Top up your re­tire­ment pot if you risk short­fall

Birmingham Post - - BUSINESS - Vicky Shaw Spe­cial Cor­re­spon­dent

PEO­PLE who have stopped work be­fore reach­ing state pen­sion age are be­ing urged to check whether they could top up their re­tire­ment pot at “heav­ily-sub­sidised” rates.

Royal Lon­don said now that the fi­nan­cial year 2017-18 is com­plete, peo­ple can top up their na­tional in­sur­ance (NI) records for that year if they do not al­ready have a qual­i­fy­ing year to­wards their state pen­sion.

The new state pen­sion was in­tro­duced in April 2016 and covers peo­ple reach­ing state pen­sion age from then on. Un­der the new sys­tem, peo­ple gen­er­ally need 35 qual­i­fy­ing years to get the full new state pen­sion.

Peo­ple might have built up a qual­i­fy­ing year if they have, for ex­am­ple, made suf­fi­cient na­tional in­sur­ance con­tri­bu­tions or been en­ti­tled to na­tional in­sur­ance cred­its.

Those who are set to be short of the full state pen­sion can po­ten­tially top it up by mak­ing vol­un­tary con­tri­bu­tions.

Royal Lon­don said some­one mak­ing vol­un­tary con­tri­bu­tions for the year 2017-18 may po­ten­tially find they get more back than they paid in after draw­ing their state pen­sion for just four years.

The mu­tual in­surer has pro­duced a free up­dated guide to top­ping up state pen­sion records at roy­al­lon­­with­y­our­money.

A pre­vi­ous edi­tion of the guide was down­loaded more than 70,000 times.

In some ex­cep­tional cases it may not be worth pay­ing vol­un­tary con­tri­bu­tions, for ex­am­ple if peo­ple ex­pect to be re­ceiv­ing cer­tain ben­e­fits, Royal Lon­don said. This is­sue is also cov­ered in the guide.

Mean­while, peo­ple can check their state pen­sion en­ti­tle­ments on the govern­ment web­site at check-state-pen­sion.

Sir Steve Webb, a for­mer pen­sions min­is­ter who is now di­rec­tor of pol­icy at Royal Lon­don, said: “Many hun­dreds of thou­sands of peo­ple who are not go­ing to get a full state pen­sion of £164.35 per week could boost their pen­sion prospects by pay­ing heav­ily-sub­sidised vol­un­tary NI con­tri­bu­tions.

“Now that 2017-18 is over, it is time for those who did not build up a qual­i­fy­ing year to­wards their pen- sion to re­view whether to pay vol­un­tary con­tri­bu­tions for that year.

“This will be par­tic­u­larly rel­e­vant to peo­ple who in the past were in pen­sion schemes which were con­tracted out of part of the state pen­sion sys­tem and who will not oth­er­wise get a full state pen­sion as a re­sult.

“I hope that our new guide will steer peo­ple through the com­plex­i­ties of whether and how to do this.”

> Peo­ple head­ing for a state pen­sion short­fall can po­ten­tially top it up by mak­ing vol­un­tary con­tri­bu­tions

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