If there are gaps in your National Insurance contributions, you might not be entitled to the full basic state pension. The new changes to the pension system will mean some people, who reach the UK State Pension age on or after 6 April 2016, do not receive the new flat-rate state pension. Here is a guide on how the state pension top-up works.

UK state pension age

The earliest opportunity to get the basic State Pension is once you reach the UK State Pension age. This is currently 65 for men and 62 for women.

The pension age is increasing and women’s pension age will keep going up every few months, until it reaches the same level as for men in 2018. Then, the basic State Pension can be claimed at 65.

Further rises will occur in future under the current plans. The Telegraph outlined this plan, noting that the UK State Pension age will be 67 for both women and men in 2028.

 

Eligibility for full state pension

Even though the state pension age provides you the earliest opportunity to receive a basic State Pension, you might not have made enough National Insurance (NI) contributions to guarantee you the full-flat rate.

Gaps in NI contributions may result because you earned below the contribution limit, you were unemployed, or maybe even lived abroad.

The new changes in the pension system mean that you need 30 qualifying years of NI contributions for the full State Pension. But the 30 qualifying years only applies if you are a man born on or after 6 April 1945 or a woman born on or after 6 April 1950.

If you are a man born before 6 April 1945, you’ll need 44 qualifying years. If you are a woman born before 6 April 1950, you’ll require 39 qualifying years.

If you want to see whether you have gaps in your NI contributions, you can request a State Pension statement. The NI Direct website will guide you through the process.

 

State pension top up

If you don’t have the required qualifying years, you are able to pay voluntary NI contributions to top up your State Pension. You typically have about six years from the end of the tax year for which the contributions apply to pay the voluntary contributions.

Depending on your age, you might be able to pay the gaps even after six years.

Topping up your State Pension is straightforward and you can find more information on how to make a voluntary NI contribution on the Government website. You can easily pay a lump sum by visiting your bank or local post office.

If you reach State Pension retirement before April 2016, you are able to make the voluntary contribution from October 12 2015 to April 1 2017.

This special scheme is designed to help those who wouldn’t receive the new flat-rate pension that takes effect in April 2016.

In order to qualify for this scheme, you’ll need to be:

  • A man born before 6 April 1951
  • A woman born before 6 April 1953

You can find out how much you need to top up your current State Pension with the Government’s State Pension top-up calculator.

 

Should you top up?

Although the current top-up scheme, especially for people retiring before April 6 2016, is a handsome offer, there can be situations where topping up your state pension might not be worth it.

Currently, the government rewards you quite handsomely if you are able to defer your retirement. You don’t need to pay NI contributions if you continue to work beyond the State Pension retirement age.

Instead, the Government will increase your pension by 1% for every five weeks you put off claiming and 10.4% for every year. Continuing to work a few years beyond retirement can provide you much bigger pension than paying off the missing contributions. You just need to consider whether that’s something you’d really want to do.

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