How to top up your State Pension

Many pension savers could boost their retirement income by up to £55,000 by taking advantage of a time-limited concession.

The Government allows pension savers to make voluntary National Insurance contributions to cover any years that are missing from their National Insurance record.

This ensures that the saver can get the maximum State Pension possible.

Normally, you can only 'buy back' a maximum of six years but, due to a time-limited concession as a result of changes to the State Pension system, savers can fill in an additional 10 years.

The deadline for this concession was originally set for April 2023 but, as that date drew near, the DWP was inundated by pension savers desperate to beat the cut-off time, with many claiming they were simply unable to get through. 

In response to ongoing difficulties experienced by applicants, the Government pushed the date back to April 2025.

Let’s take a closer look at the role of your National Insurance record in determining the size of your State Pension, and how to go about making voluntary contributions.

Your National Insurance (NI) record determines how much State Pension you receive.

It’s possible to develop gaps in your NI record, which means you haven't paid sufficient contributions or got enough credits in a year.

This can happen if you were employed but weren’t earning enough to pay NICs, have been unemployed but didn’t claim benefits or have been self-employed and don’t make enough to pay them, for example.

Gaps in your NI record could mean you will miss out on getting the full basic or new State Pension.

You can improve your entitlement to the State Pension by paying Class 3 Voluntary NI contributions out of your own pocket.  

How much you will have to pay depends on whether you fall under the old or new State Pension system.

If you reached State Pension age before on or before 6 April 2016 you are entitled to the basic State Pension which currently pays a maximum of £156 a week.

In order to get the full basic State Pension, you generally need to have a total of 30 years of NI contributions or credits.

Each qualifying year you have will count towards 1/30th of the full pension. 

If you have less you may be able to buy missing years by paying Class 3 Voluntary Contributions. 

If you reach State Pension after 6 April 2016 you will be entitled to the new State Pension, which currently pays £204 per week.

In order to get the full amount, you need to have a total of 35 years of NICs. But you’ll need at least 10 qualifying years of NICs to get any State Pension at all.

Again, if you have less you may be able to buy missing years by paying Class 3 Voluntary Contributions.

Ordinarily, you would only be able to fill in missing years from up to six years ago.

But, as mentioned earlier. there is currently a larger payment window covering all the way back to 2006/7.

This extended window only applies to those who come under the New State Pension system.

Those extra missing years could make an enormous difference to the eventual size of your State Pension income.

Analysis by pension consultancy LCP last year found that someone with 10 missing years of contributions could pay out a little over £8,000 in order to fix those gaps, but over a 20-year retirement would see a £55,000 boost to their income.

Those entitled to the new State Pension can fill NIC gaps at a rate of £15.85 a week for 2022/23, which means you can buy back a whole missing year for £824.20.

Each qualifying year is currently worth around £303 in terms of your annual pension income, and if you survive for 20 years that will mean you end up getting an additional £6,050.

However, if you're on the old State Pension then the benefit would be closer to £5,000. 

The cost of voluntary Class 3 NICs is currently £15.85 per week, and you will usually pay this rate when making voluntary payments.

This is not the case for the previous two tax years, as you will pay the original rate for those years. As a result, you will pay £15.40 for 2021/22 and £15.30 for 2020/21.

If you have gaps in your NI record, paying voluntary NI contributions will entitle you to a bigger State Pension.

Of course, if you have adequate pension provision of your own, you may decide topping up the State Pension isn't necessary.  

Also if you are below State Pension age you may still have time to reach a full 35-year record, which means paying now might not be worth it.

You can find out more about your NI record, how much topping up will cost and whether it’s worth doing it now on the Government’s check your State Pension tool. 

If you're likely to be on a low income during retirement, buying back extra years may not help you. If you qualify for Pension Credit – or think you might – you'll effectively get the full State Pension even if you haven't paid enough NI.

It might also affect your eligibility for other benefits such as Housing Benefit and Council Tax Benefit.

If you're in poor health, you may want to think twice before buying missing years. You may not survive long enough to make it worthwhile.

You may be entitled to additional State Pension through your spouse's NI record.

Check this out to make sure you don't buy any extra years you won't actually need.

To buy extra years, go to the HMRC website. You can pay monthly by Direct Debit or quarterly. For more information, call the Pension Service on 08456 060 265.

If you're already receiving your State Pension it will be increased as soon as your voluntary NICs are received, but the increase will not be backdated.