HMRC warning over state pension boost that could add £100 a week | Personal Finance | Finance
Brits have only until next April to bolster their National Insurance contributions, which could secure them a heftier state pension each week. The official deadline is April 5, 2025, for anyone looking to make voluntary National Insurance payments covering potential gaps from April 6, 2006, to April 5, 2018.
Filling these gaps can unlock various benefits and significantly boost the amount received as a state pension.
After next April, the window to make these voluntary backdated contributions will narrow, allowing payment only for the last six tax years. Gaps older than April 2019 may not be fillable after this time.
HMRC data released this week reveals that over 10,000 payments have been made, with contributors injecting more than £12.5 million into the scheme since April.
The majority opted to complete just one missing year of their National Insurance record, with an average online payment of £1,193 per person, but the investment can pay off considerably. The biggest increase in state pension recorded saw someone receiving an extra £107.44 weekly.
Emma Reynolds, the Minister for Pensions, encouraged action, saying: “We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement. That’s why I urge everyone to check if they could benefit by filling gaps before the deadline passes. Using our online tool means only a few clicks could make a huge difference to your future.”
Speaking to Newspage, Anita Wright, an Independent Financial Adviser at Bolton James Ltd, outlined the potential benefits of paying voluntary contributions: “Paying voluntary contributions could significantly boost their future income.
“For example, paying £907.40 for a year’s worth of contributions in 2024/25 will secure an additional £328.636 annually for life, indexed to inflation. Put another way, within three years of the person’s State pension income commencing, the investment will have been fully returned.”
Gabriel McKeown, Head of Macroeconomics at Sad Rabbit Investments, then highlighted the importance of this digital pension scheme, especially with the upcoming “painful” budget announcement looming at the month’s end, saying: “The clock is ticking, and for millions of Britons, a few clicks today could be the difference between retiring with a whimper or a roar.”
The criteria for accessing the state pension includes a minimum requirement of 10 qualifying years, which entails either paying National Insurance or earning National Insurance credits. Despite this, some individuals may have periods during their careers where they are unable to contribute through standard means.
Voluntary contributions can fill these gaps, allowing people to purchase qualifying years. The current rate stands at £3.45 per week for Class 2 credits or £17.45 per week for Class 3 credits, providing a feasible option for those looking to secure their state pension entitlement.
