A BBC expert has warned that people have just two months to make a simple change which could lead to them getting an extra £329 every single year they receive a state pension. Speaking on BBC Morning Live, finance expert Laura Pomfret said that checking if you are eligible is very easy, and someone topping up even four years could get an extra £28,000 back.
Currently, you qualify for the full new state pension when you have 35 years’ worth of National Insurance contributions (NICs), although some people may need more than this. A minimum of 10 years is typically required to receive any state pension at all.
People have until the end of April to top up their payments all the way back until 2006 . But this is changing after then to only allow people to pay for the previous six years. If someone topped up the last 19 years if it was missing, at £329 extra on their pension per year it would give them £6,251 a year more.
Ms Pomfret said: “The UK state pension that we receive is determined by our national insurance record, and you need 35 years of contributions to be able to qualify to get the full state pension. You’d need a minimum of 10 to qualify for any and then between then you get differing amounts.
“Right now you have a one time chance to pay gaps going all the way back to 2006. Now typically you can only go back six years, but for now until April 5th, which is two months today, we have this opportunity to top up all the way back to 2006, which shows why it can potentially lead to thousands.
“This deadline has been extended twice last year by the government. And you have until April 5th to do so.“ Explaining the difference this could make, Ms Pomfret explained that National Insurance is paid generally through salaries direct.
She said topping up a year would ‘typically cost about ‘£824’. She added: “It’s a little more in recent years but going back to 2006, it’s frozen, it’s at aound £824.
“So for £824, that would give you £329 extra annual income every year of your pension. So you can see just by paying in £824, you get that paid back within 2.5 years of receiving the state pension, and over a typical 20-year retirement, you can make £5,750 pounds back.”
She gave an example of a case who discovers they have an employment gap of between 2014 and 2019, To back and fill that gap, so she would pay in £4,120 pounds. Laura added: “It sounds like a lot of money, but that means per year she would receive an extra £1,645 pounds. So same as the last calculation, she makes her money back in 2.5 years, but over 20 year retirement for just over £4,000 pounds, it’s over £28,000 pounds that she would receive.”
A tool by HMRC and the Department for Work and Pensions ( DWP ) allows individuals to check if they can increase their state pension payments by making voluntary national insurance contributions. This tool enables you to purchase National Insurance years online to fill any gaps in your record.
At present, you can purchase missing National Insurance years dating back to 2006, with a top-up for a missed qualifying year costing £824. However, this will change in April 2025, when the look-back period will be reduced to six years.
You can check your National Insurance payments record here.