Table of Contents
Ten thousand smart savers have boosted their state pension by up to £148,922 each since April using a rare government offer.
A special window is open allowing you to buy up to ten extra years of state pension if you have gaps in your National Insurance (NI) record.
But hundreds of thousands of people who have not yet increased their retirement income have just six months left to do so.
Experts have called this generous one-time offer “one of the best investments you can make.” They say the scheme means you could spend up to £8,000 and see a net increase of £55,000 in your income over a 20-year retirement.
The scheme means you could spend up to £8,240 and see a net increase of £88,306 in your income over a 20-year retirement, assuming the state pension rises each year under the triple lock, calculations from wealth manager Quilter show .
In the most extreme example, a saver managed to increase his state pension income by almost £149,000. This would cost around £15,500 today.
Savers have made more than 10,000 payments worth £12.5 million since April to boost their state pensions through the Government’s new dedicated online service, figures published this week show.
The deadline to accept the offer was supposed to be last April but was extended after MoneyMail warned that many anxious savers were unable to top up their pensions due to administrative chaos at the Department for Work and Pensions.
Chancellor Rachel Reeves. The state pension is paid from the age of 66 and the amount received will depend on several factors
The deadline has been pushed back to April 5 next year, meaning savers now have less than six months left to make use of the generous offer.
So how do you know if you’re one of the hundreds of thousands who stand to win? Here we explain everything you need to know to take advantage of it and how much it will cost to increase your state pension in the future.
How much state pension should I receive?
Currently, the state pension is paid from the age of 66 and the amount received will depend on several factors. This includes when you reached retirement age, how many years you worked, your type of employment (self-employed or employed), and how much you earned.
There are two types of state pension. The “basic” state pension is paid to those who reached retirement age before April 6, 2016. The new “flat” state pension is paid to those who reach retirement age after that date.
Anyone receiving the “basic” state pension needed 30 years of NI contributions to qualify for £169.50 a week, or £8,814 a year. It came with several supplements, including the second state pension and so-called “contracted” pensions.
Those receiving the ‘new’ state pension need a further 35 years of NI contributions to get the full amount: £221.20 a week, or £11,502 a year.
Anyone who has not met these NI requirements will receive a smaller pension in retirement. Therefore, it is important to identify any deficits if you did not know they had occurred.
How can I increase my state pension?
The main way to increase the amount you receive in your state pension is by filling in any gaps in your NI contribution record.
You can pay to purchase missing NI contributions for specific years during which you did not make them or did not pay enough NI to accrue entitlement. This is different to the NI contributions that employed workers make each month, known as Class 3 contributions, which are paid as a percentage of your income.
Each week you want to make voluntary contributions to NI to cover costs of £17.45 this tax year. So if you wanted to complete a full year, it would cost you £909.95. At the current exchange rate, this increases your pension by £329 a year. That equates to £6,573 over a 20-year retirement, without taking into account any increase in the state pension under the triple lock. This is the Class 3 contribution rate, the most common rate workers pay.
Those who are self-employed usually pay the Class 2 rate, which is much lower than that of employees: currently £3.45 a week, or £179.90 a year. This means it costs much less to fill gaps in a record but creates the same boost in the state pension.
If you have a partial year, for example where you worked for part of the year but didn’t pay enough NI to make it a qualifying year, then the price of filling that year will often be much cheaper than a year you missed. entirely.
Most savers who increased their state pension this year paid to top up a year’s NI contributions and paid an average of £1,193, according to official figures.
The biggest increase anyone made to their state pension was £107.44 a week. Money Mail analysis finds this could add up to almost £149,000 for someone who lives to be 90, with the state pension rising by a minimum of 2.5% under the triple lock.
What is the deadline?
To check your NI contribution record, contact the Government Future Pensions Centre.
You can usually only fill gaps in your NI record dating back to the last six years. But a unique window is currently open that allows it to fill the gaps dating back to 2006.
You have until April 5, 2025 to apply and make the corresponding payments. After that, the rules will return to normal and you will only be able to cover the last six years.
But it is important not to leave it to the last minute if you plan to carry out any historical recharge.
The Government has already pushed back the deadline to give those struggling time to contact the Department for Work and Pensions the chance to complete the top-up. This means they are unlikely to do it again.
Jon Greer, head of retirement policy at Quilter, says: “Although April 2025 may seem distant, starting the process early is crucial if you want to avoid missing out on a substantial increase in your state pension.” Previously, there were reports of jammed phone lines and slow processing due to the high volume of last-minute requests. To avoid these issues, it is important to consider doing a voluntary NI top-up as soon as possible and use the forecast tool Check your state pension by logging into your online account or using the free and secure HMRC app.
How do I know if I can use the offer?
To check your NI contribution record and how much you are on track to receive in the state pension, contact the Future Pensions Center on 0800 731 0175 if you are under 66, or the Pensions Service for those over the age retirement on 0800 731 7898. You will be asked for your name, date of birth and NI number.
They can tell you which years you are eligible to make additional contributions and whether you will benefit.
There are several reasons why you may be missing NI contributions for some years.
For example, you may have been employed part-time, earned less than the threshold for making NI payments or taken time off work to care for children or elderly relatives.
You can also access your forecast online at gov.uk/check-state-pension.
If you transfer the money without checking it first and it turns out you miscalculated, you risk losing that money forever as HM Revenue and Customs won’t always refund you.
Once you know exactly which years of missing NI contributions you want to make up and how much you need to pay, you need to make the payment to HMRC. First you will need a reference number.
Call the National Insurance Helpline on 0300 200 3500 and an adviser will confirm how much you would have to pay per year and give you an 18-digit payment reference. You can then make the payment through your online banking. through the government website.
Select the ‘pay by bank account’ option. You will then be prompted to log into your mobile or online banking account to approve your payment.
You can also send a check by post to: HM Revenue and Customs, National Insurance Contributions and Employer Office, BX9 1AN.
j.beard@dailymail.co.uk
SAVE MONEY, MAKE MONEY
Investment boost
Investment boost
5.09% on cash for Isa investors
5.05% solution after one year
5.05% solution after one year
Prosperous momentum for Al Rayan
free share offer
free share offer
No account fee and free stock trading
4.84% cash Isa
4.84% cash Isa
Flexible Isa now accepting transfers
Trading Fee Refund
Trading Fee Refund
Get £200 back in trading fees
Affiliate links: If you purchase a This is Money product you may earn a commission. These offers are chosen by our editorial team as we think they are worth highlighting. This does not affect our editorial independence.
Some links in this article may be affiliate links. If you click on them, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.