The State Pension: An Opportunity to Top Up Your National Insurance Record

By Thomas McCoy

The State Pension: An Opportunity to Top Up Your National Insurance Record Before 5th April 2025

The state pension in the UK is a crucial part of retirement planning for millions of people across the country. It provides a basic income for individuals once they reach state pension age, offering a degree of financial security in later years.

If you make enough National Insurance (NI) contributions during your life, you’ll receive the full state pension. If you have gaps in your NI contributions, topping up is an excellent way to increase your future pension. The rules surrounding this will change from 6th April 2025. Therefore, you only have until 5th April 2025 to fill in gaps beyond the last 6 tax-years. After this date, the window will close for some years, reducing the number of years you can top up.

What is the State Pension and How Does It Work?

The state pension is a government benefit for individuals who have reached the state pension age. It’s designed to provide a basic income for individuals. The amount you receive depends on how many qualifying years of contributions you have made.

A qualifying year requires you to have a full tax-years’ worth (NI) contributions or have been credited with them if you are eligible (see this link for these criteria) National Insurance credits: Eligibility - GOV.UK.

Currently, to qualify for any state pension, you need a minimum of 10 qualifying years of NI contributions. For the full state pension, you need 35 or more qualifying years. The state pension is currently set at a maximum of £221.20 per week

Why Topping Up Your National Insurance Record Matters

If you haven’t made enough NI contributions, you may not be eligible for the state pension or you may not receive the full amount. In such cases, topping up your National Insurance record can make a significant difference. This can be done through voluntary National Insurance contributions.

After 5th April 2025, the rules regarding how many previous years you can top up will change so it’s important to act fast if you feel this may affect you.

  • If you’re a man born after 5 April 1951 or a woman born after 5 April 1953, then you can pay voluntary contributions to fill gaps between 2006 and 2018.
  • If you were born before these dates, you can fill gaps between 2016 and 2018.
  • After 5 April 2025, everyone will only be able to pay for voluntary contributions for the past 6 years.

What Should I do?

First you should check your state pension record, using the government gateway Check your State Pension forecast - GOV.UK. This will give you information on your state pension entitlement, and your ability to make voluntary contributions.

You then have the ability to top up your National Insurance record through:

  1. Voluntary National Insurance Contributions (Class 3): If you have gaps in your record from previous years, you can pay voluntary Class 3 contributions. The amount you pay depends on the year you’re topping up for, but Class 3 contributions are typically more expensive than Class 2.
  2. Class 2 National Insurance Contributions: If you were self-employed and have gaps in your record from certain years (before 2016/17), you may be able to make Class 2 contributions. This option is more affordable than Class 3, but it's only available for certain years.

These voluntary contributions are usually paid as a lump sum, and in return your annual state pension increases.

Another option is to request the Department for Work and Pensions (DWP) to call you using an online form Request a call back to pay voluntary National Insurance contributions - GOV.UK. By expressing an interest before 5th April 2025, this allows you the option to make payments for a greater number of years, even if the deadline passes before you are contacted.

What Are the Benefits of Topping Up?

Topping up your National Insurance record offers several benefits:

  • Increased State Pension: The primary benefit of making voluntary contributions is that it can increase the amount of state pension you’ll receive when you reach retirement age. Every year you top up gives you a higher pension in the future.
  • Peace of Mind: By ensuring you’ve paid enough National Insurance contributions, you can rest easy knowing that you’ll have access to the full state pension. This can provide a solid foundation for your retirement savings, giving you greater financial security.

Don’t Wait — Act Before 5th April 2025

With the changes coming into effect after 5th April 2025, time is running out to take advantage of the current rules. If you have gaps in your National Insurance record, it’s crucial to act before the deadline.

While topping up may not be the right decision for everyone, it can be a worthwhile investment if you're looking to secure a higher state pension in the future. Whether you have a few gaps or several, now is the time to take action to avoid missing out on the opportunity to increase your state pension entitlement.

Finally, the State Pension is usually a building block of an individuals’ retirement planning. It may not be enough to meet all of your needs in retirement. You may wish to seek financial advice to see what other savings you should have in place for retirement.

If you’d like to discuss any of this in more detail, we’ll be happy to help. Please contact us here.

Alternatively for existing clients of Castlefield, please contact your usual Castlefield contact for further information.

Written by Thomas McCoy