Filling gaps in a National Insurance record
A person typically needs 35 years of National Insurance (NI) contributions to get the full new state pension.
An individual may have gaps in their record because they were abroad for a while or they were not earning enough to pay National Insurance.
Fortunately, there is the option to voluntarily pay NI contributions to cover gaps in a person’s record.
Now is a good time to look at topping up any gaps as 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.
HMRC announced this week the deadline has been extended for people to buy contributions over the extended period, and people can now do so until April 2025.
Class 3 NI contributions are currently worth £17.45 a week or £907 for a full financial year. This will provide an extra £303 a year in payments, meaning a person will get their money back in the boosted payments after three years claiming the state pension at the current rates.
In fact, they will likely get their money back as the triple lock guarantees payments increase each financial year.
A woman called Caroline appeared on an episode of Martin Lewis’ Money Show this week after she paid NI contributions to increase her payments from £112 a week to the maximum £203.85 a week.
She is now on track to receive an extra £95,000 in state pension income over the next 20 years, the average life expectancy for a person of her age.
Deferring the state pension
A person may be able to increase their state pension by deferring when they claim the support.
An individual can currently start to claim state pension when they reach the age of 66, although the state pension age is increasing gradually to 67 and then to 68 over the coming years.
There is no need to do anything to defer the state pension – a person simply has to not claim their payments when they reach state pension age.
Individuals who reached state pension age on or after April 6, 2016, will get an increase to their state pension for each week it is deferred, as long as they have deferred for at least nine weeks.
In this case, their state pension will go up by one percent for each nine weeks it is deferred, or just below 5.8 percent for the 52 weeks of a year.
For people who reached state pension age before April 6, 2016, their pension will go up for each week it is deferred once it has been deferred for at least five weeks.
Their payments will go up by one percent for each five weeks they are deferred, which is a 10.4 percent increase for each 52 weeks.
Claiming National Insurance credits
A person may be able to get credits towards their National Insurance record even while they are not paying contributions.
People on certain benefits get credits, including people on Universal Credit, who automatically get Class 3 credits.
Some people get credits automatically as part of their benefits claim while others have to apply.
A person can check how much state pension they are on track to receive using the state pension forecast tool on the Government website.
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