DWP announced £10,000 Financial Boost for State Pensioners: If you’re looking to increase your state pension and potentially boost your payments by tens of thousands of pounds, there’s a key deadline approaching. You still have a few days left to purchase any missing National Insurance (NI) years before the rules change. Here’s everything you need to know to make sure you don’t miss out.
What is a State Pension and How Does It Work?
Your state pension is based on the National Insurance contributions you’ve made throughout your life. The more contributions you’ve built up, the higher your pension payments will be when you retire. If there are gaps in your National Insurance record, it could mean you won’t be eligible for the full state pension.
Currently, the full new state pension is worth £221.20 a week, while the full basic state pension is £169.50 a week. These amounts are set to increase to £230.30 and £176.45 respectively.
To receive the full new state pension, you typically need 35 qualifying years on your National Insurance record. For the basic state pension, the number of years you need varies depending on when you were born, with men born between 1945 and 1951 requiring 30 years and women born between 1950 and 1953 needing 30 years as well.
Why Act Now?
If you have gaps in your National Insurance record, you can buy back missing years, which will increase your pension entitlement. However, the deadline for purchasing past National Insurance years is April 5, after which you will only be able to purchase back six tax years instead of going back to 2006.
The cost of purchasing a missing year is typically £824 per year, and this can add an additional £328 per year to your pre-tax state pension. This could result in a significant increase in your retirement income, potentially adding up to tens of thousands of pounds over your retirement.
How to Buy Missing National Insurance Years
To check if you can purchase missing years, you need to follow these steps:
- Check your state pension forecast on GOV.UK to see if you have any gaps in your National Insurance record.
- Claim National Insurance credits if you qualify. You may have been entitled to these credits if you were on statutory sick pay, unemployed but seeking work, or caring for a child, among other circumstances.
- Make payments before April 5, 2025, to buy back the missing years and increase your pension.
If you’re unable to get through to the helpline, you can log an inquiry with the Future Pension Centre to schedule a callback. As long as you make the inquiry before the deadline, you’ll still be able to make payments after April 5.
How to Extend the Deadline
If you miss the April 5 deadline, there’s still a way to get an extra month to pay. You can log into your National Insurance record on GOV.UK, click “view details” on any years you might want to contribute for, and this will automatically extend the payment deadline by another month. For example, if you complete this on April 4, you’ll have until May 4 to make the payment.
Considerations Before Paying for Missing Years
Before you rush to pay for missing National Insurance years, it’s important to consider a few things:
- Tax implications: Purchasing additional years could push you into a higher tax bracket. You may want to evaluate whether the extra state pension will result in higher tax payments or reduced means-tested benefits.
- Current pension situation: If you are already nearing retirement and have enough qualifying years, it may not be necessary to buy additional years. If you’re far from pension age, you may still be able to continue building qualifying years.
Martin Lewis, the founder of MoneySavingExpert.com, has urged people aged 40 to 73 to check now, as buying missing years could potentially be worth tens of thousands of pounds in extra pension income.
With the deadline to purchase missing National Insurance years fast approaching, it’s crucial to check if you can fill any gaps in your state pension record. By acting before April 5, you could increase your pension payments significantly, securing a more comfortable retirement.
However, be sure to weigh the benefits and potential costs before making any payments. If you’re unsure about your options, consider reaching out to the Department for Work and Pensions (DWP) for personalized advice.
FAQ’s
What is the deadline for buying missing National Insurance years?
The deadline for purchasing missing National Insurance years is April 5. After this date, you will only be able to buy missing years for the last six tax years.
How much does it cost to buy a missing National Insurance year?
It typically costs £824 to purchase a missing National Insurance year, and this can increase your pension by £328 per year.
Can I get more time to pay for missing years?
Yes, by logging into your National Insurance record on GOV.UK, you can extend your payment deadline by an additional month.
Who should check for missing National Insurance years?
Anyone aged 40 to 73 should check for gaps in their National Insurance record to ensure they’re getting the maximum state pension.
Is it worth buying missing National Insurance years?
It can be worth buying missing National Insurance years if it significantly increases your state pension. However, you should also consider the tax and benefits implications before making any payments.
