If you are planning to claim the UK state pension, it is important to check your national insurance (NI) record before 5 April 2023. This is because voluntary contributions can be made to plug gaps in your NI record back to April 2006, but this option will be curtailed from April.
National insurance (NI) contributions are made by employed and self-employed individuals based on their earnings. To qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016), a person must have 35 qualifying years of NI contributions. For those whose NI record started before 6 April 2016, different rules may apply, and the number of required years of NI contributions/credits to obtain the full state pension may be higher. For part payment of the ‘new state pension’, a person must have contributed for at least 10 years.
If a person has not contributed enough before reaching state pension age, they may not be able to claim the state pension, or receive the full state pension amount. To help protect the state pension and other benefits, it may be beneficial for people to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive.
However, we recommend seeking financial advice before making any decisions about voluntary contributions, as it requires predicting what contributions will be made before state retirement.
Normally, it is only possible to make voluntary contributions for the past six tax years. Currently, there is an extension in place, which allows individuals to fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions. From 6 April 2023, the timeframe for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will only be possible to make contributions going back to the 2017/18 tax year.
It is essential to check your NI record and make any necessary contributions before 5 April 2023 to ensure you receive the full state pension amount. By taking action now, you can secure your future and enjoy a financially stable retirement.