HM Revenue and Customs bosses have issued a message to people to act ahead of a looming deadline. HMRC officials have disclosed that more than 10,000 payments, amounting to £12.5 million, have been made through the new digital service to boost individuals’ State Pensions since its launch in April. With less than six months left to address any National Insurance (NI) record gaps dating back to 2006 to maximise their State Pension upon retirement, people are being encouraged to take action.
Voluntary contributions can usually only be made for the previous six tax years, and after next year’s April 5 deadline, the standard six-tax year limit will be reinstated. In 2023, the government extended the deadline for voluntary NI contributions to April 5, 2025 for those affected by new State Pension transitional arrangements, covering tax years from April 6, 2006 to April 5, 2018.
This extended deadline has given individuals extra time to assess their options and make their contributions. Men born after April 6, 1951 and women born after April 6, 1953 are eligible to make voluntary NI contributions to increase their New State Pension.
Some individuals may qualify for NI credits instead of having to make contributions, so it’s vital they check and decide what’s best for them. HMRC stated that further analysis of the online service usage indicates that the majority (51%) of customers topped up one year of their NI record, with the average online payment amounting to £1,193.
Pensions Minister Emma Reynolds has issued a rallying cry, urging: “We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement.”
She continued: “That’s why I urge everyone to check if they could benefit by filling gaps before the deadline passes. Using our online tool means only a few clicks could make a huge difference to your future.”
Individuals are being prompted to delve into the details of voluntary contributions on GOV. UK here, while those still in their earning years can scrutinise their State Pension forecast on GOV.UK here, the Daily Record reports.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the savvy online investment platform, remarked: “People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any state pension at all and at least 35 years to receive the full new state pension – though they don’t need to be consecutive years.”
She added: “Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations.”
Haine has praised the Government’s new NI payments service, launched in April, for its user-friendly approach to updating records. She pointed out that the State Pension forecast tool has been a hit, with 3.7 million users since its inception.
Haine explained: “People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the Government’s digital channels.”
She added that a quick survey helps determine eligibility for online payments, offering options to fill any gaps based on retirement plans. However, she cautioned: “Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won’t get that money back.”
Haine also mentioned: “People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad.”
She advised prompt action due to the likelihood of the Government sticking to the April deadline, saying: “Remember, this deadline has been extended a couple of times in the past, which makes it more likely the Government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now.”
