In order to qualify for a full State Pension, you will need a complete National Insurance (NI) record of 35 years or a minimum of 10 qualifying years to be entitled to any amount.
There are various ways you will build up your entitlement, the main ones being:
-Whilst you work and pay NI contributions
-Receiving NI credits
-Paying voluntary NI contributions
You are able to attain a forecast of your state pension and a copy of your NI record through the Government Gateway, this will provide information on the State Pension you have accumulated to date and any extra NI credits that are needed in order for you to receive the full State Pension entitlement.
Voluntary contributions
If you find there is a shortfall in your NI contributions, there is the option to make voluntary contributions to fill any gaps in your NI record. This is usually only possible for gaps during the previous six years.
However, there are certain extensions available to the six-year timeframe but only until 5 April 2023; so, if applicable to you, prompt action is advised. Until this date, men born after 5 April 1951 and women born after 5 April 1953 are able to pay voluntary contributions for any eligible gaps between the tax years April 2006 and April 2016. This essentially provides a potential window of 16 years for which to make up any shortfalls.
The cost to fill in gaps in an NI record are up to £3.15 per week for class 2 contributions (£163.80 per annum) or up to £15.85 per week for class 3 contributions (£824.20 per annum). It is clear to see the benefit of making these contributions, given that each additional qualifying year equates to an extra £275.08 of State Pension benefit. Voluntary payments can be made as a one-off payment, by quarterly or monthly instalments.
What should I do?
If you think you could potentially miss out on utilising your voluntary contributions based on the above information, it is important that you seek clarification from an expert financial planner as soon as possible. With specialist advice, you can ensure you make the most of the potential benefit before the end of this tax year when the window of opportunity will be reduced to the previous six years for everyone.
Get in touch with a member of our financial planning team today to discuss your personal circumstances by emailing enquiries@pmm.co.uk or calling 01254 679131.
A comment to note that the article does not constitute personalised advice and that advice should be sought before taking any action.