Brits are being urged to pay any missing National Insurance contributions to win a higher State Pension for life – with women in particular being encouraged to take action.
Paying £907.48 to cover one year of missed NI payments, perhaps because you have been caring for children, will boost the annual pension by some £328.64, which rises in line with inflation.
Some 3.7 million people have used a new online checking tool on GOV.UK to view their State Pension forecast and understand if they are able to pay any missing NI contributions.
So far, some 10,000 people have gone on to use the new digital payments platform to cover missing NI contributions – paying in some £12.5 million.
Finance experts say it is vital that as many people as possible take advantage of what they describe as a “pensions bonanza”.
The Government has today warned that people have until April 5, 2025, to maximise their State Pension by making voluntary National Insurance contributions to fill any gaps in their NI record between April 6, 2006, and April 5, 2018.
After the April 5, 2025, deadline, people will only be able to make voluntary contributions for the previous six tax years, in line with normal time limits.
Emma Reynolds, Minister for Pensions, said: “We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement. That’s why I urge everyone to check if they could benefit by filling gaps before the deadline passes.
“Using our online tool means only a few clicks could make a huge difference to your future.”
Anita Wright, Independent Financial Adviser at Bolton James Ltd, said: “For many, the State Pension remains the only guaranteed income source that is linked to inflation through the triple lock, making it a vital part of retirement security.
“If anyone has a gap in their NI record, paying voluntary contributions could significantly boost their future income. For example, paying £907.40 for a year’s worth of contributions in 2024/25 will secure an additional £328.636 annually for life, indexed to inflation.
“Put another way, within three years of the person’s State pension income commencing, the investment will have been fully returned.”
She added: “While the State Pension alone may not cover all retirement needs, it can still form a crucial part of the overall plan.
“Some may prefer to invest their money elsewhere, especially if they have concerns about health and longevity, since the State Pension offers no inheritance benefits under the new rules. However, for those seeking guaranteed income that rises with inflation, filling NI gaps should be strongly considered.”
Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, said: “Taxpayers with any shortfalls in their state pension record have been urged by the Government to act now and plug the gap by making voluntary contributions before this golden opportunity to maximise their state pension passes.
“People can currently plug any shortfalls by backdating their National Insurance (NI) contributions – but the clock is ticking as the deadline to take advantage of this one-off concession closes in less than six months.
“Buying back missed years can be a great way for many people to bolster retirement income as the state pension provides a guaranteed monthly income for the duration of your retirement. Most importantly, that income is currently set to increase year-on-year by at least 2.5 percent and probably more, because of the triple lock.”
She added: “Typically, taxpayers can only backdate their NI contribution history by six years, but the government is currently allowing people to pay to fill gaps on their NI record all the way back to April 6, 2006 – an extremely beneficial move designed to help those affected by new State Pension transitional arrangements.
“After the April 5, 2025, deadline next year, the system will revert to the normal time limits, which means people will only be able to make voluntary contributions for the previous six tax years.
“Your state pension entitlement is determined by the number of qualifying NI years you have. People typically need at least 10 qualifying years of NI contributions to receive any state pension at all and at least 35 years to receive the full new state pension – though they don’t need to be consecutive years.
“People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad. Pension shortfalls and errors that have come to light in the last decade have particularly affected women who gave up work to look after children and widows – and it is now thought many divorcees could also have a State Pension shock awaiting them, which is key keeping tabs on your state pension record is so important.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, told Newspage: “While the forthcoming Budget has cast a shadow of uncertainty over the pension landscape, a ray of hope has emerged for savers.
“The government’s digital pension initiative has unexpectedly struck gold, unleashing a tsunami of savings with over 10,000 payments pouring through the system as those seeking to supercharge their State Pension.
“This pension bonanza offers a glimmer of positivity and signals a shift in public proactivity regarding retirement planning. This presents a unique opportunity for individuals to bolster their retirement funds with the ability to retroactively fill NI gaps.
“This could increase State Pension entitlements significantly, offering a rare chance to enhance long-term financial security. The decision to extend the deadline to April 2025 provides a crucial lifeline for those who may have overlooked this option. However, the clock is ticking, and for millions of Britons, a few clicks today could be the difference between retiring with a whimper or a roar.”
Riz Malik, Independent Financial Adviser at R3 Wealth, said: “It is important to check your National Insurance records and plug any gaps if possible before the deadline. With the Budget looming, this is one area where a small amount of time could have big benefits when you come to retire.”
