We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info
Anyone with missing National Insurance contributions between 2006 and 2017 have until April 5 to make up the difference. Failure to do this could result in individuals missing out on their full state pension entitlement but those who do buy back five missing years could get a boost of up to £27,500.
In order to get the full new state pension, taxpayers typically need to have 35 years of National Insurance contributions under their belt.
For those who claim the basic state pension, which is available to men born before April 6, 1951 and women born prior the same date in 1953, they usually need to have 30 years of contributions.
People are likely to miss out on making contributions due to being out of the workforce for periods of time.
It is possible for people to buy back these missing years by voluntarily filling in the gaps in their National Insurance record.
The British public are being reminded of the important deadline coming up, April 5, 2023, which will mean how much people can get in their state pension could be depleted.
Specifically, from April 6, the number of extra years available to purchase National Insurance contributions drops to the last six tax years
As a result, those thinking about their retirement could be losing out on tens of thousands of payments down the road.
Experts are breaking down what is at stake financially for future pensioners and what needs to be done to get people their full state pension.
Alice Haine, a personal finance analyst at Bestinvest, explained: “With the end of the financial year edging ever closer, many savers are looking to top up pensions and Individual Savings Accounts, ahead of looming tax rises.
“Another equally urgent and potentially rewarding strategy, however, is to check your National Insurance record for any missed years of contributions.”
The finance expert outlined how buying back missed years is a helpful way for people to boost retirement income.
One qualifying year of National Insurance costs £824.20 at the standard rate adds up to £275 per year to someone’s pre-tax state pension.
For someone who lives 20 years beyond the future state pension age of 67, each year bought back could give them up to £5,500 per year to take home.
An individual who makes up five missing years, which comes to a cost of around £4,121, could potentially be worth up to £27,500 over a typical 20-year retirement.
Despite this, experts are warning that a deadline in seven weeks could severely affect how much people get in their state pension in the long-run.
Ms Haine added: “However, anyone with a shortfall in their record needs to act fast as they only have until midnight on April 5 to buy back their missed years to qualify for a full state pension.
“Failure to do so by the deadline might mean they don’t receive the full pension payment they are expecting.
“This particularly applies to shortfalls between the 2006/07 and 2016/2017 tax years, as from April 6, 2023, only missing contributions over the past six years can be made up.
“The concession to buy back more than six years only applies to those on the new state pension, which came into force in April 2016, so they should use this opportunity to improve how much they receive while they still can.”
All Britons are being urged to check their state pension record to determine whether making National Insurance contributions is right for them.
Source: Read Full Article