Alert over deadline for plugging NI gaps

Money experts are warning that time is running out for people aged between 45 and 70 to significantly boost their pension income through paying more voluntary national insurance contributions.

Moneysavingexpert.com, Martin Lewis’ organisation, says the transitional arrangement to top up your National Insurance contributions in order to qualify for the maximum state pension ends on 5th April 2023, after which you can only fill gaps going back six tax years.

Many people who have had time out of work or who have worked part time, whether for unemployment, parental leave, sickness, training, imprisonment, caring responsibilities or other reasons, will have paid fewer NI contributions, which will be reflected in their pension. When the new state pension was brought in in 2016, it allowed people to plug any gaps in contributions dating back to 2006.

Moneysavingexpert.com says that, depending on your circumstances and how long you live, investing £800 could mean you get £5,500 back in terms of pension payments.

It states: “For some who qualify and have the cash, paying to plug NI gaps is a no-brainer that could boost your pension by £1,000s.”

That all depends on your particular circumstances so the website enables people to work out whether this would be the case for them by calculating their state pension entitlement and NI contributions record. The site also outlines what might affect NI contributions and has an online calculator which can show you what impact filling in gaps in your contributions might have.

There are provisos – if you are on a low income and could qualify for pension credits, it may not be worth plugging the gaps. Moreover, if you are near the threshold of either paying tax or hitting the 40% tax bracket once your state pension and other income is combined, you will pay more tax on your pension income if that income increases.

The site advises getting free advice through the Future Pension Centre on 0800 731 0175 before taking any action.

Full details on what to do are available here.

• Vote  
• 0
• 0
• You already voted!