Can you top up your state pension?

By Mattioli Woods

20 Mar 2018

 

Under the new State Pension, those individuals who have accrued 35 years worth of National Insurance contributions could be entitled to a full State Pension which amounts to £159.55 per week. Furthermore, based on the current triple lock rules, individuals will see this income index linked for the rest of their lives. This will provide a valuable underpin to assist with outgoings through retirement and will complement any other retirement wealth that has been accumulated.

What happens if I have not accrued sufficient National Insurance Contributions?

Individuals may be able to increase their State Pension by purchasing voluntary National Insurance contributions if they have gaps in their National Insurance record.

For men born on or after April 6 1951 and women born on or after April 6 1953, the first step to understand the current position would be to visit HMRC’s State Pension Checker.

This free and easy online system will indicate whether or not individuals will be in a position to accrue sufficient National Insurance contributions through natural future accrual in order to achieve the maximum level of State Pension that could be available.

I do not know whether or not I will accrue sufficient National Insurance contributions in the future

It is important to bear in mind that the online system clearly cannot predict whether or not someone plans to continue working and therefore will not be able to confirm whether an individual will make sufficient future National Insurance contributions in order to achieve a full State Pension.

If an individual currently expects to reach their full State Pension without paying voluntary contributions, but then their plans change and it transpires that insufficient contributions are made, individuals can still pay voluntary contributions as they approach State Pension age, provided that the voluntary contributions are made within certain time limits.

Can I make voluntary National Insurance contributions?

Many individuals will be caught up in a transition period from the old State Pension to the new State Pension which started in 2016. Therefore their 2016 State Pension starting amount may be based on entitlement built up under the old State Pension system. These individuals may be able to top up the basic State Pension of this 2016 starting amount (the part that excludes State Earnings Related Pension Schemes (SERPs) or State Second Pension (S2P) i.e. any additional State Pension benefits), if there is an incomplete record of National Insurance contributions.

The full basic State Pension under the old system is £122.30 a week if 30 years worth of National Insurance contributions have been made. Those with less than 30 qualifying years may be able to pay voluntary Class 3 contributions to fill the incomplete years, although time limits apply. Voluntary contributions may be able to be made covering the tax years 2006/07 onwards. It is crucial to note that individuals have to do this by 5 April 2023 deadline. After 5 April 2023, voluntary contributions can only be made representing the last 6 years, on a rolling 6 year basis.

The reason that the old system may still be relevant is when the 2016 starting amount under the old system is better than the 2016 starting amount under the new system for the individual in question. The rationale behind this is to ensure that these individuals will not be worse off under the new system.

The cost of voluntary Class 3 National Insurance contributions is currently £14.25 per week i.e. £741 per annum. Based on the current basic state pension rates, this £741 will provide an income of £212.16 per annum. This clearly represents great value for money. The cost of previous tax years may be different, normally less.

As discussed above, the full state pension under the new system is £159.55 per week and an individual needs 35 qualifying years worth of National Insurance Contributions to qualify.

If the 2016 starting amount is based on the new system, but the starting amount is less than £159.55 per week, individuals may be able to enhance their income through voluntary Class 3 National Insurance contributions by filling in any gaps from the 2006/07 tax year onwards, but within the time constraints discussed above.

Individuals will also have the opportunity to make Class 3 Voluntary National Insurance contributions which represent the years from 2016/17 onwards.

Summary

Although the State Pension system is very complex, it is quite clear that if there are gaps in National Insurance contributions, making a voluntary contribution definitely needs to be considered, taking into account your individual financial planning requirements, and given that it only takes around four years to recuperate the original cost. More information about paying your voluntary Class3 insurance bill can be found on the HMRC website.

Latest news

1

Work begins on £3m youth zone expansion Blackburn Youth Zone Rosslee Construction

Work begins on £3m youth zone expansion

11 Jul 2024

2

Employment initiative launched at careers conference Careers Hub Event

Employment initiative launched at careers conference

09 Jul 2024

3

Farleys assists Basically Cheer and Fitness with new lease in Burnley Parkside Methodist Church.jpg.jpg

Farleys assists Basically Cheer and Fitness with new lease in Burnley

12 Jul 2024

4

Prime industrial developments in Blackburn go to market Trevor Dawson Sigma&Omega.png.png

Prime industrial developments in Blackburn go to market

12 Jul 2024

5

Counties need to get real on mayors frank-mckenna-1000x500.jpg

Counties need to get real on mayors

12 Jul 2024

Bec Web Strip 980x120
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
Lancashire Built Environment Conference
BEC 315 X 315 Px
Networking
25 Sep 2024

Lancashire Built Environment Conference

Conference and Exhibition Centre, Winter Gardens Blackpool, FY1 1HL

08:30 - 13:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
11 Jun 2024 - 04 Dec 2024

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 16:30

LBV117 Magazine Launch Event
DSC9389
Networking
16 Jul 2024

LBV117 Magazine Launch Event

Blackburn Rovers Football Club, Blackburn, BB12 9EE

16:00 - 18:00

A Freelancers Introduction to Co-ops with John Atherton
Screenshot 2024-06-13 at 13.59.57.png.png
LBV Hub Seminars
17 Jul 2024 - 17 Jul 2024

A Freelancers Introduction to Co-ops with John Atherton

Society1 Coworking Space, Preston, PR1 3LT

14:00 - 16:00

The Business Network Central & East Lancashire
LBV Header (10).png.png
LBV Hub Networking
18 Jul 2024 - 18 Jul 2024

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Conversations in Creativity - Creative Networking Event
Untitled design-4.png.png
LBV Hub Networking
18 Jul 2024

Conversations in Creativity - Creative Networking Event

Society1 Coworking Space, Preston, PR1 3LT

17:30 - 19:30

Lancashire Economic Breakfast
LBV Hub Seminars
18 Jul 2024

Lancashire Economic Breakfast

The Mill, St Catherine's Park, Preston, Lancashire

07:15 - 09:00

Preston Freelancer MeetUp and Coworking Day
Screenshot 2024-06-13 at 13.55.10.png.png
LBV Hub Networking
30 Jul 2024

Preston Freelancer MeetUp and Coworking Day

Society1 Coworking Space, Preston, PR1 3LT

10:00 - 12:00

Chamber Breakfast Networking
Chamber Logo1.png.png
LBV Hub Networking
31 Jul 2024

Chamber Breakfast Networking

Pye Motors, Morecambe, LA3 3PF

08:00 - 10:00

Scaling your revenue: From zero to £1m in 60 months
CBP-logo LBV.png.png
LBV Hub Webinar
31 Jul 2024

Scaling your revenue: From zero to £1m in 60 months

Online, Online, Online

08:00 - 09:30

Online Women's Health Clinic
clinic.png.png
LBV Hub Webinar
06 Aug 2024

Online Women's Health Clinic

x, Online, x

12:00 - 12:00

International Coworking Day Open Day
1.png.png
LBV Hub Social
09 Aug 2024 - 09 Aug 2024

International Coworking Day Open Day

Society1 Coworking Space, Prestin, PR1 3 LT

10:00 - 13:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV116 Online Graphic
Subscribe now

Weekly news bulletin