With just weeks to go before the window closes on boosting your state pension, Brits are being urged to act fast.
After 5 April 2025, the opportunity to backdate National Insurance contributions will be severely limited, with the ability to plug gaps only stretching back six tax years instead of the current 17.
For many, filling these gaps could make a significant difference in the amount of state pension they receive in retirement.
Latest data (August 2024) shows that over 1.1 million people are currently receiving less than £200 per week from their state pension. However, from April, the full new state pension will rise to £230.25 per week.
Helen Morrissey, Head of Retirement Analysis at Hargreaves Lansdown, stressed the importance of acting before the deadline: “The clock is ticking for people to take advantage of the opportunity to plug gaps in their state pension record going back to 2006.
“In less than six weeks, the window will slam shut, and after that, you can only go back six tax years. With more than a million pensioners receiving less than £200 per week, this is a chance that could have a real impact on your retirement income.”
Who Can Benefit?
If you were born after April 5, 1951 (men) or after April 5, 1953 (women), you can still backdate your National Insurance contributions to 2006, potentially increasing your future state pension payments.
How Can You Top Up?
To see if you’re eligible, you can easily check your National Insurance record online at gov.uk. If you’re under state pension age, you can also review your state pension forecast or get in touch with the Future Pension Centre. For those already over state pension age, The Pension Service is your point of contact.
Experts are advising people to get their paperwork and details in order now, as the lead-up to the April deadline is expected to cause a surge in traffic to government websites and phone lines. A little preparation could make all the difference in ensuring you don’t miss out on boosting your retirement savings.
What Will It Cost?
The cost for filling in a gap is roughly £824 per year of missed contributions, with partial years costing less. Each extra year of National Insurance will increase your state pension by approximately 1/35th, which equates to around £328 per year. As long as you live more than three years past your state pension age, you will have recouped the cost of topping up.
Free Ways to Boost Your Pension
Before you pay to fill any gaps, make sure to check whether you automatically qualified for National Insurance credits during the years in question. For example, those who missed out on claiming Child Benefit due to the High-Income Child Benefit Charge may be eligible for free credits that could boost their state pension.
Important Considerations
Morrissey also advises checking with the Future Pension Centre before committing any money to ensure that topping up will actually benefit you. For some, such as those who were contracted out of the State Second Pension, buying extra credits may not be an option.
As the deadline approaches, now is the time to review your National Insurance record and make the most of this opportunity to secure a better state pension.
