Can I top up my state pension?
By Paul Davies
Can I top up my state pension?
You can still top up your state pension to bolster your retirement income. Which? outlines the pros and cons of buying voluntary National Insurance contributions.
The temporary offer to top up your pension - so-called 'Class 3A' National Insurance (NI) contributions - has now come to an end. Which? outlines how you can still add to your state pension.
Voluntary 'Class 3' National Insurance contributions
'Class 3' contributions are the main way to fill gaps in your NI record and to add full qualifying years.
How many full National Insurance qualifying years you have is important as it will go some way to determining how much state pension you’ll get.
Previously you were entitled to a full pension after 30 years of National Insurance contributions (NICs), it’s now 35. To qualify at all, you need 10 years of NI payments. For more: How much state pension will I get?
You may have gaps or part years in your NI record due to a number of reasons – you may have been employed on low earnings or unemployed but not claiming benefits. Those who were self-employed or worked abroad may also have gaps in their record.
If your NICs record is incomplete you can make up one or more qualifying years by paying voluntary contributions – known as Class 3 contributions. Voluntary Class 2 contributions are for low income self-employed people.
People must usually pay the voluntary contributions within six years of the year in question, although there are some exceptions. The cost of the extra contributions varies depending on which system you qualify under – see below – but everyone can top up their pension in this way if they have gaps.
The cost of voluntary National Insurance contributions
If you qualify under the old state pension system
This is men born before 6 April 1951 and women born before 6 April 1953.
Every week that you plug a gap for in 2017/18 will cost you £14.25 or £741 maximum if you contribute the whole year.
In return you’ll get another full qualifying year up to 30, and therefore an additional extra £4.08 per week or £212.16 a year in 2017/18. So less than four years of receiving your state pension to recoup your outlay, and you’d get the extra pension for the rest of your life.
If you qualify under the new state pension system
Those covered under the new state pension are men born on or after 6 April 1951 and women born on or after 6 April 1953.
The current rate is again £14.25 per week, but the rate varies on the week you want to make up. For gaps between 2006 and 2010, the rate is £13.25 providing you make the contributions by 2019. After that you pay the rate applied to the year in question, eg £12.05 in 2010/11, £13.55 in 2013/14, £14.10 in 2016/17.
Making extra National Insurance contributions
You may have paid some or partial NICs in a financial year but not enough to get a full qualifying year. Making contributions for those extra weeks can get you another full qualifying year.
Topping up 10 weeks of contributions from 2010/11 would therefore cost you £142.50 if you’re under the old state pension system and £120.50 if you’re under the new system.
Making up the cheapest year first (years with fewest weeks to make up to have a full year) makes best sense. However, if you wait too long you may run out of time.
Visit the Check your State Pension website to get a summary of your National Insurance history and gaps you might have.
Class 3A National Insurance contributions
These were available until 5 April 2017 and allowed people who had reached the state pension age before April 2016 to top up their pension.
The time-limited offer was designed to help those that won't receive the new single-tier state pension that started in April 2016. Those aged 65 were able to increase their state pension by £1 per week in exchange for £890.
- Last updated: April 2017
- Updated by: Paul Davies