State pensioners can get extra £5,916 a year – must act before April 5 | Personal Finance | Finance
There’s less than two months left until the April 6 deadline, and HMRC is urging those who want to secure a higher retirement income to act fast.
This is a brilliant opportunity for Britons to max out the new state pension by plugging gaps in their National Insurance (NI) record going back all the way to 2006.
Tens of thousands have been racing to do just that, while they can.
Since the launch of an enhanced HMRC digital service last April, more than 37,000 people have taken advantage of the opportunity to top up missing years in their NI record.
So far Britons have spent £35 million buying more than 68,000 years’ worth of contributions in total.
Many more could benefit if they get their skates on.
Under current rules, individuals can make voluntary NI contributions to cover gaps dating right back to April 6, 2006.
From April 6 this year, that window will be significantly reduced. People will only able to make backdated contributions for the previous six tax years.
HMRC’s deputy chief executive Angela MacDonald stressed the urgency of checking whether this applies to you or a loved one. “There are just two months left to check and fill any gaps in your NI record from 2006 onwards to boost your state pension entitlement.”
The deadline was been previously extended as high demand crashed HMRC helplines. It won’t be stretched again. MacDonald said: “Don’t delay – it’s quick and easy to check your NI record on Gov.uk and could help your finances in retirement.”
HMRC figures show some have boosted their weekly state pension by as much as £113.76 a week. That’s an extra £5,916 a year.
However, topping up only makes sense for those who are likely to end up with fewer than 35 years of NI contributions towards the new state pension, paid to those retiring from April 6, 2016.
People of working age who are likely to have hit that 35-year target in the normal way by state pension age should save their money.
Those who get the maximum entitlement cannot buy more.
Those who are facing a shortfall should first check whether they qualify for free NI Credits, which cover periods when people were ill, disabled, pregnant, raising a family, acting as carers or unemployed.
Rosie Hooper, chartered financial planner at Quilter Cheviot, said with the April 5 deadline fast approaching anyone with NI gaps should seriously consider this option. “You now have only a short window to take action.”
Hooper said people in their late 40s, 50s and 60s should check eligibility as a priority. “In some cases, a few thousand pounds paid now could translate into tens of thousands in additional pension income over retirement. It could be one of the most financially rewarding decisions people make.”
Just make certain that paying voluntary NI contributions really will boost your state pension, she added. “Not everyone will benefit so it’s vital to also contact the Future Pension Centre on 0800 731 0175. Staff can provide personalised advice on whether paying extra will increase your entitlement.”
There are two types of voluntary NI contributions, Class 2 and Class 3, so you need to discuss which applies to you.
Hooper said whether paying small top-ups or covering multiple missing years, it’s worth securing all the state pension you can. “ It might turn out to be one of the best retirement planning calls you make.”