Many savers are at risk of not receiving the full State Pension when they retire, largely due to gaps in their National Insurance records. This issue affects a significant portion of the population, with many unaware of the necessary steps to ensure they qualify for the maximum entitlement.
Experts are urging individuals to take proactive measures, including reviewing their National Insurance history and making informed decisions about voluntary contributions.
Failure to do so could result in a reduced pension, impacting their financial security in retirement. According to DevonLive, it’s crucial to act before missing opportunities to fill any gaps in their records.
What Qualifies for the Full State Pension?
To receive the full new state pension, individuals need a minimum of 35 qualifying years of National Insurance contributions. A qualifying year is earned by either paying National Insurance or receiving National Insurance credits, which can be obtained through various circumstances such as unemployment or caring for family members.
Many pensioners, estimated to be around half, are not receiving the full state pension, which currently amounts to £230.25 per week. This is often due to missing years of National Insurance contributions, particularly for those who have less than 35 qualifying years. If an individual has fewer than 10 qualifying years, they won’t be entitled to any state pension.
As of April 5, 2025, the opportunity to top up National Insurance records for years before 2019 has expired. This means that unless individuals acted by completing an online callback form with HMRC, they cannot add contributions for years earlier than the last six tax years.
For those looking to fill gaps in their record, checking their National Insurance record on Gov.uk is a crucial step.
Should You Make Voluntary Contributions?
Voluntary contributions can help fill gaps in one’s National Insurance record, but they come at a cost. A year of voluntary contributions can set individuals back approximately £907.40. While this can increase the state pension by about £330 per year, experts caution that it might take up to three years of state pension payments to break even.
It’s essential to carefully consider whether this investment aligns with your retirement plans.
In some cases, people may be eligible for National Insurance credits without making a financial contribution, especially if they are unemployed, caring for children, or looking after elderly relatives. As Tom Selby of AJ Bell explained to The i Paper :
The first thing to consider is whether you are likely to naturally build up a 35-year NI record through work. It is also important to check that you cannot boost your state pension entitlement for free before paying voluntary NI.
It’s also advised that savers check if boosting their state pension could disqualify them from other benefits, such as Pension Credit or the Winter Fuel Payment.
