A MARTIN Lewis fan has revealed how they boosted their pension pot by £11,500.
Sheila revealed how she boosted her state pension pot by making two voluntary contributions worth £1,000 in the latest episode of the Martin Lewis Money Show.
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It comes after Sheila and her husband Martin from Wiltshire watched the Martin Lewis’ show last October and realised that Sheila hadn’t made enough National Insurance contributions to receive the full state pension.
The mother-of-one stopped working full-time to focus on bringing up her son Carl who required full-time care due to a disability.
Sheila said: “I was Carl’s primary carer, right up until he was 19 and a half which is when he had the opportunity to move out into supported living.”
But as the pair approached their retirement age, they started to think about maximising their state pension.
Martin, Sheila’s husband said: “Whilst I was aware that Sheila hadn’t made enough National Insurance contributions to receive the full state pension, I hadn’t done anything about that until I was watching Martin Lewis‘ show back in October.
At the time Martin Lewis said that if you’re aged between 45 and 70 you need to check if you can boost your state pension because some people are missing years – meaning they won’t get the full allowance.
Off the back of this, Martin said: “I rang the Future Pensions Centre, and they had confirmed that Sheila was three full years short of full National Insurance contributions.
“One of those years was just £190 short, but by paying a voluntary National Insurance contribution Sheila would receive an additional £275 per year.
“For the second year, for an £800 payment, Sheila would receive another £275 per year.
“A female will typically live 21 years beyond the initial state pension age (66) and should Sheila live that long – she’ll receive back £11,500 from a contribution of £1,000.”
While Sheila and Martin could have paid another £800 for the missed contributions in the third year but that contribution would have only resulted in a 34p per week boost.
This is because they were nearly at the maximum state pension so Sheila would have had to live another 45 years to get her money back if they made another £800 top-up.
Martin said: “Martin Lewis’ advice during that show was absolutely spot on.
“I would have probably just gone ahead and paid the full three years, which would have been a little bit of a waste of money.”
Anyone aged between 45 and 70 set to receive the new state pension and missing National Insurance contributions (NICs) can plug gaps back to 2006.
But after April 5 you will only be allowed to backdate missing payments by up to six years.
So you should fill in any gaps before this date.
You need 35 years’ worth of NICs to get the full pension amount which is currently £185.15 per week.
But you might have gaps in your NICs if you were not earning enough, or were unemployed and not claiming benefits.
Anyone wanting to check can do so via National Insurance Credits on the Government’s website Gov.UK.
The new state pension was introduced in April 2016.
You can claim the benefit once you have reached state pension age (66) and if you have at least 10 years of National Insurance contributions.
You also have to have been born on or after April 6, 1951, if you are a man and after April 6, 1953, if you are a woman.
How can I top up my new state pension?
How much you can get for the new state pension depends on your National Insurance contributions.
You can get the full amount if you have made 35 years’ worth and have to have made 10 years to get at least something.
But you can top up any missing gaps in your NI record through voluntary contributions.
Steve Webb, LCP partner and former pensions minister, previously told The Sun topping up contributions can get people a better “rate of return” than other ways of saving.
But you have to pay if you want to plug any gaps.
Earning back your missing NI years costs £15.85 a week so it will work out as £824.20 to buy one year of contributions.
Steve said as an extreme case, someone who misses the April 5 deadline to fill their gaps would lose the chance to top up another 10 years of NI contributions.
This would be the period between 2006/07 to 2015/16.
Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
So someone who was retired for 20 years would get back around £55,000 in total, before tax.
How you can claim voluntary contributions depends on which type you are going for.
For example, if you want to buy Class 2 National Insurance contributions you can pay for them as part of your Self Assessment tax bill.
Or you can pay for them online on Gov.UK.
But you’ll need your online banking details and the 18-digit reference number shown on your HMRC payment request ready.
You’ll need your Class 2 National Insurance reference number to hand as well.
If you want to buy Class 3 contributions you can pay on Gov.UK as well.
You’ll need your Class 3 National Insurance reference number to hand though.
It’s also worth bearing in mind that voluntary contributions won’t always increase your state pension.
If you have the budget, you can pay a financial advisor to see whether it’s worth you buying them back.
Who can claim National Insurance credits?
It is important to check if gaps in your contributions – for example when you’re not working and looking after children – can be made up by claiming credits instead.
Thousands are thought to be missing out on these NI Credits, leaving them worse off in retirement.
For example, those on certain benefits should qualify for Class 1 credits.
You can check the full list of who’s eligible for claiming credits on the government website.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.
