HMRC has issued a warning to state pensioners that they could miss out on a state pension increase if they don’t take action before an upcoming deadline. The tax authority is alerting those receiving Department for Work and Pensions (DWP) state pensions that they have under three months left to fill any gaps in their National Insurance (NI) record from 2006 onwards.
The DWP has reported that since the launch of a new digital service last year, over 10,000 payments totalling £12.5 million have been made to enhance individuals’ State Pensions. In 2023, the previous government extended the deadline for voluntary NI contributions to April 5, 2025, for those impacted by the new State Pension transitional arrangements, which apply to tax years from April 6, 2006, to April 5, 2018.
Alice Haine, personal finance analyst at Evelyn Partners—the company behind Bestinvest—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.”
Ms 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. A short survey assesses the person’s suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.”, reports Birmingham Live.
She noted that calculating whether to top up can be tricky, adding there’s no benefit in paying for more years than necessary. She said: “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.
“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 also highlighted: “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.”