Topping Up a State Pension

To receive a full state pension when you retire, you must have made a certain number of years of National Insurance contributions by the time you reach the state pension age.

If you reach state pension age after 6 April 2010, then you need 30 qualifying years, and if you have less than this amount, you will receive 1/30 of the full basic State Pension for each qualifying year you have. For example, if you had 20 qualifying years, you would be entitled to 20/30 (2/3) of the full basic State Pension.

You might receive a letter from HM Revenue & Customs (HMRC) telling you there is a gap in your National Insurance contribution record. These letters are generally sent out between September and January each year, and it will tell you how much you can pay if you want to fill the gaps and how you have to pay in order to do so.

If you have gaps in your record (for example, in cases you were self-employed, unemployed and not claiming benefits, employed but had earnings below the 'lower earnings limit' of £107 a week (2012-13 tax year rates), or if you were living abroad), then you may be able pay Class 3 Voluntary NI contributions, thereby helping you qualify for your entitlement. Normally, you are permitted to make up the shortfall within 6 years from the end of the tax year for which they are being paid, and you can do this even if you already have reached State Pension age.

Not everyone will benefit from paying Class 3 Voluntary NI contributions. Your decision to pay additional voluntary contributions may be affected by the date you reach State Pension age and the number of qualifying years you expect to have by that date. And also, an improved basic State Pension may reduce any income-related benefits, for example Pension Credit, Housing Benefit or Council Tax Benefit when you have retired, and it may also mean that you pay more tax

Special Rules for Those Reaching State Pension Age in 1998-2004

There is an allowance for some people to pay voluntary NI contributions for the tax years 1996/7 to 2001/2, to be paid no later than 5 April 2010. The measure applies to:

  • Men born between 6 April 1933 and 23 October 1939 (who reached State Pension age between 6 April 1998 and 23 October 2004);
  • Women born between 6 April 1938 and 23 October 1944 (who reached State Pension age between 6 April 1998 and 23 October 2004).

Special Rules for Those Reaching State Pension Age in 2008-2015

New legislation in the Pensions Act 2008 offered a special extended allowance for some people to pay up to an additional six years of voluntary contributions to cover years going back to 1975/6, over and above those permitted under the usual time limits. These measures apply to individuals who:

  • Reach State Pension age between 6 April 2008 and 5 April 2015.
  • Already have 20 qualifying years, including any full tax years of Home Responsibilities Protection.
  • Have at least one qualifying year that consists of paid contributions, or contributions treated as paid.