It’s a damn site quicker way to boost pension
PEOPLE heading for a state pension shortfall can now top up their entitlement quickly and easily, using a new governmentbacked online service.
This will make life simpler for those who fear they will not qualify for the maximum state pension because they have not made sufficient qualifying National Insurance (NI) contributions.
The payment service from HM Revenue & Customs (HMRC) and the Department for Work and Pensions (DWP) lets people view gaps in their NI record and pay voluntary contributions to plug those holes.
It will show people how much their pension could increase by and how much they need to pay to achieve this.
After paying securely through the site they will receive confirmation that their payment has been received, and their NI record will be updated.
Typically, people can only pay voluntary contributions covering the past six years, but last year the government temporarily extended this. It is now possible to make up NI gaps between April 6, 2006, and April 5, 2018, too. The deadline for doing so is April 5, 2025.
Pensions minister Paul Maynard said the new online tool will simplify boosting the state pension, adding: “I would encourage everyone to check their state pension forecast.”
Sir Steve Webb, partner at consultants LCP, said until now people have had to go through a DWP helpline to check which years they can top up, followed by the HMRC helpline to get a payment reference number. “It must be a step in the right direction to do this without hanging on the phone.”
Voluntary contributions will not always increase someone’s state pension but the site will help people assess whether it is worth it.
They typically pay the current rate, which for the 2024/25 tax year is £3.45 a week for Class 2 contributions, adding up to £179.40 for each year of state pension bought. Some will have to pay Class 3 contributions, at £17.45 a week, or £907.40 per year. The new service should explain who pays what.
Buying extra state pension works best for those in good health with higher life expectancy. Those who die before retirement age will get nothing in return.
Before paying, make sure you are not going to get the full state pension anyway, through standard NI contributions.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said also check if you are eligible for NI credits, which are free. “They fill the gaps for those who are sick, unemployed, or took time out to raise a family or care for elderly relatives.”
People will need to log in to the new service using their personal tax account details. Those without an online HMRC account can register on gov.uk.
The service is not currently available to those already receiving their state pension, self-employed or living outside the UK with gaps incurred while working abroad.