State pension: Voluntary NI contributions can boost income but limits apply – full details

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State pension income is based on a person’s National Insurance record with 10 years needed to receive any amount of money, while 35 years is needed to get the full amount of £175.20 per week. As National Insurance records are so important for state pensions, the government allows people to check if they have any gaps in payments and if there are, voluntary contributions can be made.

A person may have gaps in their record if they were at some point employed but had low earnings, unemployed and not claiming state benefits or self-employed but did not pay contributions due to small profits.

Where these gaps occur, people may be able to pay voluntary National Insurance contributions to increase their eventual state pensions.

This will usually be done through either class two or three contributions but it should be noted voluntary payments do not always increase state pensions.

To find out if contributions will benefit the payee, they should contact the Future Pension Centre for guidance.

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Voluntary National Insurance payments can usually cover gaps in a record over the previous six years.

Where a person is eligible to pay voluntary National Insurance, there will be a wide range of variables as the following details and contexts explain:

  • Employed but earning under £120 a week and not eligible for National Insurance credits – class three
  • Self-employed with profits under £6,475 – Class two or Class three, with each counting towards different benefits
  • Both employed and self-employed, with low earnings and small profits – HMRC will need to be contacted for guidance
  • Self-employed as an examiner, minister of religion or in an investment or land and property business -Class two or Class three, with each counting towards different benefits
  • Living and working abroad – class two, but only if the payee worked in the UK immediately before leaving, and they previously lived in the UK for at least three years in a row or paid at least three years of contributions
  • Living abroad but not working – class three, but only if at some point they’ve lived in the UK for at least three years in a row or paid at least three years of contributions
  • unemployed and not claiming benefits – class three
  • married woman or widow who stopped paying reduced National Insurance rates – class three

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It is currently not possible to pay voluntary contributions if the person is eligible for National Insurance credits or is a married woman or widow paying reduced rates.

Additionally, those who have already reached state pension age will see limitations on their options.

For those at retirement age who want to fill gaps in their National Insurance records, they will only be able to pay class three contributions.

When making these payments, people should note the specific class they’re paying as each will have different charges levied.

For the current tax year, class two contributions are charged at £3.05 per week.

This increases to £15.30 a week for class three contributions.

These payments must be made by April 5 every year.

Those born before 1953 may have more time to pay National Insurance contributions if they’re set to receive state pensions under the old system.

It should be noted that when a person reaches state pension age, which is currently 66 for most people, they will no longer have to pay National Insurance at all if they carry on working.

State pensions do not have to be claimed if the person involved doesn’t wish to and they may be able to utilise flexible working arrangements in their later years.

Where they are claimed, it is possible to process a request up to four months before reaching state pension age.

Initial payments may take around five weeks to arrive but beyond this, payments will be made every four weeks.

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