Those planning to claim the UK state pension must check their National Insurance record before April 5th 2023. Currently, voluntary contributions can be made to address gaps from as far back as April 2006; however, this window of opportunity is closing in April. We have made a checklist with actions you can take.
Individuals who are employed or self-employed typically make National Insurance (NI) contributions based on their earnings. Eligible individuals may also receive NI credits. This combination of NI contributions and credits composes a person’s NI history, which can influence eligibility to the state pension as well as other benefits, like employment and support allowance.
To qualify for the maximum “new state pension” (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of National Insurance contributions. Those who have contributed for least 10 years can obtain part payment. As for those whose NI records began before 6 April 2016, to obtain the full state pension may require a higher number of contributions and or credits.
An insufficient contribution history before reaching state pension age can lead to a reduced or no state pension entitlement. To address this, individuals may opt to make voluntary National Insurance (NI) contributions in order to build up their contribution history and thus potentially increase the amount of state pension received. However, seeking professional financial advice is advised when making this decision as it involves predicting future contributions and the risk of changes in applicable regulations.
Voluntary contributions can normally only be made for the last six tax years. However, there is an extension currently in place, allowing individuals to make voluntary contributions to cover gaps in NIC history since April 2006.
From the 2023/24 tax year, the timeframe for voluntary contributions will return to the usual six years. This means contributions can only go back as far as 2017/18.
Now would be a good to take advantage of this opportunity to review your NI record and identify any potential gaps in your NI history.
Taxpayers should review their record to ensure NI contributions made via PAYE or self assessment are included, and also verify if they have earned NI credits. To rectify any errors, HMRC can be contacted.
Before 5 April 2023, here is a list of actions you should take:
- Check your National Insurance (NI) record.
- Find out if there are any discrepancies between NI contributions paid and those recorded by HMRC.
- Identify any missing NI credits from periods where they should have been received, such as on receipt of universal credit or child benefit.
- See if there are any shortfalls in contributions.
- Reach out to BrooksCity if you spot errors.
- Decide whether or not to make voluntary NI contributions.