This extension could make all the difference in ensuring you receive all or some of the ‘new state pension’ and you should act now.

For those retiring on or after 6 April 2016

If you are planning on topping up your national insurance contributions to make sure you are entitled to the state pension, or to increase or maximise your state pension amount, you have until 5 April 2023 to benefit from the current extension of going back to 2006, before it returns to going back as far as six years. This extension could make all the difference in ensuring you receive all or some of the ‘new state pension’.

Please note that for those whose NI record started before 6 April 2016, qualifying years may be higher and different rules could apply.

Background

In order to claim the full ‘new state pension’ a person will need to have had 35 qualifying years of NI contributions (or NI credits) through employment or self employment, and to claim part payment of the ‘new state pension’ a person will need to have at least 10 qualifying years of NI contributions (or NI credits).  There are many reasons as to why an individual may have shortfalls where for periods of time they have not paid any, or sufficient NI, and therefore may wish to take advantage of the opportunity to make voluntary NI contributions.

Typically, a common example of why a person may wish to make a voluntary contribution is where they are nearing retirement/state pension age and they don’t have enough qualifying years left, whilst still working, to pay NI and receive the full or part ‘new state pension’.

How do I know if I have any shortfalls?

In the first instance, you will need to check your national insurance record to identify if a voluntary contribution is necessary, and you can do so here.  Anybody wishing to plug any gaps by making a voluntary contribution and who would benefit from the extended period of going back to 6 April 2006 has until 5 April 2023 and should act now. After 5 April 2023, you will only be able to go as far back as six years.

What next?

1. Check your NI record
2. Identify if any NIC gaps need to be filled in order to receive some, more or all of the ‘new state pension’.
3. Consider if you would benefit by going back as far as 6 April 2006.
4. If you wish to make voluntary NI contributions, and need to do so before 5 April 2023 to benefit from the extension, allowing you to plug the gap as far back as 6 April 2006, do not delay in doing so now.
5. This is also a good time to identify if there are any discrepancies from what you have paid through NI contributions to what is showing on the system and to contact HMRC if you have found any errors.

If, after obtaining your pension forecast, you would like to discuss the position with us, please contact Ian MacGillivray of our Tax Team.