Pensions are back in the headlines again with the news the deadline to ‘boost’ your State Pension by as much as £55,000 has been extended.
The booster plan from HMRC gives people the opportunity to buy the equivalent of up to 10 extra years’ of state pension if they have gaps in their National Insurance (NI) record.
So many people had been trying to take up the previous one-off offer that the HMRC helpline went into meltdown – the deadline had been April this year.
Then it was set at July this year, but so many wanted to access the scheme that has now been pushed back to April 2025!
Unfortunately, the ‘£55,000’ is not a lump sum, but each year of extra NI payment adds £275.08 to your State Pension, therefore buying the maximum of 10 years could add an additional £2,751 a year.
Over a typical 20-year retirement, that’s worth £55,020.
If you have been in full time employment during your career, this may not affect you, however this could be good news for anyone who has worked abroad for a time, has earned a low salary or has gaps in their employment history.
In the normal course of events, you can only fill in gaps in your NI record for the past six years, but a window is currently open that allows people to fill gaps extending back another decade, so they can buy missing NI contribution years stretching back to 2007.
After April 2025 the normal rules will apply and you will only be able to ‘buy back’ six years, so if this does affect you, it is still better to act sooner rather than later.
It is worth remembering that any new government before 2025 could choose to scrap the window or increase costs.
If this may affect you, firstly you need to identify any gaps in your NI record. You can do this at www.gov.uk/check-national-insurance-record but you will need to log in with your Government Gateway ID and password. If you don‘t have an account, you can set it up via email and with proof of official documents such as a passport or driving licence.
If you have gaps, check your state pension forecast by contacting the government’s Future Pension Centre on 0800 731 0175 if you are below the age of 66 — or the Pension Service if you are above pension age on 0800 731 7898. Or online at www.gov.uk/check-state-pension.
Then to establish what you need to pay, call the National Insurance Helpline on 0300 200 3500 and an adviser will confirm the amount per year and give you an 18-digit payment reference.
This may sound long-winded, but should not take you too long – however it is best not to leave it until the last minute.
If you wish to look at the overall picture for your pension including any private or employment pensions you hold as well as other sensible-term investments, it may be a good idea to speak to an Independent Financial Adviser such as ourselves.
