S Poddar
Financial journalist Martin Lewis has called on people to check their National Insurance (NI) records, as lost contributions might result in a substantial increase to their state pension. With the deadline to purchase back lost years fast approaching, many individuals have only weeks to act on this option.
The size of the state pension depends on how many qualifying years of NI contributions an individual has. Where there are gaps in their record, people can pay voluntarily to top them up. Buying a missing year for around £800 could, according to Martin Lewis, equate to an increase in pension of around £6,100 a year over time, and it is a very worthwhile investment for those who can do it.
This tip is particularly important for people aged between 40 and 73, as they stand to benefit the most. Those who were born after 1985, however, might not get much out of it unless they have major holes in their NI records. Lewis and his crew at Money Saving Expert (MSE) have stressed that there is a “potentially unbeatable opportunity” that people in this age group can take advantage of.
The time limit to purchase missing NI years between 2006 and 2016 has been extended to April 5, 2025. This provides individuals with more time to review their records and make the required contributions. A large number of individuals will gain significantly, with some able to boost their lifetime pension income by more than £50,000.
On a recent episode of The Martin Lewis Money Show Live, Lewis gave examples of people who have already taken advantage of this tactic. One listener explained that by buying six missing years, she had boosted her state pension by £49 a week. This worked out at an extra £2,550 a year. Over a 20-year retirement, this would be a whopping £51,000—a return that is many times the original investment of about £5,000.
Lewis explained that the closer an individual is to retirement, the more straightforward this decision becomes. Those nearing state pension age can easily determine if making these contributions will be beneficial.
For those under 45, Lewis recommended a more prudent strategy. He said that although buying missing years is not always worth it for younger people, there are instances where it is sensible. If one can afford to buy a partial NI year for a small fee, for example, £16, it is perhaps wise to do so. This prevents future gaps in contributions from impacting pension entitlement.
For those who are unsure whether they have an NI record, it is easy to check. The UK government offers an online facility where people can see their record of contributions and check if they have any gaps. If they do, they can then choose whether buying extra years is a good financial decision.
Although this option offers the potential to increase retirement income, action must be taken before the deadline. Delaying too long may mean losing out on a potentially life-altering financial benefit. With the cost of living on the rise and the greater dependence on state pensions, having a secure and adequate income in retirement is more crucial than ever.
Lewis has been outspoken regarding the need for advance financial planning, particularly about state pensions. His guidance is especially pertinent now, given policy shifts on pensions and financial instability that make securing one’s future income important.
With just over a year left until the April 2025 deadline, now is the time for eligible individuals to assess their situation. Whether nearing retirement or still years away, reviewing NI records and considering voluntary contributions could lead to significant long-term benefits.
In these times when every cent matters, making the most of this offer may mean financial security and contentment for many years to come. As ever, Lewis urges readers to consider professional financial advice if unsure what action to take in their own personal situation.
