People are being warned of an upcoming deadline to make payments that would boost your State Pension.
HM Revenue and Customs (HMRC) has recently disclosed that over 10,000 payments amounting to £12.5 million have been made through a new digital service to boost people’s State Pensions since its launch in April. Now individuals have less than six months left to address any gaps in their National Insurance (NI) records dating back to 2006 to maximise their State Pension upon retirement.
Typically, individuals can only make voluntary contributions for the previous six tax years, and after the deadline of April 5 next year, the usual six-tax year limit will be reinstated. In 2023, the former government extended the deadline for voluntary NI contributions to April 5, 2025 for those affected by new State Pension transitional arrangements, covering tax years from April 6, 2006 to April 5, 2018.
This extended deadline has given individuals more time to assess their options and make their contributions. Men born after April 6, 1951 and women born after April 6, 1953 are eligible to make voluntary NI contributions to enhance their New State Pension, reports the Daily Record.
Some individuals may be entitled to NI credits instead of having to make contributions, so they should check and consider what is best for them. HMRC stated that further analysis of the online service usage shows that the majority (51%) of customers topped up one year of their NI record, with the average online payment being £1,193.
Pensions Minister Emma Reynolds appealed to those nearing retirement age by saying: “We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement.”
She went further by stressing the importance of seizing the opportunity, saying: “That’s why I urge everyone to check if they could benefit by filling gaps before the deadline passes. Using our online tool means only a few clicks could make a huge difference to your future.”
Adding valuable advice, Helen Morrissey from Hargreaves Lansdown gave tips on how retirees can boost their State Pension. She shared: “There are things you can do to plug the gaps, including checking to see if you were entitled to claim a benefit (such as Child Benefit) which comes with a National Insurance credit during that time, and seeing if you can backdate a claim.”
Morrissey also pointed out the benefits of purchasing voluntary National Insurance credits, suggesting that “you can also buy voluntary National Insurance credits, which can work out very good value. Generally, you can purchase credits to plug gaps going back six tax years but if you’re a man born after 5 April 1951, or a woman born after 5 April 1953 you can currently plug gaps in your National Insurance record going back to 2006.”
The pension adviser has issued an urgent alert for those considering boosting their National Insurance (NI) record, saying: “It is hugely important that you speak to DWP before parting with any money for voluntary National Insurance credits as they can confirm if you will definitely benefit from buying them. In some instances, such as if you were contracted out for instance, you may not benefit from the extra credits.”
Tips for boosting State Pension
Head to the ‘Check your State Pension forecast’ page on the GOV. UK website to get an idea of your State Pension entitlement.
You’ll also find out when you can officially retire and start receiving payments.
Claim Child Benefit
Many women have lost out on these credits because it was the partner who made the claim, not them. High-Income Child Benefit Tax Charge has also impacted others, but claiming in your name secures the National Insurance credit.
If you’re under the State Pension age and caring for a family member under 12 while their parent returns to work, you might be eligible for the Specified Adult Childcare Credit. This scheme allows the working parent to essentially transfer their National Insurance (NI) credit to you.
There are also other circumstances where you can claim NI credits while receiving benefits, such as when you’re off work and receiving Statutory Sick Pay.
Voluntary Contributions
If you have the financial means, you can fill gaps in your NI record by purchasing voluntary class 3 NI contributions.Buying a full extra year costs around £800, although partial years will cost less. Each year purchased gives you 1/35th of a year’s State pension.
However, it’s crucial to check with the DWP to ensure that buying these credits is worthwhile for you. More information about filling gaps in your National Insurance record can be found on the GOV. UK website.
Are you qualified for Pension Credit?
Pension Credit is a scheme designed to boost the incomes of the poorest pensioners, offering access to other benefits such as assistance with heating costs, Council Tax, and a free TV licence for those aged over 75. This means-tested benefit also provides access to Winter Fuel Payments following the Labour Government’s decision in July to cease issuing the annual heating bill aid to all State Pensioners.
New claims lodged before December 21, 2024 that are later deemed successful will also be eligible for a backdated Winter Fuel Payment. To verify eligibility for Pension Credit, older individuals or their friends and family can utilise the online Pension Credit calculator on GOV.
UK. Alternatively, pensioners can directly contact the Pension Credit helpline at 0800 99 1234 from Monday to Friday, 8am to 6pm.
