HMRC has issued a warning to state pensioners that they could miss out on a significant state pension increase if they don’t take action by an upcoming deadline. The tax authority is alerting those who receive pensions from the Department for Work and Pensions (DWP) that they have a shrinking window of opportunity to address any gaps in their National Insurance (NI) record that date back to 2006.
Since launching last year, more than 10,000 payouts totalling £12.5 million have been processed through a new online service designed to boost individuals’ state pensions, according to the DWP. The previous government made a decision in 2023 to extend the deadline for making voluntary NI contributions until 5 April 2025 for those impacted by the new State Pension transition rules, which relate to tax years between 6 April 2006 and 5 April 2018, Birmingham Live reports.
Alice Haine, a personal finance analyst at Evelyn Partners, the company that runs Bestinvest, said: “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.
“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.”
She added: “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.”
She warned that figuring out whether to make additional contributions can be tricky, noting: “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.”
Alice reminded everyone: “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.”