WORKERS can boost their state pension by £50,000 – but the deadline to do so is just one month away.
Savers can fill gaps in their National Insurance record to get the full state pension in later life.
You can top up your state pension by filling in your NI record[/caption]
Currently, individuals can buy missing NI years dating back to the 2006/7 financial year after the rules were changed in 2016.
However, this will change from April 6, limiting retrospective contributions to the past six tax years instead.
It means you have just a few weeks left to boost your state pension by a significant amount.
Those filling in NI years can increase their state pension by up to £113.76 a week, working out as an annual increase of £5,915.92.
Stacked up over 10 years, and you’re looking at a total pay boost of more than £50,000.
Bear in mind, as it stands you need 35 NI years to qualify for a full new state pension which is worth £221.20 a week.
However, you only need 10 years to get anything at all.
Jon Greer, head of retirement policy at Quilter, previously said: “Before making a payment, you should check your NI record using the ‘State Pension forecast’ on the gov.uk website to understand your current state pension entitlement.
“If you are not predicted to receive the full amount, you should investigate any potential gaps and fill them if you can.
“Not everyone will benefit from paying voluntary contributions, so it’s vital to also contact the Future Pension Centre on 0800 7310175.
“They can provide personalised advice on whether paying extra will increase your entitlement.
“It might be one of the most beneficial calls you make in planning for your retirement.”
The one-month warning comes after the government announced a major change to the NI topping up process.
As long as you have logged an inquiry with the Future Pension Centre by April 5, you can make payments after this deadline.
What is National Insurance?
NATIONAL Insurance is a tax on your earnings, or profits if you’re self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You’ll usually pay National Insurance Contributions (NICs) when you’re over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 – so £72.50. Then you pay 2% on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
NICs are usually taken automatically by your employer and paid to HMRC, so you don’t need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.
The announcement from ministers came following a flurry of last-minute enquiries from people trying to beat the deadline to boost their retirement income.
TOP UP YOUR NATIONAL INSURANCE YEARS
In some cases, buying back missing years can be really valuable, but you’ll have to pay to fill them.
If you fill gaps between 2006/07 and 2015/16, you’ll pay the 2022/23 rates for contributions.
It is worth £15.85 a week, which means it costs £824.20 to buy one year of contributions.
As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year.
Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
Someone who was retired for 20 years would get back around £55,000 in total (before tax).
Anyone under 73 can make voluntary pension contributions, as it’s assumed everyone under this age will claim the new state pension.
Find out how to pay for your contributions by visiting www.gov.uk/pay-voluntary-class-3-national-insurance.
CHECK FOR NATIONAL INSURANCE CREDITS
Before making a voluntary contribution, it is important to check if the gaps in your contributions can be filled with free NI credits.
Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.
For example, those on certain benefits should qualify for Class 1 credits.
This includes parents with active claims for child benefit.
You can check the full list of people eligible to claim credits by visiting www.gov.uk/national-insurance-credits/eligibility.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.
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