How to top up your State Pension


Updated on 12 May 2017

Topping up your National Insurance contributions by £741 could boost your State Pension by £5,214. Read on to find out more.

What happens if you haven't paid enough National Insurance 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.

Luckily, there is a way you can make up for some of those missing years – even if you have retired and you’re already receiving State Pension benefits.

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.

Here’s what you need to know.

If you reached State Pension age before 6 April 2016

If you reached State Pension age before on or before 6 April 2016 you will be entitled to the basic State Pension which pays £122.30 a week.

In order to get the full basic State Pension, you 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. So, even if you only have one qualifying year, you'll still get something.

If you have less you may be able to buy missing years by paying Class 3 Voluntary Contributions. You can normally go back up to six years. So, the earliest NICs you can make are for 2011/2012, which you have to do by 5 April 2018.

There are different rules for those that reached State Pension between 6 April 2010 and 5 April 2015 as well as those who already have 20 qualifying years.

This applies to men born before 6 April 1945 to 5 April 1950 and women born 6 April 1950 to 5 October 1952.

People in this group can buy back up to six missing years right back to 1975/76 and the deadline is six years after the date on which they reach State Pension age.

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If you reached (or will reach) State Pension age after 6 April 2016

If you reach State Pension after 6 April 2016 you will be entitled to the new State Pension, which currently pays £159.55 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.

Under the new system, you can top-up missing years as far back as 2006/07 up to 2023, after that the six-year rule will come into force.

How much will voluntary NI contributions cost you?

Those entitled to the new State Pension can fill NIC gaps as at a rate of £14.25 a week for 2016/17, which means you can buy back a whole missing year for £741.

Buying a missing year will provide £237 a year extra in come, which over a 22-year retirement (the average life expectancy according to the ONS) amounts to a £5,214 boost.

If you qualify for the basic State Pension paying £741 now will produce an extra £212 a year, which amounts to a £4,664 boost over a 22-year retirement.

The cost of voluntary Class 3 NICs is currently £14.25 per week but the rate varies depending on the year you want to make up and when you make the contribution. Here' what you'll pay for other years.

Year to which contribution are applied

Cost of making a week’s worth of NICs

2006/07 to 2009/10

£13.25

2010/11

£12.05

2011/12

£12.60

2012/13

£13.25

2013/14

£13.55

2014/15

13.90

2015/16

£14.10

2016/17

£14.25

Is it worth buying class 3 voluntary NI contributions?

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

This will check your ‘personal maximum’. If yours is greater than or equal to £159.55 you probably don’t need to do anything.

Open a Self Invested Personal Pension (capital at risk)

 

Other things to consider

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 extra 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.

 

 

How to buy class 3 voluntary NI contributions

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.

More pension tips

Deferring your State Pension: how much can you get and is it worth it?

Divorce and pension splitting UK: everything you need to know

State Pension: 6 mistakes that impact how much you get paid

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