It is possible to top up your State Pension. In other words, you can make additional National Insurance contributions, to make sure you get as full a State Pension as possible in retirement. The Government also has a special offer on at that moment, enabling you to top up by a lot more than usual. But you must be quick: the offer ends 31st July.
Few things in life are guaranteed
But a British State Pension is about as close as you can get to a cast-iron guarantee.
If you’ve made enough National Insurance (NI) contributions – namely 35 years’ worth – you get the full £9,660.86 a year, or £185.15 a week.
That’s on current levels. It’s going up to £203.85 a week, or £10,600 a year from 6th April – and is likely to rise thereafter, because of the triple lock guarantee which was put in place to provide protection against inflation.
That’s if you’ve made enough NI contributions.
But what if you haven’t?
Buying more years in your state pension
The Government allows you to make up any missed contributions for the last six years. Given they operate on a one tax year time lag, you can go back to 2016 and make extra NI payments. This will cost you up to £800.80 per year.
This means that, for an outlay of up to £4,804.80, you can guarantee you will put yourself in the best position to receive the fullest possible State Pension in retirement. Currently that’s £9,660.86 but set to rise to £10,600 – every year, until you die, subject to you having 35 years of full NI contributions.
That’s a pretty useful investment.
The special offer: buying even more years
But there’s more.
If you’re a woman born after 5 April 1953, or a man born after 5 April 1951, you are likely to be able to buy more than the last six years’ worth.
In fact, you can pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016. That’s an extra ten years.
The deadline for this special offer closes on 31 July 2023. After that date, the rules revert to you merely being able to buy the last six years.
How to top up
As pensions go, this is a reasonably simple and straightforward thing to do.
To top up, you’ll need a Government Gateway account to do the online components.
First of all, we suggest checking to see if you are eligible in the first place. The full list of criteria is here but don’t worry about this too much, the next stage will tell if you have a shortfall that you can make up.
Second, get your State Pension summary. This is a forecast (not a guarantee) of what you are likely to receive and when you can start receiving it. It’s available here.
Scroll down a little and look for the link marked “View your National Insurance record”. This will tell you what NI contributions you’ve made in which years. Any years showing a less than full contribution from 2016 onwards (in normal circumstances) or from 2006 (under the special offer ending this July) will be eligible for top up. The record will show you if you have a shortfall in a tax year and how much you need to pay to make it up.
Third, this is the point where we suggest you seek advice from us:
We are very used to reviewing your NI contributions, and the advantages of topping them up to receive the full State Pension considering your overall financial arrangements. For example, you may learn from your forecast that you already have 30 years’ worth of contributions – so there’s a decision to be made about the five-year balance: do you buy more or work more or a blend of the two?
We can also give you tips on how to get through the last stage as efficiently and effectively as possible.
This fourth and final stage will require you to call the Future Pension Centre, part of His Majesty’s Revenue and Customs (HMRC). This is the bit that sometimes defeats people. This department is short staffed and snowed under. You may need to wait a while until you get through to someone but do keep trying. During the call, the staff will be able to:
- Confirm that it is worth you topping up. There can be circumstances where it isn’t. For example, if you were in certain types of final salary pension schemes before 2016 or opted out of the old SERPS pension via a personal pension. This is something only they can advise on
- Give you the 18 digit code that you need to make an online payment.
Where to go
If doing all this online isn’t for you, don’t worry, a telephone-based and paper-based option is also available. We can talk you through these.
The relevant contact details are as follows:
Future Pension Centre helpline
Open 8 6 Monday to Friday
Telephone: 0800 731 0175
Telephone from outside the UK: +44 (0)191 218 3600
Welsh language telephone: 0800 731 0175
Textphone: 0800 731 0176
HM Revenue and Customs
National Insurance Contributions and Employer Office
This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.