Government officials have issued an alert to state pensioners as a deadline approaches. HM Revenue and Customs (HMRC) has revealed that over 10,000 payments totalling £12.5 million have been made via the new digital service to enhance individuals' State Pensions since its inception in April.
And with less than six months remaining to address any National Insurance (NI) record gaps dating back to 2006 to optimise their State Pension upon retirement, people are being urged to act. Typically, voluntary contributions can only be made for the previous six tax years, and after next year's April 5 deadline, the standard six-tax year limit will be reinstated.
In 2023, the last government extended the deadline for voluntary NI contributions to April 5, 2025 for those impacted by new State Pension transitional arrangements, covering tax years from April 6, 2006 to April 5, 2018. This extended deadline has provided individuals with additional time to evaluate their options and make their contributions.
Men born post-April 6, 1951 and women born post-April 6, 1953 are eligible to make voluntary NI contributions to increase their New State Pension. Some individuals may qualify for NI credits instead of having to make contributions, so it's crucial they check and decide what's best for them.
HMRC stated that further analysis of the online service usage indicates that the majority (51%) of customers topped up one year of their NI record, with the average online payment amounting to £1,193. Pensions Minister Emma Reynolds has made an appeal, stating: "We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement," reports the Daily Record.
She added: "That's why I urge everyone to check if they could benefit by filling gaps before the deadline passes. Using our online tool means only a few clicks could make a huge difference to your future." People are encouraged to learn more about voluntary contributions on GOV. UK here, while those of working age can also verify their State Pension forecast on GOV.UK here.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, the online investment platform, commented to say: "People typically need at least 10 qualifying years of NI (national insurance) contributions to receive any state pension at all and at least 35 years to receive the full new state pension - though they don't need to be consecutive years."
She further explained: "Plugging gaps can be quite an expensive process, so it is important to assess whether you actually need to buy back any missing years. This will depend on how many more years you plan to work, and whether you are eligible for NI tax credits, which fill the gaps, such as those who have been sick, were unemployed or took time out to raise a family or care for elderly relations."
Haine also noted the ease of updating records with the Government's new NI payments service introduced in April this year, highlighting that the State Pension forecast tool has already been used by 3.7 million people since its launch. She went on to say: "People simply need to log into their personal tax account or the HMRC app to not only view any payment gaps but also check if they can plug those gaps directly through the Government's digital channels.
"A short survey assesses the person's suitability to pay online with those eligible to pay directly given a series of options to plug any gaps depending on when someone wants to stop working.
"Calculating whether to top up can be confusing though and ultimately there is no point paying for more years than you need because you won't get that money back."
Ms Haine further stated: "People who might need to top up include those that took a career break as well as low earners or expatriates living and working abroad.
"Remember, this deadline has been extended a couple of times in the past, which makes it more likely the Government will stick to the April cut-off point this time around. For this reason, those that think they might need to take action should start the process now."
