £11,502.40 a year, so each National Insurance year is worth £328.63 of yearly state pension.

The Office for National Statistics reports the average life expectancy for someone at State Pension Age is 19 years (males) and 21 years (females). The average person could therefore expect to receive in the region of £5,500 more for each extra year of NICs paid. This is without factoring in the guaranteed increases to the State Pension under the triple lock.

Why would I have gaps in my record?

There are several reasons why gaps may exist in a National Insurance record. The most common include:·

• Career breaks – e.g., to bring up the family, to care for another person
• Time spent in lower-paid work
• Time spent working abroad
• Periods where your primary income was dividends rather than salary

How much do Class 3 NICs cost?

Currently, Class 3 National Insurance contributions cost a fixed rate of £15.85 per week (a full year costs £824.20) and are paid directly to the DWP. The cost is based on the current tax year, and not how much it would have cost to pay them in earlier years. With the State Pension amount increasing annually the cost of Class 3 NICs also increases annually. Paying Class 3 NICs now locks in the boost to your State Pension.

Anyone can pay Class 3 contributions for the previous six tax years, so the opportunity is there for gaps between the 2016/2017 tax year and now.

You can sometimes pay for gaps from more than six years ago, depending on your age. If you are a man born after 5th April 1951 or a woman born after 5th April 1953 you have until the end of April 2025 to pay voluntary contributions to fill gaps between April 2006 and April 2016.

How do I check my NICs record?

You can check your NICs record online via your Personal Tax Account. The system will give you an estimate of your State Pension in today’s terms and provide a list of complete years.

Alternatively, you can complete a BR19 State Pension Forecast form and send this to the Department for Work and Pensions along with a covering letter requesting a breakdown of your contribution record.

If you have gaps in your NICs record or would like to discuss your pension and retirement planning in more detail, please don’t hesitate to contact us or by calling 01903 534587.