You must check your National Insurance (NI) records to identify any payment history shortfalls if you plan to claim the UK state pension.
NI contributions, or lack thereof, can affect a person’s entitlement to the state pension in later life.
A temporary window allowing people to voluntarily top up their NI contributions as far back as 2006, will now close on 31 July 2023 to give taxpayers more time to make the additional contributions to fill gaps in their National Insurance record and help increase the amount they receive in State Pension.
HMRC has confirmed that “where the rates of voluntary National Insurance contributions were due to go up from 6 April 2023, payments made by 31 July 2023 are at the lower rate.”
Filling NI payment gaps
To ensure people can claim their full pension, the Government has put a temporary extension in place that enables people to fill any gaps in their NIC history.
However, from 31 July 2023, the timeframe for making voluntary contributions will revert to six years.
In the 2023/24 tax year, you can only make contributions back to the 2017/18 tax year.
Pension part-payment
You must have at least 35 years of qualifying NI contributions for the new maximum state pension.
You need at least ten qualifying years to receive a partial statement pension and likely only acquire a partial payment.
Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.
HMRC is advising taxpayers to take the following action before 31 July 2023:
- Check your NI record.
- Identify discrepancies between NI contributions paid and those showing on HMRC’s system.
- Identify any NI credits that are missing from periods in which they should have been received (e.g., on receipt of universal credit or child benefit)
- Identify any shortfalls in contributions.
- Contact HMRC if you think there are any errors.
- Decide whether to make voluntary NI contributions.
Are you looking for advice on making National Insurance contributions for your pension planning? Get in touch with us today to book your free consultation.
