More than 10,000 payments have been made through a new online system designed to help people increase their state pension, with a total of £12.5 million contributed since its launch.
Individuals hoping to benefit from this measure have until April 5, 2025 to address national insurance (NI) gaps dating back to 2006, after which the normal six-year payment limit resumes.
Extended Window for Voluntary Contributions Set to Close
Ordinarily, voluntary NI contributions can only be made for the last six tax years. As part of the new state pension transitional arrangements, the UK government extended this timeframe, allowing eligible individuals to fill gaps going as far back as April 2006.
The extension ends in early April this year, meaning this opportunity will no longer apply beyond that date.
Men born after April 6, 1951, and women born after April 6, 1953, are eligible to benefit. Some may also qualify for NI credits, which serve as alternatives to paid contributions.
51% of Users Top Up Just One Year
Analysis of the digital service shows that 51% of customers chose to top up just one year of missing contributions, with the average online payment being £1,193. The service, launched in April 2023, has proven accessible and popular. As personal finance analyst Alice Haine noted :
Plugging gaps in your record is relatively straightforward since the Government rolled out its new NI payments services in April last year – a State Pension forecast tool that has been checked by 3.7m since its launch.
Pension Value : Years Needed and Return on Investment
According to Alice Haine,
“People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any state pension at all and at least 35 years to receive the full new State Pension – though they don’t need to be consecutive years.”
A full additional year costs about £825, though partial years can start at £16. Each additional year adds around £329 annually, which means a return on investment can be achieved in roughly three years, assuming eligibility.
Still, Haine emphasises caution :
Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years.
This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.
Using the Online System to Check and Pay
The digital service allows individuals to log into their personal tax account or use the HMRC app to review gaps in their NI record.
“People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the Government’s digital channels,” Haine said.
“A short survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Ways to Increase Your State Pension Without Paying
For some, the state pension can be increased through NI credits rather than direct monetary contributions. One option is Carer’s Credit, which applies to individuals aged between 16 and state pension age who have provided unpaid care.
Another possibility is the Child Benefit NI credit, which ensures contribution eligibility was preserved during periods when child benefit was received.
A third route is the grandparent childcare transfer, available when grandparents have cared for children under the age of 12 at any point since 2011.
In such cases, the parent may transfer their child care credit to the grandparent to help fill any contribution gaps.
Take Action Before the Deadline
Anyone interested in reviewing or improving their state pension should begin by using the ‘Check your State Pension forecast’ tool available on GOV.UK, which outlines both projected payments and official pension age.
For further guidance, individuals can contact the Future Pension Centre at 0800 731 0175 to obtain information about eligibility and available purchase options.
Those who have already reached retirement age should instead reach out to the Pension Service at 0800 731 0469.
It is essential to ensure that only qualifying years which will genuinely increase the pension are paid for, and government services are in place to help guide that process.
