I am aged 58. Like many people I guess, I have some gaps in my career where I haven’t earnt anything.

I am now worried these gaps may mean I cannot get my full state pension. How can I check that? And if I am short is there anything I can do about it? I keep seeing something about plugging national insurance contributions, but I am not sure whether this is relevant to me.

Thanks

Clare

Rachel Vahey, AJ Bell Head of Public Policy, says:

The state pension provides an important foundation to many people’s retirement income. Anyone claiming a state pension after 2016 is usually entitled to the full amount (around £11,500 a year) if they have paid at least 35 years of national insurance contributions.

But there are some, who like you, worry they haven’t paid enough national insurance over the years. For example, if you’ve had gaps in your career or have spent time abroad.

In addition, anyone who previously ‘contracted-out’ of the state pension under the old system (which existed before 6 April 2016) may also be entitled to less than the full state pension (even if they have a 35-year national insurance record).

Contracting out (which no longer exists) just meant you paid lower national insurance and in return didn’t receive entitlement to the state second pension. If you have previously contracted-out, a deduction will be made to your state pension entitlement. If you aren’t entitled to the full state pension because of being contracted-out, you can pay voluntary national insurance to make up the gap.

The first step is to check your national insurance record which you can do online or in the HMRC app, or by contacting the Department for Work and Pensions (DWP) by phone.

PLUGGING THE GAP

If you think you are short, then you can plug gaps by paying voluntary national insurance contributions, even if you have reached state pension age (currently 66, rising to age 67 from April 2028). Usually, you can only fill in gaps in your record in the last six tax years. However, it’s currently possible to fill in gaps in your record going back to 2006. But this window shuts on 5 April this year, and from 6 April onwards you can, again, only go back six years.

Paying voluntary NI can be a financially savvy way to boost your retirement income, although you need to make sure doing so will increase your entitlement.

It costs £17.45 to buy a week’s worth of state pension entitlement in 2024/25, or around £900 to buy a year’s worth of state pension. In return you could receive £330 a year of state pension income, protected by the triple-lock (meaning your state pension will rise each year by the highest of average earnings growth, inflation or 2.5%). Provided the top-up boosts your state pension entitlement, it will take just a few years for that investment to pay off.

NOT EVERYONE WILL BENEFIT

However, it’s crucial to check this is the right option as not everyone will benefit from paying voluntary national insurance. For example, if you work up to your state pension age you may naturally build up the 35 years of contributions you need to get the full state pension.

Equally, those who have taken time out of work to care for children or elderly relatives may be able to claim national insurance credits for free.

And not everyone who was contracted-out will benefit from buying extra years. This is quite complicated and will depend on what you’d have been entitled to under the old system.

This website has more information on claiming free national insurance credits and you can contact the Pension Service to discuss making voluntary contributions. Contact the Pension Service: Get information about your State Pension - GOV.UK

Because the DWP is expecting a surge in demand, it has said that if you call the Pension Service by 5 April requesting a call back, then it will honour any request to fill gaps going back to 2006 processed after this date. This gives people wanting to do this a little more wriggle room.

Finally, if you decide to go ahead with paying voluntary NI, you can do this online, although you can also make your application via post.

DO YOU HAVE A QUESTION ON RETIREMENT ISSUES?

Send an email to askrachel@ajbell.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares.

Please note, we only provide information and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

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