Time to catch up with your National Insurance history?

The countdown is on and the clock is ticking for you to look at your National Insurance records and plug any missing years of payments to potentially offer a great return on your investment.

The extended window of opportunity to make voluntary contributions for any gaps in your NIC history dating back to April 2006 runs out on 5 April this year. After this, you will only be able to go back and top up any missing payments over the last six years.

So, why is this such a golden opportunity?

Well, the National Insurance contributions you make throughout your working life count towards your future state pension entitlement.

To qualify for the maximum state pension, currently £185.15 per week (received by anyone retiring on or after 6 April 2016) you need 35 years of contributions.

For part-payment of the state pension, you must have contributed at least 10 years.

For those whose NI record started before 6 April 2016, different rules may apply; the number of years required may be higher.

But simply put, the more years of contributions you make, the better your state pension entitlement will be!

Is it worth paying now to fill any missing gaps?

Filling in your missing gaps in your National Insurance record potentially offers you a great return on your investment.

A missing year would cost up to £824.20 or £15.85 per week, based on voluntary class 3 NI contributions. This would then “buy” you an increase in your state pension of £275 per year, inflation linked and be paid from your state pension age for the rest of your life.

It is also worth noting that some people may be able to make voluntary contributions using a lower ‘class 2 rate’ of £3.15 per week.

How do I check my National Insurance record?

If you are not sure what your history looks like, you can check this online by visiting www.gov.uk/check-national-insurance-record

Here you will get full details of how many qualifying years you have already achieved and how many years you will accrue by working until the state pension age.

If you think you will fall short of the maximum state pension, then check your record by individual years and it will tell you the amount that is needed to top up any gaps.

Topping up will not necessarily be the right option for everyone, but for most people, it could be an excellent opportunity to maximise a guaranteed inflation-linked income in retirement.

So, don’t forget, with the 5 April extended window deadline rapidly approaching, do not leave it too late and miss this opportunity.

More help and advice

If you need help with checking your National Insurance record or deciding whether to make voluntary NI contributions, please contact a member of the Westcotts team or speak to your usual adviser.

While we cannot give financial advice, if you think you need some, ask your financial adviser for a retirement overview. Westcotts Chartered Financial Planners can help, and we are happy to refer you or you can contact them direct by visiting our Financial Planning Services page.

Written by Paul Webb

March 3, 2023

Category: Blog

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