Looming deadline for NI top-ups for State Pension

There is a government scheme in place that allows taxpayers with gaps in their National Insurance records to make voluntary payments for these years to help ensure entitlement to State Pension. For those with gaps in their NI record between 2006 and 2017, they have until 5 April 2023 to make voluntary NI top-ups.

From 6 April 2023, taxpayers will only have the option to plug gaps from the previous 6 years.

In order to qualify for State Pension, taxpayers need to have enough qualifying years – 35 years in total. One of the following needs to be satisfied in a given tax year to produce a qualifying year:

• You were working and paying NI
• You were getting NI Credits (e.g. you were unemployed, sick, or a parent or carer)
• You were paying voluntary NI contributions

For those claiming the new State Pension (for men born on/ after 6 April 1951 and women born on/ after 6 April 1953), the number of qualifying years on your National Insurance record affects how much State Pension you get.

You can check your National Insurance record here to see if you are on track for the full 35 qualifying years.

If you are not on track, you would need to consider whether it is worth making voluntary NI top-ups. It may be the case that you plan to work enough years to complete your record, but for those closer to retirement age it might be worthwhile. For those in poor health, it may not be the best option, so the decision needs to be made based on personal circumstances.

You would want to consider what other sources of income you expect to receive in retirement, for instance if you have a substantial workplace pension to drawdown on, an increased State Pension may mean more of your income is subject to higher rate tax, potentially making voluntary contributions less worthwhile.

If you opt to contribute to gaps between 2006-07 and 2016-17, it makes sense to prioritise these years and make the contributions before 5 April 2023 while the extended window is still open.

If you believe you are affected by this, it is recommended you speak to the Future Pension Centre, as they can advise where you stand and whether topping up is worthwhile, as you may have more qualifying years than you realise.