Deadline approaching for voluntary National Insurance Contributions
Anyone reaching state pension age after 6 April 2016 with a National Insurance (NI) Record of less than 35 years will not be entitled to the full state pension. The government is currently allowing those below state pension age to add to their NI Record as far back as 2006, but this ends in April 2023.
Background
The New State Pension is currently £185.15 per week and is triple locked, meaning it will increase by whatever is highest out of average earnings, CPI or 2.5% each year. Those who don’t have a complete NI Record by the time they reach retirement age will not receive the full state pension.
Those working and paying adequate National Insurance Contributions (NIC) to qualify for state pension will continue to accrue additional years in the scheme. Even if someone does not have a full 35 years of contributions, this is fine if they are expected to reach 35 years before they retire.
A state pension forecast can be obtained through the government gateway or by completing form BR19. This should explain any shortfall in NIC record.
Check your State Pension forecast
What can be done about this?
Other than paying national insurance through work, there are two ways to add to a NIC record, making voluntary contributions and receiving National Insurance credits.
Voluntary contributions
Normally an individual can only pay voluntary NI contributions for the last six years. However, men born after 5 April 1951 and women born after 5 April 1953 have until 5 April 2023 to pay for any gaps between the tax years April 2006 and April 2016.
Money Helper provides free, impartial help that’s quick to find, easy to use and backed by government. More details about voluntary contributions and the steps to take can be found here:
Voluntary National Insurance contributions and the State Pension | MoneyHelper
Those working part time may have paid some National Insurance contributions but not met the minimum required over a year to count towards their National Insurance record. In this case they can simply make up the difference. A breakdown of an individual’s NI record, including how much is required in voluntary contributions for each year, is available below:
Check your National Insurance record
NI Credits
NI Credits are an alternative way to fill up an NI record without having to pay. The most notable way one may be able to receive NI credits is for childcare. The best way to claim these is to register for child benefit. Even those who do not qualify for child benefit are automatically awarded NI credits for a child under 12, so it is always worth registering.
Please note that only one parent can claim for child benefit, so it is advisable to consider who needs the NI credits more. For example, it would be preferable for a non-working spouse to claim credits than someone who is working and contributing enough in national insurance to fill their record anyway.
If the claimant or their partner earns over £50,000, they can get Child Benefit if their (or their partner’s) individual income is over £50,000, but they may be taxed on the benefit. This is known as the High-Income Child Benefit Tax Charge.
Grandparents and other family members under state pension age can also apply for NI credits if they are caring for a child while the parent or main carer is working.
More details can be found here:
Claim Child Benefit: How it works – GOV.UK (www.gov.uk)
Aside from the above, NI credits are mostly awarded to those who are unable to work due to disability, ill health or caring for someone else. Those who do not have a job but are actively seeking work, or who are on some form of income support, are also able to claim NI credits. The full list of reasons one could be eligible for NI credits is here.
If you are unsure whether you are affected or otherwise need assistance, please do not hesitate to get in touch with your adviser.
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