Boost your state pension by 5th April 2025
In a recent post we discussed how you could mitigate the increase in rate of National Insurance (NI) contributions. Conversely if you have gap in your National Insurance (NI) record, you could miss out on £1,000's in future State Pension. However, it's still possible to boost your state pension by 5th April 2025 by taking action now.
Overview
You may have a gap in your NI contribution record .This could be as a result of periods of low income, self-employment without enough NI paid. Alternatively you could have spent years out of the workforce without receiving NI credits.
Why does a gap in my NI contributions matter?
If you're retiring under the ‘new State Pension’ rules, this requires about 35 qualifying years to claim the full state pension. Although, if you are to receive any State Pension, then at least 10 qualifying years are required.
Making voluntary NI contributions
Where there are gaps in your NI record, you can pay voluntary NICs. These can be used to obtain a higher State Pension or entitlement to other state benefits. Typically, this might affect you if you are aged between 45 and 60 years.
Where you are close to the State Pension age and do not have enough qualifying years or will not be able to get the qualifying years voluntary contributions are an option..
How far back can I make contributions?
You can usually only make voluntary NI contributions for the past six years. However, transitional arrangements mean that voluntary NI contributions can be made back to 2006.
The ability to make voluntary NI contributions for this extended period ends on 5 April 2025. Furthermore, after the deadline, this opportunity will be lost as the transitional arrangements will have ended.
Under this extension, the 2023-24 rates will apply to any voluntary payments made up to the 5 April 2025 deadline.
Home Responsibilities Protection (HRP)
HRP was the predecessor to Class 3 NI contributions for those individuals claiming child benefit before April 2010.
The Department for Work and Pensions (DWP) and HMRC have launched a campaign to correct some NI records where HRP entitlements are be missing.
Before using the extended voluntary NI contribution window, we recommend that you first check your entitlement to HRP for the tax years 2006-07 to 2009-10. Equally importnantly you should check whether this has been properly reflected in your record.
Where errors in your HRP position are corrected this may negate the requirement to make voluntary NI contributions for those years. You can fuse this HRP eligibility checker here.
What level of voluntary NI contributions should I make?
As has been pointed out by Martin Lewis it may not always be worth making full voluntary contributions to boost your state pension by 5th April 2025. You'll need to work out what level of voluntary contribution will provide the most benefit. He has helpfully provided a calculator on his website for this purpose.
What action should I take?
In order to decide whether to boost your state pension by 5th April you should take the following steps:
The Department for Work and Pensions (DWP) has created an online call-back request form for those struggling to get through by telephone. This is available on the Contact the Future Pension Centre page on GOV.UK.
Provided you submit a request to the DWP by 5 April 2025 will still be able to pay voluntary NICs back to 6 April 2006, after the deadline has passed.
For more useful information, check out our Ebooks here.
And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].
Alternatively, please feel free to complete our Business Questionnaire here.