Britons over 40 have been urged to investigate buying back any missing years of National Insurance contributions to boost their pensions. Buying one year’s of missing NI contributions will cost £824, but it could boost the State Pension by £302.64 each year.
That means it would pay for itself in under three years, while an older person could expect to receive around £5,500 if they live another 16-17 years beyond retirement.
The increase in the pension income could be substantially higher if people invest in buying back several years of missing NI contributions.
For example, a woman paying £5,000 to cover missing NI contributions could boost her state pension by £2,250 a year – an uplift worth more than £50,000 over 20 years.
An alert has been sounded by the Martin Lewis team at MoneySaving.Expert.com.
They warned that action needs to be taken before a deadline allowing people to buy back missing years of NI contributions lapses in April 2025.
The advice to looking at buying back missing years of NI payments is based on the premise that people must have 35 years of contributions to qualify the maximum state pension.
If you have contributions of less than 35 years you will receive reduced amounts.
However, there are some important exceptions to this requirement. For example, people who have not been paying NI because they have been caring for children or because they been claiming benefits are given automatic credit for making contributions.
The Money Saving Expert team issued a call for action on NI contributions in their weekly newsletter: “Aged 40 to 73 and not due a full State Pension? Boost it by turning £800 into £5,500+ (free for some).
“To get the full state pension, you’ll need 35ish (only ‘ish’, as it can be more for some) complete NI years – most get these through working or claiming benefits.”
It added: “If you’ve gaps in your NI record, check if you can fill them for free. If not, you can buy missing years from 2006 to 2016, which can be incredibly lucrative, though you’ll need to do it before 5 April 2025.
“Don’t leave it till then though, as it’s not quick.”
A checklist of the steps people need to take around ensuring they have paid enough NI can be found here.
Explaining the process previously on the Martin Lewis podcast, the Money Saving Expert said: “We need to spread the word on this. On April 6 2016 that was the day they introduced the new state pension.
“For those who hit pension age since then, you have been put on the new state pension.
“As part of that, transitional arrangements were put in place. Those transitional arrangements are set to end.
“This is all about your National Insurance years. The amount that you get in your state pension is about the number of qualifying years that you have.
“You can acquire years by working. Minimum wage, and you will get National Insurance credits, or if you’re not working there are other ways you can get NI credits for example if you are raising children or have a disability.
“Now to get the full state pension when you retire, on the new state pension, you will need 35 years ish.
“Some of you when you get to retirement will be missing years – it might be you were on a low income or working abroad.
“Anybody listening right now, do this. If you are not yet at state retirement age, go to gov.uk and look up your state pension summary.
“That will tell you when you will get your pension and it will give you a forecast of how much you are likely to get.”
