If you're aged under 70, you have until 31 July to boost your state pension by £1,000s or even £10,000s by plugging gaps in your national insurance record going back to 2006. That's what MoneySavingExpert.com's founder Martin Lewis urged everyone to do in a special 90-minute everything you need to know about pensions episode of ITV's The Martin Lewis Money Show Live.
In addition, the cost of filling those gaps will stay at the same level instead of rising in April as planned. For more info, see State pension-boosting deadline extended. Also see a step-by-step state pension boosting guide for more help.
If you're aged 45ish to 70, and actually in some cases younger, a state pension boost is possible. The new state pension was introduced on 6 April 2016. It's for anybody aged under 70ish. To get it, you need around 35 qualifying national insurance years but many people are missing national insurance years – maybe because they were caring for somebody or a child, or had years abroad, were on a low income, or had a career break.
Transitional arrangements were put in place in April 2016, and they were due to end on 5 April but this has now been extended to 31 July. Until then, you can plug any gaps back to 2006 in your national insurance years. But after that, you can only go back six tax years to 2017. So there are 11 years that, from 31 July, you will lose the ability to buy back.
How to check if you're missing national insurance years
For people who are under state pension age, go and check your state pension summary on the Government website. You put your details in and it will tell you whether your pension is forecast to be at the full state pension level. The next thing everybody should do, even if you're already at state pension age, is go and check your national insurance record on Gov.uk. What you're looking for is a year that is not full or you haven't contributed to, since 2006.
Check if you're due FREE national insurance credits
Before you go and buy any national insurance credits to top up missing years it's very important that you check whether you are due free credits. For example, if you were a carer, you had childcare responsibilities or an illness. You can go and check via the national insurance credits section of Gov.uk and you may get those years back without having to pay for them.
You can buy more years if you need them
If you have a shortfall, you can buy more years if you can't get them free. If your gaps are from 2006 to 2017, you need to decide soon because the window is closing as you would need to top up your credits before 31 July. If you're near state pension age, this is easy. You'll know whether or not you'll be able to make them up another way.
If you're younger, you've got more time to plug the gaps naturally by working, or any other method, and this makes it more difficult to see if it's worthwhile buying extra credit. A full voluntary national insurance year costs around £800 and adds £275 a year to your state pension. So the breakeven point is, if you live three years after your state pension age, it would be worthwhile. Or if you're already at state pension age when you're doing this, if you live three more years from that point.
At age 66 a man will typically live for 19 more years, so £800 would get you around £5,300 at age 66. And typically a woman would typically live 21 more years, so each £800 would get you £5,800 so it's very well worth doing.
Why it could be worth buying extra years even if you're under 45
It's important to understand that with national insurance years you either qualify for them or you don't. You don't get half a year. You either get nothing or you get the whole year. And it can be the case, if you're only a week short of a full year, you could pay £15 for just that one week which might qualify you for a full year.
If you are under 45 and you see that you are nearly getting the full years, even though it might be wasting money to buy additional years because you might earn the full number of national insurance years naturally anyway, you might want to consider doing it speculatively if it's really cheap for 2006 to 2017 because you only have a few months left where that will be the case.
So it's worth everybody, even if you're under 45, just having a quick look at this, because that window is closing.
Important: contact the Government's Future Pension Centre BEFORE paying for any missing years
Check out whether this applies to you. it's a complicated situation and you will need individual help. Always contact the Government's free Future Pension Centre for bespoke calculations on whether it is worth doing for you.
Martin's baboon warning: two big 'buts' to consider
There's a couple of big 'buts'. For example, if you do this, it might diminish the amount of pension credit you're entitled to and also, if you do this, by getting more, it might push you into a higher tax bracket, which means the returns may not be what you've calculated. For the vast majority of people out there, though, if you have gaps in those years, especially if you're nearing retirement age, it will be worth filling them and will be very lucrative, as long as you live long enough – and statistically, the vast majority of people will do.
Is it worth paying national insurance contributions if I won't have enough to qualify for the full state pension?
If you're aged under 70, you have until 31 July to boost your state pension by £1,000s or even £10,000s by plugging gaps in your national insurance record going back to 2006. That's what MoneySavingExpert.com's founder Martin Lewis urged everyone to do in a special 90-minute everything you need to know about pensions episode of ITV's The Martin Lewis Money Show Live.
In addition, the cost of filling those gaps will stay at the same level instead of rising in April as planned. For more info, see State pension-boosting deadline extended. Also see a step-by-step state pension boosting guide for more help.
If you're aged 45ish to 70, and actually in some cases younger, a state pension boost is possible. The new state pension was introduced on 6 April 2016. It's for anybody aged under 70ish. To get it, you need around 35 qualifying national insurance years but many people are missing national insurance years – maybe because they were caring for somebody or a child, or had years abroad, were on a low income, or had a career break.
Transitional arrangements were put in place in April 2016, and they were due to end on 5 April but this has now been extended to 31 July. Until then, you can plug any gaps back to 2006 in your national insurance years. But after that, you can only go back six tax years to 2017. So there are 11 years that, from 31 July, you will lose the ability to buy back.
How to check if you're missing national insurance years
For people who are under state pension age, go and check your state pension summary on the Government website. You put your details in and it will tell you whether your pension is forecast to be at the full state pension level. The next thing everybody should do, even if you're already at state pension age, is go and check your national insurance record on Gov.uk. What you're looking for is a year that is not full or you haven't contributed to, since 2006.
Check if you're due FREE national insurance credits
Before you go and buy any national insurance credits to top up missing years it's very important that you check whether you are due free credits. For example, if you were a carer, you had childcare responsibilities or an illness. You can go and check via the national insurance credits section of Gov.uk and you may get those years back without having to pay for them.
You can buy more years if you need them
If you have a shortfall, you can buy more years if you can't get them free. If your gaps are from 2006 to 2017, you need to decide soon because the window is closing as you would need to top up your credits before 31 July. If you're near state pension age, this is easy. You'll know whether or not you'll be able to make them up another way.
If you're younger, you've got more time to plug the gaps naturally by working, or any other method, and this makes it more difficult to see if it's worthwhile buying extra credit. A full voluntary national insurance year costs around £800 and adds £275 a year to your state pension. So the breakeven point is, if you live three years after your state pension age, it would be worthwhile. Or if you're already at state pension age when you're doing this, if you live three more years from that point.
At age 66 a man will typically live for 19 more years, so £800 would get you around £5,300 at age 66. And typically a woman would typically live 21 more years, so each £800 would get you £5,800 so it's very well worth doing.
Why it could be worth buying extra years even if you're under 45
It's important to understand that with national insurance years you either qualify for them or you don't. You don't get half a year. You either get nothing or you get the whole year. And it can be the case, if you're only a week short of a full year, you could pay £15 for just that one week which might qualify you for a full year.
If you are under 45 and you see that you are nearly getting the full years, even though it might be wasting money to buy additional years because you might earn the full number of national insurance years naturally anyway, you might want to consider doing it speculatively if it's really cheap for 2006 to 2017 because you only have a few months left where that will be the case.
So it's worth everybody, even if you're under 45, just having a quick look at this, because that window is closing.
Important: contact the Government's Future Pension Centre BEFORE paying for any missing years
Check out whether this applies to you. it's a complicated situation and you will need individual help. Always contact the Government's free Future Pension Centre for bespoke calculations on whether it is worth doing for you.
Martin's baboon warning: two big 'buts' to consider
There's a couple of big 'buts'. For example, if you do this, it might diminish the amount of pension credit you're entitled to and also, if you do this, by getting more, it might push you into a higher tax bracket, which means the returns may not be what you've calculated. For the vast majority of people out there, though, if you have gaps in those years, especially if you're nearing retirement age, it will be worth filling them and will be very lucrative, as long as you live long enough – and statistically, the vast majority of people will do.
Is it worth paying national insurance contributions if I won't have enough to qualify for the full state pension?
This isn't about getting to the full state pension. This is about whether you can boost it. As long as you've got the minimum number of years, which is roughly 10 years [of] national insurance contributions, that means you get a state pension. Then, each year you buy gets you £275 extra a year, which if you live long enough is worth it. So 'yes' is the basic answer, as long as you've got the minimum number of years.
