Martin Lewis reveals how to turn £800 into £5,500
Martin Lewis has revealed a little-known trick that could help people to turn £800 into £5,500 on their state pension.
The MoneySavingExpert founder is urging those aged between 45 and 70 to check if their state pension is missing any national insurance contributions, and if they are, to add a voluntary £800 for each year.
Such gaps are possible due to transitional arrangements that were put in place for a new state pension introduced in 2016.
But he warned people to move quickly because contributions will be limited after next April 2023.
Speaking on The Martin Lewis Podcast, Mr Lewis explained: “A voluntary national insurance year costs around £800 - but it adds £275 a year to your state pension, which means if you live just three years after state pension age or if you are already at state pension age, after buying the extra year then you’re even.
“A man who gets to age 66 will typically live 19 more years. So each £800, in that case, would get him £5,300 back. And that’s before the fact that it’s normally linked with inflation (obviously, that’s another discussion at the moment for another day). For a woman, because women live longer, for 21 more years at the same age, each £800 would be worth £5,800 extra.”
Mr Lewis told listeners who have not yet reached retirement age to check their state pension summary online at gov.uk where they can find out when they can view a forecast on how much they are likely to get based on their national insurance record.
For those who have already reached state pension age, Mr Lewis urged them to check their national insurance record which tells them how many years of full contributions they have and to top up any missing years if they can.
He said: “You can buy more years and this is the crucial bit and why timing is so important right now. Until April 2023 you can buy back national insurance years dating all the way back to 2006.
“After April 2023 you’ll only be able to go back six years. So as you can see there is a substantial number of years if you’re missing them you only have a short window left to buy them.”
