25 February 2023 , 07:00
441
0
A Martin Lewis fan has shared how she upped her retirement pot by £11,500 by following the Money Saving Expert's pensions advice.
Speaking on a special pensions episode of The Martin Lewis Money Show Live on Tuesday night, Sheila and her husband Martin explained how they found out her state pension was not going to as much as she thought.
The couple, based in Wiltshire, said Sheila stopped working full time when their youngest son was born, to become his primary carer as he had a disability.
Sheila described how she continued to support him until he was 19, and could move into supported living.
The couple were aware that her care for their son had meant that Sheila had not made enough National Insurance (NI) contributions to receive a full state pension.
Martin Lewis issues 8-week warning to phone users ahead of huge price hikes
Due to her care for their son, Sheila had not made enough National Insurance Contributions (NICs) to get the full state pension (ITV)Martin told the show that even though they knew this he had not done anything about it until Martin Lewis reminded them.
In the October show, The Money Saving Expert had urged anyone aged 45-70 to urgently check if they were eligible for a state pension boost by buying National Insurance years to meet the threshold for a full state pension.
After seeing this, Martin called the Future Pension Centre and they confirmed Sheila was missing contributions across three years.
For one year she was £190 short, and by paying this amount she could boost her state pension by £275 a year.
Martin warned others to check exactly how many years it's worth buying National Insurance for (ITV)She was also short by £800 for a second year and by paying this amount they could boost her payments by another £275 a year.
Martin told the show: "A female will typically live about 21 years beyond the initial state pension age.
"Should Sheila live that long, she will receive back an additional £11,500, for a contribution of £1,000."
Martin also added the caveat that it's worth checking exactly how many years it's worth buying National Insurance for.
This is because Sheila could have paid another £800 for a third National Insurance year, but it would only have gained her an extra 34p per week extra in her pension pot.
By making this payment, Sheila would've had to live another 45 years beyond the state pension age to get her money back.
Martin Lewis urges everyone with a mobile phone to send two texts to cut bills
Martin said: “Martin’s [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.”
It is possible that some people might be able to fill gaps in their National Insurance record for free - so do your checks first.
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 on 0800 731 0469.
As an example, you may be entitled to National Insurance credits if you were claiming statutory sick pay and not earning enough for a qualifying year.
Those who claim benefits such as Jobseeker's Allowance and Employment and Support Allowance may also qualify for National Insurance credits.
See more examples on the Gov.uk website.
You also need to check if the gains from buying extra years may be reduced if it pushes you into the higher 40% tax bracket.