Martin Lewis has warned that there’s just a few months left to add tens of thousands of pounds to your state pension pot before a deadline passes and you can never access the money.
The money expert has been pushing hard on the issue of missing National Insurance contributions as the deadline to fill in missing years in your record is rapidly approaching with each passing month of 2024.
The money saving expert says that spending as little as £824 on ‘buying out’ a missing year in your National Insurance record with HMRC can be extremely lucrative, turning into up to £6,100 per year in annual state pension value paid out when you retire.
If you live to an average lifespan, that could be as much as £79,000 extra in your pension pot.
And how worthwhile it is will increase as you get closer to retirement age. Martin Lewis says everyone aged between 40 and 73, so born between 1951 and 1974 should strongly consider doing this.
Each year you’re missing – for example if you didn’t earn enough, or you were ill or abroad – could add as much as £5,400 per year to your state pension if you’re male and £6,100 per year if you’re female, based on average life expectancy.
If you’re missing 13 years and buy them all back, that makes a total of £79,300 extra in your state pension if you’re female and £70,200 if you’re male if you live an average lifespan.
Martin Lewis’ MSE site adds: “There is a potentially unbeatable opportunity everyone aged 40 to 73(ish) needs to consider. You’ve got until April 5, 2025 to buy back any missing national insurance years from 2006 to 2016. This can be prove very lucrative, as some are on course to make over £50,000 in boosts to their state pension by following this guide.”
“This is for men born after 5 April 1951 (currently aged up to 73) and women born after 5 April 1953 (currently up to 71). Born earlier? You’re on the old state pension, so this doesn’t apply.”
“Normally you can buy back up to six years, but when the ‘new’ state pension was introduced, transitional arrangements were put in place to let you plug gaps all the way back to 2006.”
One of Martin Lewis’ ITV Money Show viewers managed to add as much as £74,000 to his pension pot but most people stand to gain at least £50,000.
Martin told his viewers: “If you have gaps between 2006 and 2018, you need to think about this this year because you can only do it until next April.”
“If you’re nearly at the state pension age it’s easy to see, it’s pretty obvious that you should be buying them.”
“The older you are, the more likely you should be [buying them. If there are no gaps after 2019, then you could still buy those so you could wait and see.”
“You need a minimum 10 years to get a state pension so a warning here.”
“If you’ve only got three years, and you’ve got three years missing, there’s no point buying those three years because you’ll still only be on six years and you still won’t get the state pension.”
“If however you’re on nine years and you can buy a year, suddenly you’ll have 10/35ths of your pension and it will be massively lucrative, worth £3,000 a year for £800. So if you’ve got very limited years it could either be very lucrative or not lucrative.”
