How to boost State Pension payments before and after you reach retirement age
HM Revenue and Customs (HMRC) recently announced that more than 10,000 payments worth £12.5 million have been made through the new digital service to boost people’s State Pensions since it launched in April. People have less than six months left to fill any gaps in their National Insurance (NI) records going back as far as 2006 to maximise their State Pension in retirement.
Usually people can only pay voluntary contributions for the past six tax years, and after the April 5 deadline next year the normal six-tax year time limit will apply. In 2023, the previous government extended the deadline to pay voluntary NI contributions to April 5, 2025 for those affected by new State Pension transitional arrangements, covering the tax years running from April 6, 2006 to April 5, 2018.
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The extended deadline has allowed people more time to consider what is right for them and make their contributions.
Men born after April 6, 1951 and women born after April 6, 1953 are eligible to make voluntary NI contributions to boost their New State Pension.
Some people may be entitled to NI credits rather than needing to pay contributions, so they will need to check and consider what is right for them.
HMRC said further analysis of the use of the online service shows the majority (51%) of customers topped up one year of their NI record, with the average online payment being £1,193.
Pensions Minister Emma Reynolds said: “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.”
People can find out more about making voluntary contributions on GOV.UK here. People of working age can also check their State Pension forecast on GOV.UK here.
The current age of retirement is 66 for men and women across Great Britain and is set to rise to 67 between 2026 and 2028. However, there are several things everyone can check now to ensure they maximise State Pension payments - even if they have reached retirement age.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown explained: “There are things you can do to plug the gaps, including checking to see if you were entitled to claim a benefit (such as Child Benefit) which comes with a National Insurance credit during that time, and seeing if you can backdate a claim.
“You can also buy voluntary National Insurance credits, which can work out very good value. Generally, you can purchase credits to plug gaps going back six tax years but if you’re a man born after 5 April 1951, or a woman born after 5 April 1953 you can currently plug gaps in your National Insurance record going back to 2006.”
But, before you rush to plug gaps in your National Insurance (NI) record, the pensions expert warns: “It is hugely important that you speak to DWP before parting with any money for voluntary National Insurance credits as they can confirm if you will definitely benefit from buying them. In some instances, such as if you were contracted out for instance, you may not benefit from the extra credits.”
How to boost your State Pension
Check your State Pension forecast
Go online and check your State Pension entitlement on the ‘Check your State Pension forecast’ page on the GOV.UK website here.
This will also tell you your State Pension age - when you can officially retire and start collecting payments.
Claim Child Benefit
Women in particular miss out on valuable State Pension credits when they are at home looking after children. However, if they claim Child Benefit, they will receive National Insurance credits that count towards their State Pension. Many women have missed out on this in the past because their husband claimed the Child Benefit rather than themselves.
Others missed out when they opted out of Child Benefit after the introduction of the High-Income Child Benefit Tax Charge. If you claim Child Benefit in your name, then you will get the National Insurance credit towards your State Pension.
Specified Adult Childcare Credit
Are you under State Pension age and looking after a family member under the age of 12 while their parent or main carer goes back to work?
If this is the case, you could qualify for National Insurance credits under Specified Adult Childcare Credit as the working parent essentially transfers their NI credit to you.
There are other situations where you are receiving benefits and you can still claim National Insurance credits. For example, if you are off work sick on Statutory Sick Pay. It is always worth checking to see if you may be entitled.
Buy National Insurance credits
If you can spare the cash, you can plug gaps in your NI record by buying voluntary class 3 NI contributions. Buying a full extra year costs around £800, though partial years will be cheaper. For each year bought you get 1/35th of a year’s State pension. This means you effectively earn your money back in around three years, so it can prove very good value.
It is, however, really important to check that it is worth your while paying for these credits so always check with DWP before doing so.
Find out more about plugging gaps in your National Insurance record on GOV.UK here.
Can you claim Pension Credit?
Pension Credit aims to top up the incomes of the poorest pensioners and acts as a valuable gateway to other benefits such as help with heating costs, Council Tax and a free TV licence for the over-75s.
The means-tested benefit also provides access to Winter Fuel Payments following the Labour Government's decision in July to stop issuing the annual heating bill help to all State Pensioners.
New claims made before December 21, 2024 which later turn out to be successful will also qualify for a backdated Winter Fuel Payment - full details here.
How to check eligibility for Pension Credit
Older people, or friends and family, can quickly check their eligibility and get an estimate of what they may receive by using the online Pension Credit calculator on GOV.UK here.
Alternatively, pensioners can contact the Pension Credit helpline directly to make a claim on 0800 99 1234 - lines are open 8am to 6pm, Monday to Friday.
Expert help and advice is also available from:
More details about claiming Pension Credit can be found on GOV.UK here.