‘Top-up’ your pension before April deadline

You could lose out on a sizeable boost to your state pension if you miss a top up deadline on April 5 2023.


7th February 2023

Do you qualify to 'top-up' your pension?

To receive the full state pension, you need to have paid enough years of National Insurance Contributions (NIC). Since 2010 you need 35 years of contributions to get a full state pension. To ensure those retiring, or have already retired don’t miss out, there is a government scheme which allows individuals to plug any historic gaps. There may be a gap if you were a low earner, unemployed or working abroad.

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953 and don’t have a full record you can pay voluntary class 3 contributions to fill the gaps going back to 2006, but only until April 5. After that date you can only top up the last six years – so anyone with gaps further back should be looking to top-up those missing years before it’s too late.

How can you 'top-up' your pension?

You can currently ‘top-up’ by making Class 3 voluntary NIC, these currently cost £824.20 per year. However, if you fill gaps from past years the cost is lower. Each year you buy currently provides an extra £275 per year state pension, so if you live say three years past state pension age, you would have received £825 back (before tax). Therefore, the cost equals the payback once you get to three years past pension age, and the longer you live, the more significant the boost will be.

For example, if a 66-year-old male makes a one-year NIC top up to his state pension to gain the maximum amount he can, and lives to the expected age of 84, he would have made a £824.20 “investment” and received £4,950 back (before tax).

Don't pay for National Insurance Contributions (NIC) you don't need.

However, it is a complex area and very much depends on individual circumstances, and not everyone with ‘gaps’ will actually need to top up.

There are some big caveats with the ‘top-up’ scheme, firstly, you need to make sure you won’t get credited with sufficient NIC in the years up to state pension age by other means, or you could end up paying for NIC you don’t need. The most obvious way this could happen is if you are earning enough to pay NIC and will do so up until state pension age.

You may also be able to manually apply for NIC credits for those missing years, for example, if you were on statutory sick pay, caring for a family member, on maternity, paternity or adoption pay. You can find out more here national-insurance-credits/eligibility.

Are you making the most of your state pension?

The best way to find out if you are making the most of your state pension is to get an update by visiting check-state-pension. Here you will be able to find out how much state pension you could get, when you can get it, and how to increase it, if you can.

If you are not predicted to get the full amount at state pension age, you may then need to check your NIC history, you can do that here check-national-insurance-record and if it looks like there is the ability to make NIC top-ups – and it is the right thing to do for your personal circumstances – then call the Future Pension Centre who should be able to guide you further through the process.

Not sure? We're here to help.

This is just one small piece in the ‘retirement’ jigsaw puzzle and as always, I would urge everyone to start planning and mapping out this stage in your life as soon as you can.

If you feel like any of the issues in this article may affect you, or if you need general advice for you pension, please feel free to contact us by clicking here…