Thinking of Topping up your state pension? Well the voluntary NI contributions discounted rate ends on 5 April 2019

If you’re looking to maximise your income in retirement, a good place to start is with your state pension. if you’re not getting the full amount or are not on track for it, then it’s worth considering topping up. Our Analysis shows that you need to live approximately 3 years past the age when you start drawing the income to break even and any time after this, is profit. Do consider your tax situation as well.

Under current rules, anyone who comes under the new state pension system (those reaching pension age after 5 April 2016) can fill gaps in their NI record at especially favourable rates, but, these concessionary rates expire on 5 April 2019, after which filling those same years could cost several hundred pounds more in total.

Those who are thinking of filling gaps and, crucially, who have checked that they will boost their state pension by doing so, can save money by acting before the end of the current financial year.

Anyone covered by the new state pension system with a gap in their national insurance record for any year from 2006/07 to 2015/16 has until 5 April 2023 to fill those gaps. “on the face of it, this means that there is no rush to do so.  However, under a special concession, those who pay voluntary contributions by 5 April 2019 qualify for special rates.”

In 2019/20 the normal rate for buying back one week of NI contributions will be £15, but there are different rates for those acting now – see table below

Contribution year (s) Weekly Rate Annual Rate (If bought by 5th April 2019) Annual Rate (After 5th April 2019_ Additional Cost
2016/07 – 2009/10 £13.25 £689.00 £780.00 £91.00
2010/11 £12.05 £626.60 £780.00 £153.40
2011/12 £12.60 £655.20 £780.00 £124.80
2012/13 £13.25 £689.00 £780.00 £91.00
2013/14 £13.55 £704.60 £780.00 £75.40
2014/15 £13.90 £722.80 £780.00 £57.20
2015/16 £14.10 £733.20 £780.00 £46.70

source: https://www.gov.uk/voluntary-national-insurance-contributions/rates

The table shows that someone wishing to fill a gap for 2010/11 will save over £150 by acting before 6th April 19. Someone wishing to fill six years from 2010/11 to 2015/16 would save over £500 by acting now.

Royal London points out that those considering topping up should check that doing so will actually boost their state pension, as complex transitional rules mean that this will not necessarily be the case.  they can do this by contact the DWP future pension centre whose contact details are at: www.gov.uk/future-pension-centre

Royal London has produced a guide to topping up state pensions which explains more about the process and can be found at: https://www.royallondon.com/media/good-with-your-money-guides/topping-up-your-state-pension/


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