Missing the deadline could mean you lose over £300 a year in retirement
Experts have issued a stark warning that acting promptly could significantly increase your state pension income – potentially by thousands. Time is of the essence for savers, as the deadline to plug gaps in their National Insurance record since 2006 is fast approaching, with only until April 5 to take action.
After this cut-off point, individuals will be restricted to filling gaps from only the last six tax years. This means if you’ve neglected to make National Insurance contributions any time between 2006 and 2019, you have under three weeks to amend this shortfall or it becomes a permanent gap on your record, which ultimately determines your state pension amount.
Jonathan Watts-Lay, Director at WEALTH at work, highlighted the urgency with which certain individuals should review their National Insurance records online, identifying three key demographics most likely to benefit from taking swift action due to potential gaps in payments—notably those who may have career breaks, periods of working abroad or times off for childcare or caring for the elderly.
He cautioned: “Those who have a gap of more than 6 years in National Insurance contributions, which may include those who have taken a career break, have worked abroad or had time off for child or elderly care. (They) may want to consider filling these gaps in their record now to ensure they are on track to receive the full State Pension entitlement at retirement.”
To secure the full new state pension, a minimum of 35 qualifying years is needed, each representing an entire year’s worth of paid National Insurance contributions. The April deadline is particularly crucial for those approaching retirement.
For instance, if you were employed and contributed to National Insurance from 1990-2006, took a career hiatus, and resumed work in 2015, by 2025 you’ll have approximately 26 qualifying years. If you don’t fill up your record before April to bridge the 2006-2015 gap, you’ll need to continue working for an additional nine years to be eligible for the full state pension.
However, if you reach state pension age prior to this, you won’t be able to fill the gap based on your employment as you will no longer be contributing to National Insurance. To address this shortfall, you can make voluntary National Insurance contributions.
While this may seem like a hefty initial expense, data from WEALTH at work indicates that it’s a worthwhile investment in the long term. For employed individuals, it costs £17.45 to purchase a week’s worth of National Insurance credits or £907.40 for an entire year.
Each year of voluntary contributions can increase your state pension by £328.64 annually. This amount accumulates over time, so if you buy a full year and live 20 years beyond the state pension age, you would receive an additional £6,500 in state pension for an outlay of £907.40.
However, experts caution: “It can take a number of years to get back what you pay in, so people should consider how long they expect to receive their State Pension. If someone was to die before reaching the State Pension age, they wouldn’t get anything back.”
You can discover your current state pension entitlement on the Gov.uk website. Additionally, the government provides a checker tool that allows you to view your National Insurance record and identify any potential gaps that need addressing before April.
