Martin Lewis is encouraging individuals to check to see whether they can increase their state pension by up to £74,000. This however only applies if they are of the appropriate age.
Deadline to Boost State Pension by Buying Missing NI Years Approaching, Warns Martin Lewis
The finance expert has highlighted how the deadline for buying back lost National Insurance years on your personal tax return is right around the corner.
Since the amount you earn in your state pension is based on the number of years of National Insurance contributions you have on history, if you're missing years from your back catalogue, you may enhance your state pension considerably by buying them back
For every £800 you spend to fill a missing year of National Insurance (NI), you could see an average increase of £6,100 over time in your pension, according to Martin Lewis.
The closer you are to retirement, the more beneficial it is to make up for any gaps in your NI record. However, if you're under 45 (born after 1979), it’s usually not worth it unless you have significant gaps in your history.
Martin also mentioned that the deadline to fix this is April 2025, and while that may seem far off, the process can take months to complete. Since the deadline is strict, once it passes, you'll no longer have the chance to boost your pension by buying these missing years.
Martin Lewis Explains How Buying NI Years Can Boost Your State Pension
Martin Lewis has issued crucial advice on how filling gaps in your National Insurance record could significantly boost your state pension. He advised his audience, "If you have gaps between 2006 and 2018, you need to think about this this year because you can only do it until next April.
"If you're nearly at the state pension age it's easy to see, it's pretty obvious that you should be buying them."
"The older you are, the more likely you should be. If there are no gaps after 2019, then you could buy those so you could wait and see."
Martin Lewis pointed out that if you're under 45, it’s probably not worth buying back National Insurance years unless you have very cheap partial years available. He added, "If you can buy a year for as little as £16, it might be worth doing just in case you miss future contributions, as the potential value is huge."
He also highlighted the importance of having at least 10 qualifying years to get any state pension. "If you’ve only got three years and buy three more, you’ll still fall short of the 10-year requirement," he said.
However, Lewis explained that if you have nine years and can buy just one more, you'll qualify for 10/35ths of the full pension. This could be highly lucrative, as that £800 investment could bring you £3,000 a year in pension payments. So, for those with limited qualifying years, it could be either highly beneficial or not worthwhile, depending on their situation.
He explained that by adding £6,100 to your state pension each year, you could accumulate up to £74,000 extra over your lifetime if you live to the average life expectancy for women.