State Pension Top Up

Men born after 5 April 1951 and women born after 5 April 1953 are able to buy extra National Insurance years to top up their State Pensions. If you are eligible, you may be able to make up for gaps between tax years April 2006 and April 2016  – this needs to be done before 31st July 2023.

When the government updated the State Pension system in 2016, they added a transition period so that those impacted could top up their pensions and boost their retirement income.

Your State Pension

Checking how much you are likely to get from the State Pension is quite straightforward.

Use the governments’ State Pension forecast calculator to see how much State Pension you could receive when you retire. You’ll need a Government Gateway account to log in, but you can create one of these if you don’t have one. You or your accountant will have created on if you complete Self-Assessment each year.

The website will give you a forecast. If this is lower than £185.15 per week, you may be able to top up your pension by making additional National Insurance contributions.

Underneath the forecast, follow the link to view your National Insurance record.

National Insurance

You can see every tax year that you’ve made National Insurance contributions and whether they are ‘full year’ or ‘incomplete’ on the government website. If any years from 2006 are incomplete, you may be able to purchase them.

There are two aways you can top up your National Insurance contributions:

  1. Claim a credit – if you have a qualifying reason, such as being on sick pay, employment support, maternity/paternity pay or caring for someone
  2. Make a payment – you can also buy contributions to plug the gaps in your record

Extra National Insurance Years

Until 31st July 2023, you can purchase National Insurance years all the way back to 2006 if you are eligible, afterwards it will be limited to the most recent six years.

If you are near State Pension age and your forecast showed less than £185.15 per week it may be a good idea to top up your National Insurance record.

If you’re younger than 45-50 it’s not as simple as you may be able to close the gap by other means – such as working extra years.

Buying Extra Years

Buying a year of National Insurance usually costs £824 – unless you’re self-employed or topping up one of the two most recent tax years.

That £824 will get you an extra £275 per year in your state pension – so if you live three years after beginning to take your pension you’ll be in credit and if you live twenty years from retirement you’ll get £5,500 for your £824.

It’s worth pointing out that you can’t boost your pension above £185.15 – so if you’re projected to get around that mark it may be less beneficial to buy extra years of National Insurance.

Should you wish to find out more about buying your extra years talk to one of our FCA authorised wealth managers by arranging a Discovery Call [Here]

This article is for informational purpose only. It does not constitute finacial, tax or legal advice, nor is it a recommendation to buy, sell or hold any investment. Past performance is not a guide to the future, investments rise and fall so investors could make a loss. No view is given on the present, future value or price of any investment and investors should form their own view on any proposed investment.