- Brits attempting to boost their state pension entitlement by paying voluntary National Insurance (NI) contributions will still be able to plug gaps dating back to 2006 after 5 April this year, the BBC reports
- Savers have until 5 April to take advantage of rules which allow you to plug gaps in your NI record going back almost two decades
- From 6 April onwards, it will only be possible to fill gaps by paying voluntary NI contributions from the prior six years
- Amid fears of a spike in demand ahead of the deadline, the Department for Work and Pensions (DWP) has said anyone who requests a call back in relation to a voluntary NI contribution will still be able to take advantage of the transitional rules, even if the call back comes after 5 April
- The move should help prevent a repeat of the chaos that ensued when the previous government attempted to enforce the deadline, when people found themselves unable to get through to DWP
Tom Selby, director of public policy at AJ Bell, comments:
“There’s nothing like an impending deadline to sharpen the mind, and with just over a month until the closing of special rules allowing people to plug gaps in their National Insurance record going all the way back to 2006, the government is clearly bracing for a surge in demand. The decision to soften the deadline for those who try to contact the DWP in the next few weeks and request a call back suggests lessons have been learned from the previous government’s botched attempt to close this window.
“Provided a request for a call back has been made by the 5 April deadline, the government says any request to fill gaps going back to 2006 processed after this date as a result of a call back will be honoured. This pragmatic approach should help ensure anyone who wants to take advantage of the time-limited transitional measures has the opportunity to do so.
“It is crucial before paying voluntary NI that you check this is a sensible course of action. If you are young, for example, you will likely build up the required 35-year NI record naturally through work. Equally, it is possible to claim free NI credits from government if you care for children or elderly relatives.
“The first port of call should be to review your NI record to see if there are any gaps to fill. From here, you can then consider if it’s likely to be beneficial or if there are alternative ways, such as claiming free NI credits, to boost your state pension entitlement.”
How do voluntary NI contributions work?
The full state pension for those who build up entitlement after 5 April 2016 (when the state pension system was reformed) is £221.20 per week, or around £11,500 per year. To qualify for the full amount, you need to have a National Insurance (NI) contribution record of 35 years, with deductions made for every missing year on your record. You need at least a ten-year NI record to qualify for any state pension entitlement.
For anyone who thinks they might come up short of NI contributions, there is the option to pay voluntary NI in order to boost your entitlement. Even if you have reached state pension age (which is currently 66) you can top up your state pension by paying voluntary NI. Paying voluntary NI contributions can be a financially savvy way to boost your retirement income, although you need to make sure doing so will increase your entitlement.
It costs £17.45 to buy a week’s worth of state pension entitlement in 2024/25, or around £900 to buy a year’s worth of state pension. In return you could receive £330 per year of state pension income, protected by the triple-lock (meaning your state pension will rise by the highest of average earnings growth, inflation or 2.5% each year). Provided the top-up boosts your state pension entitlement, it will take just a few years for that investment to pay off. You can usually only reach back six tax years to fill gaps in your NI record, but until 5 April Brits have a time-limited opportunity to reach all the way back to 2006 to boost their state pension entitlement.
Things to think about before paying voluntary NI
Before making any decision, it is crucial to check this is the right option for you as not everyone will benefit from paying voluntary NI. For example, if you are relatively young and working, you will likely build up the 35 years of NI contributions you need to get the full state pension naturally. This is less likely to be the case for someone who has already reached state pension age.
Equally, those who have taken time out of work to care for children or elderly relatives may be able to claim NI credits for free. But if you’ve had other work gaps for other reasons or have spent time abroad not paying NI, voluntary contributions can be a really sensible investment.
In addition, anyone who previously ‘contracted-out’ of the state pension under the old system (which existed before 6 April 2016) might also be entitled to less than the full state pension (even if they have a 35-year NI record).
Contracting out (which no longer exists) just meant you paid lower NI and in return didn’t receive entitlement to the state second pension (the state pension used to be made up of two parts – the basic part and the state second pension, which was previously called ‘SERPS’).
If you have previously contracted-out, a deduction will be made to your state pension entitlement. If you aren’t entitled to the full state pension as a result of being contracted-out, you can pay voluntary NI to make up the gap.
However, not everyone who was contracted-out will benefit from buying extra NI years. This is quite complicated and will depend on what you’d have been entitled to under the old system.
For those considering paying voluntary NI, the starting point should be to check if you have any gaps in your record – you can do this online or by contacting the DWP over the phone. Once you have identified any gaps, determined that you aren’t entitled to free NI credits and therefore that filling the gap by paying voluntary NI is the best way to boost your state pension, you can press ahead with paying your voluntary NI. It is easiest to do this online although you can also make your application via post.
Normally, it is possible to fill in NI gaps for the previous six tax years. However, as part of transitional arrangements introduced when the state pension was reformed in 2016, it is currently possible to reach back all the way to April 2006 to fill any gaps in your record. If you think you might benefit from doing this, you need to get your skates on as the window for taking advantage of these transitional arrangements closes on 5 April 2025.
As you can probably tell, this is quite complicated and whether paying voluntary NI is sensible will vary from person to person. There are, however, various free resources that can help inform your decision:
- You can check you NI record here: Check your National Insurance record - GOV.UK
- You can find information on claiming free NI credits here: National Insurance credits: Eligibility - GOV.UK
- And you can contact the Pension Service to discuss making voluntary NI contributions here: Contact the Pension Service: Get information about your State Pension - GOV.UK
- Further information about paying voluntary NI is available here: Pay voluntary Class 3 National Insurance: Pay online through the Check your State Pension forecast service - GOV.UK
- Finally, if you can access free information via the government-backed MoneyHelper website here: Voluntary National Insurance contributions and State Pension | MoneyHelper
