State Pensions & the National Insurance Top-Up

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Last updated: September 7, 2023

On 12 June 2023, the government announced that the voluntary National Insurance contributions deadline has been extended to 5 April 2025. So, now is the time to act if you want to maximise the potential of your State Pension.  

This sparked some confusion over who is entitled to a State Pension, the benefit of having one and, if you do, how to make the most of it.  

So, let’s clear some things up – a State Pension 101 if you like.  

In 2016, the Basic State Pension changed to the New State Pension and the rules about the number of years credit needed to get the full benefit also changed. The new rules state that you need 35 years full credits to be eligible for full state pension and that if you have less than ten years’ service you won’t get any State Pension

What are credits and how do you get them?

Credits are essentially National Insurance Contributions. If you are employed and earn over £242 per week you will get the full credit. You can also get credits through voluntary contributions, and in some cases, through benefits such as child benefit.  

You might have heard of ‘transitional protection’ in the news around State Pensions. A large part of this is rectifying the fact that many people were contracted out of the State Pension prior to 2012. Because of the need to have more than the previous 30 years credits, the protection allows the purchase of full or part years that are missing all the way back to 2006.  

This option is being removed on 5 April 2025 and will revert to the standard six years as per legislation. Now is the time to consider if there are gaps that need filling and make the most of the option to go back to 2006. Not everyone needs to fill gaps, even if they currently don’t have full State Pension entitlement and care needs to be taken to avoid buying years unnecessarily.  

A good place to start is getting a State Pension forecast (statement), which can very easily be obtained using the Government Gateway here. Sign up and access only take minutes. 

When looking at the State Pension forecast then the first thing to consider is the projected pension figure, what you have already earned based on the current records and how many more years you need to get the full amount. 

A couple of scenarios for context...  

If the forecast shows, that only three more years are needed, and you intend to work full time or receive credits for three years, then there is no need to do anything more. In addition, with just three years to accrue before retirement, then buying additional years should you decide to cease work shouldn’t be a problem because there are sufficient years until State Pension Age. 

More consideration is required if there is a disparity between the projected pension figure and what you hope to accrue before you reach State Pension Age. In some cases, the forecast may seem too low. This can be for a number of reasons. For example, contracting out of the State Second Pension or SERPS. (old state pension rules). This could have resulted in a deduction being made to the forecast. Here, your choices are to work longer to get the full New State Pension at State Pension Age or top up your State Pension back to 2006 using the Top Up Extension to April 2025. 

It is always wise to contact the State Pension helpline before making any decision to pay extra contributions to ensure the information is accurate and up to date. The helpline may also be able to shed some light on any anomalies. 

The most important point to take away is

to check your current entitlement, and if something doesn’t look right, query it. We’ve seen numerous mistakes from the state pension office over the years, and therefore it’s worth ensuring you’re getting what you deserve.  

This content is for information purposes and should not be treated as financial advice. We would always recommend speaking to a professional before making decisions regarding your wealth.


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