Time to make up shortfalls in state pension running out – Act now

Earlier this year, the Government extended the final date to top up your National Insurance (NI) record for tax years 2006 to 2016 to ensure you received the full state pension.

Previously slated for 5 April, the deadline now stretches to 31 July 2023, providing a valuable grace period for anyone with gaps in their NI record during this period.

This means that there is still time left to potentially add thousands of pounds to your future state pension payments.

From 1 August 2023, the provision to catch up on missing National Insurance Contributions will only apply to the preceding six tax years and no further.

Under current provisions, eligibility for the full new state pension (applicable to those retiring post-5th April 2016) is rooted in 35 years of National Insurance contributions.

However, individual circumstances such as age and specific record details may affect this. The Government’s online pension forecast tool is a useful ally in understanding where you stand.

Enhancing your record by one full year currently costs £824, but if you’re plugging a gap in a partial year, the cost reduces proportionally.

While you’ll need sufficient funds to invest, topping up for just a single year could enrich your state pension by an additional £275 annually.

If you are yet to reach state pension age but want to make the most of this opportunity before it runs out, follow these three simple steps:

  1. Obtain your state pension forecast online via your Government gateway here.
  2. Log in to discover whether you’re set for the full £185.15 per week and your state pension age. To evaluate the need for extra years, click ‘view your national insurance record’ at the page bottom.
  3. If 2006 to 2016 appears with ‘incomplete’ years, consider acquiring these missing years before 31 July 2023.

Caution is key here, as in certain instances, filling gaps in your NI contributions record may yield no financial advantage.

Your state pension is an important part of your later life planning and should be considered alongside your private pension and other savings. If you need advice about your retirement strategy, please contact us.

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Posted in IFA News.