07 March 2023
If you are covering the news that the government has extended the deadline for people to make voluntary National Insurance contributions and top up their state pension, please see the following comment from Jon Greer, head of retirement policy at Quilter:
"It is commendable that the government have listened to concerns from the public and industry and has extended this golden opportunity for people to fill gaps in their National Insurance record and top up their state pension.
"An extra three months will hopefully mean that people who might have struggled to get through to the DWP and HMRC to top up can now try again and take advantage of what is a fantastic opportunity for people to boost their retirement income. It will also give others more time to decide to save up and take advantage of making these contributions.
"Our recent Freedom of Information (FOI) request found that over the last five years only an average of 123,000 people per year have made Class 3 National Insurance Contributions (NICs).
"Typically people aged between 45 and 70 who have gaps in their NI record are most likely to be impacted by the upcoming rule change and should act now.
"Under normal rules it is only possible to fill gaps in an NI record up to six years after the year in question, but people previously only had until 5 April 2023 to go back an extra ten years but this has now been extended to the 31st of July. This is due a special concession that for a limited period people can fill historic gaps in their NI record all the way back to 2006/07.
"Further analysis of another previous FOI submitted show that over the last two years on average only an additional 45,000 people have made Class 3 NICs for each of the last five tax years.
"According to the most up to date data available from the DWP, as of March 2020, 34% of the over 11 million people who receive the Basic State Pension did not receive the full amount equating to nearly 3.8 million people.
"Similarly, around 805,000 people don’t receive the full New State Pension equating to 55% of the nearly 1.5 million people who receive this type of state pension. However, not all these people will receive less than the full state pensions because of gaps but also due to contracting out but these figures show some of the scale of how many people might be able to benefit from making these top ups.
"Someone with ten missing years could pay a little over £8,000 to fix the gaps and boost their state pension income by £55,000 over a typical 20-year retirement. If you have one or two years missing, then this might only cost you in the region of £1,400 but within just a few years of retirement you’d make your money back and more.
"If someone isn’t sure whether they have any gaps in their record the first thing to do is to go on gov.uk and use the ‘State Pension forecast” and see how much state pension you’ll get based on your current record and how much you will get if you work up to your state pension age. If you aren’t predicted to get the full amount (currently £185.15 a week) it can check for gaps in your record.
"Paying voluntary contributions won’t benefit everyone and it is key to contact the Future Pension Centre (if you are below state pension age) on 0800 7310175 who will be able to tell you if paying extra will increase your state pension entitlement. It could be one of the most fruitful calls you make."
