SAVERS have been issued a warning over a “ticking time bomb” which could see them miss out on cash in retirement.
People who haven’t got a complete National Insurance record won’t receive a full state pension later on in life.
It takes 35 “qualifying” years of NI contributions to get the full new state pension and at least 10 years to get anything at all.
Luckily, you can top up your NI record which ensures you’ll receive the full amount when do you come to retire.
The full new state pension is currently worth £221.20 a week so it’s well worth looking into boosting payments if you have the budget.
As it stands, you can top up for any missing years from between 2006 and 2018.
But a change from April 2025 means you will only be able to pay to top up your NI record for the previous six tax years.
It means if you want to top up your NI record from as far back as 2006, you only have around 12 months to do so.
Kevin Mountford, co-founder of online savings platform Raisin UK, said topping up your record from 2006 could be worth thousands of pounds and warned against the “ticking time bomb” of not doing it before the April 2025 deadline.
He said even buying one NI year would make someone £328 better off a year when they came to claim their state pension.
Over the course of 20 years, it would make them more than £6,000 better off.
He explained: “Putting in a full-year class 3 contribution at £824 could make you £328 (better off) per year towards your pre-tax pension – that could add up to over £6,000 before you retire.”
Becky O’Connor, director of public affairs at PensionBee, added: “Until April 2025, there’s the chance to make up the difference much further back, for years between April 2006 and April 2018.
“This potentially applies to men born after 5 April 1951 and women born after 5 April 1953.”
Buy more National Insurance years and you could be set for even more than £6,000 overall in retirement.
Of course, bear in mind you have to pay to top up your NI record which means you will be temporarily out of pocket.
It depends on your age too – if you are still working and on course to earn 35 NI years, you obviously don’t need to top up.
It comes after the Government scheme which lets people fill in gaps in their NI history from 2006 was set to end last April, but it was extended until July, before being extended once more to April 2025.
The move was due to DWP phone lines being jammed in the run up to the initial deadline.
You might have holes in your NI record for any number of reasons, including if you took time out of working to raise children.
In this case, you would be missing NI years because you receive them by working.
HMRC previously said the revised deadline for people to plug any gaps in their NI record will help “tens of thousands” more people.
It’s worth bearing in mind, the scheme to plug missing NI years from 2006 to 2018 only applies to people who reached (or will reach) state pension age after April 5, 2016.
Remember too, it might be worth claiming NI credits before topping up your NICs.
You can claim NI credits if you haven’t worked throughout your life and have giant holes in the NI record, say for example if you were on benefits, ill or unemployed.
How to top up NI years and how much you can get
You have to pay to fill any gaps in your NI record.
How else to boost your pension
THERE'S are a couple other ways to boost your savings pot in later life, according to two experts who spoke to The Sun...
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said one easy way of boosting your state pension pot is by deferring it.
This is because you don’t receive your state pension automatically and have to actively claim it.
But for each year you decide to not claim it, the Government boosts your payments.
Helen explained: “Under the new state pension system for every year you defer you boost your state pension by around 5.8% per year.
“This works out as an extra £12.82 per week. However, make sure that in doing so you aren’t inadvertently pushing yourself into a higher tax bracket when you do come to claim state pension or pushing yourself out of eligibility for benefits you would otherwise have received.”
Becky O’Connor, from PensionBee, said you should also claim child benefit to boost your state pension, even if you’re not working.
This is because claiming child benefit gives you NI years.
Becky explained: “While you usually get National Insurance contributions by paying taxes on your wages, when you claim child benefit, you’ll be automatically credited with National Insurance contributions until your youngest child is 12, even if you’re not earning.
“Even if you don’t think you’re eligible for child benefit because either you or your partner earns over the £60,000 tax-free limit, it’s important to claim it to avoid missing out on National Insurance contributions and putting yourself at a disadvantage in retirement.”
If you’re filling gaps between 2006/07 to 2015/16 you’ll be paying the 2022/23 rates for contributions.
It works out to be worth £15.85 a week which means it costs £824.20 to buy one year of contributions.
As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year.
Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
Someone who was retired for 20 years would get back around £55,000 in total (before tax).
Anyone who tops-up their record after April 2025 will pay those rates.
Before you make any voluntary contributions, you need to get a pension forecast which tells you how much you can expect to earn when you start claiming your state pension.
You can get one of these via the Government’s website.
This is because there are some situations in which paying historic contributions don’t boost your state pension.
You can check the full list of who’s eligible for claiming credits on the Government’s website.
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