Martin Lewis has urged Britons to do an “important” check that could boost their state pension by thousands of pounds over the course of their retirement.
He spoke on his ITV show to give a “clarion call” to the nation for individuals to find out if they have gaps in their National Insurance record, which they could top up to increase their state pension payments.
A person typically needs 35 years of contributions to get the full new state pension. People can usually pay contributions up to six years ago, but the scheme is currently extended by another 10 years, as far back as the 2007/2008 tax year.
Ministers have this week extended the deadline for people to buy contributions over the extended period, and people can now do so until April 2025.
Caroline and her husband Mark appeared on Martin Lewis’ ITV show to share their story of how they hugely increased their state pension income for the rest of their retirement.
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In the years approaching her state pension age, Caroline had to stop working due to health reasons.
Caroline knew she would be missing years of her state pension and the couple looked at making voluntary contributions, but they didn’t know how to do it.
They watched a February episode of the Martin Lewis show which called on people to check if they could pay voluntarily National Insurance contributions.
Caroline had 19 full years, two years of part contributions and 14 missing years. They paid £12,283 in total to top up her contributions using money from Mark’s redundancy money he got when he retired.
This boosted Caroline’s state pension from £112 a week to the full new state pension, of £203.85 a week, almost doubling her payments.
This will provide her an extra £95,000 in income over the next 20 years, the average life expectancy for a woman of her age.
Mark said: “Having this increase in pension should ensure that she can live fairly comfortably for the rest of her days, and I’m very pleased about that. It’s the best money investment you will make.”
To purchase NI contributions, a person will need to buy “voluntary class 3 National Insurance contributions” – although this may be different from self-employed people.
Class 3 contributions are currently worth £17.45 a week or £907 for a full financial year, which runs from April 6 of one year to April 5 of the next.
As a person usually needs 35 years of contributions to get the full £203.85 a week/£10.600 a year new state pension, each year of contributions is worth 1/35 of this amount, or an extra £303 a year in payments.
Interactive investor calculated that an individual who purchased 10 years of NI contributions at the cost of £9,070, could increase their state pension by £77,400 over a 20-year retirement, £33,946 over 10 years and £15,927 over five years.
If a person purchased six years of contributions for £5,442, they could get £46,440 over 20 years, £20,368 over 10 years and £9,556 over five years.
Britons who have been low earning self-employed people may be able to pay less for contributions.
Individuals who were under the small profits threshold of £6,725 in 2022/2023 and 2023/2024 may be able to buy Class 2 voluntary contributions instead.
In this case, they would only have to pay £33.45 a week or £179 for a full year. This means a self-employed person with low earnings could pay £1,794 in contributions and boost their state pension by £77,400 over a 20-year period.
Alice Guy, head of Pensions and Savings at interactive investor, said: “The extension of the National Insurance deadline is amazing news for anyone with gaps in their National Insurance record and that often includes self-employed people, and anyone who’s taken time out to care for loved ones.”
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