State pension deadline - how to check your forecast and pay for missing NI years
You are able to check your state pension forecast online and see if you have any gaps in your National Insurance record - but how do you do it?
Brits have until the end of July to plug any gaps in their National Insurance record which will give them the full state pension when they reach the official retirement age.
The original deadline of April 5 this year but was extended until July 31 after a public awareness campaign, spearheaded by the Money Saving Expert Martin Lewis, caused phone lines to the Future Pension Centre to become jammed.
The extension allows people to buy back missing National Insurance years going back to 2006.
After the July deadline, Brits will only be able to go back six tax years - so from August, you will only be able to go back to 2017.
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So when should you buy back years? and how do you do it? Here we explain everything you need to know.
When do you need to buy back years?
The full "new" state pension is currently £203.85 a week and you get this when you turn 66 years old.
However, how much you receive depends on how many "qualifying" full National Insurance (NI) years you have.
You collect National Insurance through working and paying it from your wages - you can also claim them if you are on benefits.
Currently, most people need 35 years of full National Insurance years to get the full state pension so if you do not have this you will get less money when you reach state pension age.
It does not need to be 35 consecutive years.
When the "new" state pension was introduced, transitional arrangements were put in place to let you plug gaps all the way back to 2006.
The deadline for this is now July 31 and after this date, you will not be able to go back and plug the missing years further back - you will only be allowed to go back six tax years.
So overall, if you are approaching state pension age and you do not have 35 years of NICs then you will need to "plug the gaps" to make sure you do.
For example, if you are 65 and you only have 32 full years of NICs then you will need to "plug" three full years to get the full state pension.
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How can you check?
Before you pay for any voluntary contributions, it’s a good idea to check your state pension forecast to get information on your state pension entitlement.
You can check this by using the online "Check your State Pension" forecasting tool on Gov.uk, by calling the Future Pensions hotline, or by post by completing a BR19 form.
You will need a Government Gateway account to check your forecast online.
Your forecast will tell you exactly how much money you will be paid each week/month/year in retirement.
This will be according to your current and projected level of contributions.
The summary also outlines what steps you need to take to improve the forecast if there are any shortfalls.
Your forecast will show you which years are not full and they will be marked as "Year is not full".
Before you make any contributions you should consider several factors.
This includes whether it is worth topping up - for example, will you live long enough to benefit from topping up, will topping it up push you into a higher tax bracket when you get the state pension, and if you have time to make up the losses before you reach 66.
You should also check whether you can claim National Insurance Credits - this means you do not have to buy additional years.
Some examples where you can potentially earn NI credits include:
- Being a parent or guardian registered for child benefit for a child under 12
- Being on Statutory Sick Pay
- Looking for work
- Fostering a child or caring for a sick or disabled person
You should always ask for bespoke advice before making a decision.
Contact the free Future Pension Centre on 0800 731 0175 before buying any NI contributions to check if you'd benefit from plugging any gaps in your NI record.
If you're already at state pension age, contact the free Pension Service helpline on 0800 731 0469.
How much does it cost to top up?
For most people, the cost to make up a full year is:
- £824.20 for gaps between 2006/07 to 2019/20
- £795.60 for gaps between 2020/21
- £800.80 for gaps between 2021/22
This rate of NIC is known as Class 3 however people pay different rates depending on their situation.
You can find out more about the different classes of National Insurance on GOV.UK here.
How do you pay for voluntary NICs?
If you are making a one-off payment for Class 3 NICs and have decided how many years to top up and which ones exactly, you will need to contact HMRC to find out the cost.
You will also need to find out how to get the 18-digit reference number you need to actually make a payment.
This number can be given to you over the phone or sent by post.
You can contact HMRC's National Insurance helpline on 0300 200 3500.
Once you have the 18-digit number, paying for the missed years can be done by online bank transfer, from a bank at your bank or building society or by cheque to HMRC.
Full details on plugging gaps in your NI record can be found on GOV.UK here.
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