HUNDREDS of thousands of mothers are at risk of wasting their time and money by topping up their pensions ahead of a key deadline.
Class 3 contributions are voluntary payments you can make to fill in gaps in your National Insurance record.
Hundreds of thousands of women have been warned they are wasting their money[/caption]
The contributions can help you to qualify for or boost your State Pension.
You can usually only pay for gaps in your National Insurance record for the past six years, which means you have until April 5 each year to top up.
But former pensions minister and LCP partner Steve Webb has issued a warning to hundreds of thousands of mothers that they could be wasting their money if they do so.
This is because they may be able to fill in any gaps in their record for free by claiming missing National Insurance credits.
Families who claim Child Benefit for a child under 12 automatically get National Insurance credits.
These credits can help non-working parents to build up a full state pension.
But when non-working parents do not claim the benefit, they create gaps in their National Insurance record.
They may not have claimed Child Benefit because the working parent earned more than the eligibility threshold.
The threshold was originally £50,000 but rose to £60,000 in 2024.
Above this threshold the amount of Child Benefit you get gradually tapers off before stopping completely.
This means that parents who claimed the credits could be hit with an additional tax bill, which is called the High Income Child Benefit Charge.
But even if your income meant you were not entitled to the money, you could still complete the Child Benefit claim form and tick the box to say you want credits only, rather than the cash.
However, many parents were unaware of this option.
As a result, the number of families on Child Benefit has fallen every year since 2013.
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 – but it’s due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people’s National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
In response to this problem the last Government said that it would create a new type of National Insurance credit to help this group that missed out.
But until now the current Government has said very little on the subject, which made the change seem more unlikely.
But last week the Government confirmed that it will introduce the new credits next year.
In a Parliamentary session Exchequer Secretary James Murray said: “I can confirm that the new National Insurance (NI) credit for parents who did not claim child benefit due to the High-Income Child Benefit Charge will be implemented as planned from April 2026.”
He added that the change will ensure that “affected parents and carers do not miss out on building entitlement to the State Pension”.
Although this is good news, it means that mothers who have already paid voluntary contributions could be wasting their money as they will get free credits for those years.
But without full details of who will qualify and for which tax years, there is still some uncertainty.
Steve Webb said this is “good news” but the Government should make it clear who is eligible as soon as possible.
He said: “Parents who were thinking of paying voluntary NI contributions before April 5 might need to think again, as they are at risk of wasting their money.”
But he added: “It would be helpful if the government set out – as a matter of urgency – precisely who will be entitled to these new credits so that parents know whether or not there is any point making voluntary contributions for these years.”
Who can make voluntary National Insurance contributions?
If you do not pay National Insurance then you may have gaps in your record.
This could be because you were:
- Employed but had low earnings
- Unemployed and were not claiming benefits
- Getting National Insurance credits for less than a full tax year
- Self-employed but did not pay contributions because of small profits
- Living or working outside the UK
Gaps in your record can mean that you do not have enough years of National Insurance contributions to get a State Pension.
You usually need to have at least ten qualifying years of contributions to get any money.
Typically, you need around 35 years to qualify for the full new state pension.
Meanwhile, if you have gaps in your record then you may not qualify for certain benefits.
You may be able to pay voluntary contributions to fill any gaps and top up your pension.
You have until 5 April 2025 to pay for gaps in your National Insurance record that were more than 6 years ago.
If you’re a man born after 5 April 1951 or a woman born after 5 April 1953, then you can pay voluntary contributions to fill gaps between 2006 and 2018.
If you were born before these dates, you can fill gaps between 2016 and 2018.
After 5 April 2025, everyone will only be able to pay for voluntary contributions for the past six years.
But the rules have currently been relaxed so that you can buy missing National Insurance years dating back to 2006/7.
From April 6 the usual rules will apply so you can only backdate your contributions for six years.
But this deadline is now flexible.
As long as you have logged an inquiry with the Future Pension Centre, which manages NI top-ups, by April 5, they will be able to make payments after this deadline.
The change comes after a rush of last-minute enquiries from people trying to beat the deadline and boost their pensions.
This has led to long call wait times as people have been unable to get through.
If you cannot speak to someone in time for the deadline you can now fill in an “online call back request form”.
You should check your National Insurance record to find out:
- If you have any gaps
- How much it will cost you to pay voluntary contributions
- If you will benefit from paying voluntary contributions
- If you can pay online
Voluntary contributions do not always increase your State Pension.
This could be because:
- You’re close to State Pension age and do not have enough qualifying years to get or increase your State Pension
- You know you will not be able to get the qualifying years you need to get the full State Pension during your working life
- You’re self-employed and have annual profits of less than £6,725
- You live outside the UK, but you want to qualify for certain benefits or the State Pension
- You’re not eligible for National Insurance credits
You can check your State Pension forecast to find out if you will benefit from paying voluntary contributions.
For advice contact the Future Pension Centre on 0800 731 0175.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk.
Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories
