State pensioners have a chance to increase their payments this month, with the opportunity to top up National Insurance (NI) contributions. This window offers a potentially substantial financial boost, but it is closing soon.
According to Devon Live, individuals can make voluntary contributions to fill gaps in their NI records, with the potential to add thousands to their future pensions.
However, this option won’t be available for long, and those interested must take swift action before the approaching deadline. It’s crucial to understand the process and benefits before it’s too late.
How to Boost Your State Pension Payments
Typically, you can only top up your National Insurance contributions for the past six tax years. However, there is a limited-time opportunity to pay back to the 2006/2007 tax year. This window is closing today, April 5, which means State pensioners must act quickly to maximize their state pension.
To receive the full new state pension, currently at £221.20 a week, you typically need 35 years of NI contributions. Starting this month, payments will rise by 4.1%, with the full amount increasing to £230.25 per week.
The Potential Financial Impact
Amy Knight, a personal finance expert at NerdWallet UK, explains that filling just four missing years of contributions could reduce your annual state pension income by £1,310. She adds,
Over a 25-year retirement, this could amount to a loss of almost £33,000 or more as the state pension increases.
Voluntary contributions are being accepted until midnight April 5, 2025, for the tax years 2016/17 and 2017/18. After that, State pensioners will no longer be able to make up for these gaps. Knight further emphasizes that this process takes just 15 minutes, saying:
It takes just 15 minutes to log into the Government website to check your NI record, find out if you’re eligible to make voluntary payments to turn these into qualifying years, and complete the transaction to HMRC using online banking.
She also advises users to prepare before starting:
Take a moment to dig out your Government Gateway ID so that you’re ready to log in, and check how much you have available in savings, outside of your emergency fund, before you start.
Who Is Most Likely to Benefit?
Individuals with gaps in their National Insurance records include self-employed workers, stay-at-home parents, and part-time workers. The process to top up is straightforward and can be done in just 15 minutes through the Government’s online portal.
State pensioners need to log into the Government website, check their NI record, and complete the transaction using online banking.
Despite the opportunity, many people remain unaware of the April 5 deadline. A recent survey of 4,000 UK adults revealed that almost three-quarters of people were unaware of the deadline to top up their state pension.
It’s encouraging to see so many people have noted the upcoming deadline and filled their National Insurance gaps, and that HMRC’s digital service is allowing easy access – said Knight.
However, the research also showed concerning figures. Only 53% of people had checked their state pension forecast, with 30% of those aged 50-69 not having done so.
Additionally, about a third of people found gaps in their National Insurance records, but only one in ten had attempted to buy voluntary contributions. So far, about 120,000 individuals have taken action, filling 260,000 years’ worth of gaps in total.
