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Should I Pay To Top Up My State Pension?

You need 35 years of NICs ...


Posted by Roger Eddowes on 01/06/2023 @ 8:00AM

As of 2023, to be eligible for a full State Pension, you must have made National Insurance contributions for 35 years. But what if you've fallen short? Surprisingly, the Government has extended the scheme ...

To receive the full state pension, you need 35 years of National Insurance contributions!

To receive the full state pension, you need 35 years of National Insurance contributions!

copyright: highwaystarz / 123rf

Traditionally, you're able to make voluntary NICs for the previous six tax years. This initiative, however, extends this period by an additional ten years. You now have the opportunity to make voluntary contributions stretching back to the 2006/07 tax year until the end of July this year.

"This offer is particularly beneficial for individuals aged between 45 and 70, who might have significant gaps in their NI records!"

The State Pension has seen a substantial rise, amounting to £203.85 a week, thanks to the triple lock mechanism. However, your eligibility and the amount you receive will be contingent upon the NICs you've made throughout your working life.

For full State Pension eligibility, you need 35 years of NICs. With between 10 and 35 years of contributions, you'll receive a proportionate amount, but less than 10 years of contributions will leave you ineligible for any State Pension.

If you're unsure about your eligibility or your NI contribution history, you can apply for a State Pension forecast online. This will give you a comprehensive insight into the amount you're projected to receive and highlight any potential gaps in your NI record.

If you find gaps in your NI record, voluntary contributions could be a viable solution. Class 3 NICs currently cost £17.45 per week or £907.40 per year. Each year of additional top-up could boost your weekly income by £5.82 a week or £302.64 a year (based on the 2023/24 State Pension).

However, these voluntary NICs come with a risk, as you could pass away before you recoup your investment. It's also crucial to be aware of potential tax implications, especially for high-income individuals.

"NI credits can be a surprising source of extra NI contributions!"

These are typically paid from earned income, but there are situations where you could be eligible for NI credits even when not working, such as during periods of illness or caregiving. Additionally, grandparents of working age looking after children under 12 can also be eligible for NI credits.

Remember, however, that every individual's circumstances are unique and you should always speak to your accountant to understand fully the implications of any decision regarding your pension.

Until next time ...

Business Godparent


Would you like to know more?

If anything I've written in this blog post resonates with you and you'd like to discover more about topping up your state pension, it may be a great idea to call me on 01908 774320 and let's see how I can help.

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About Roger Eddowes ...


Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.

Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.