Arguably one of the best value forms of pension savings is the state pension; and, regardless of your other investments and savings, if you are short of NI contributions to ensure you receive the full amount on reaching the State Pension Age (SPA) now is the time to act.
Someone with ten missing years could pay just over £8,000 to fill the gaps and boost their state pension income by £55,000 over a 20-year retirement at today’s rates… but the revised deadline of July 31 is looming.
Normally 2016/17 would be the earliest year in which NI gaps could be filled, but until 31 July you can buy top-ups all the way back to 2006/7.
Over a third of people reaching retirement miss out on the full amount (£10,600 a year); and if you have any gaps to fill, each full year’s NI contribution will cost you £824 (less for a part-year gap). March 2023 had been the deadline to take advantage of this concession, but the DWP revised the deadline after thousands of savers found themselves unable to get through on the DWP helplines.
To qualify for the full state pension, you need at least 35 years of NI contributions, and those aged between 45 and 70 who have gaps in their NI record are the most likely to benefit from the concession.
Do remember that, even if you paid in full for a whole 35 years, if you have contracted out for some years it might reduce your entitlements. That makes it important to check whether it is worth you individually paying the top ups.
It also worth remembering that, if you don’t need your state pension to get by on immediately on reaching the SPA, perhaps because you are still working or have other forms of incomes to rely upon, you can defer it – and then receive more in later years.
To check if you have gaps in your record go to https://www.gov.uk/check-state-pension.
Keeping tabs on your retirement finances
Remember that you can use your RetireEasy LifePlan to make sure your retirement plans are realistic and sustainable. If your subscription has lapsed, you can renew it for just a few pounds a month.
