As financial planners, we deal with many different areas when planning for retirement. One critical aspect of this planning is ensuring you receive the full State Pension you’re entitled to.
The UK Government has extended the deadline for making voluntary National Insurance (NI) contributions to fill gaps in your record from April 2006 to April 2018. This extension, now set to end on April 5, 2025, provides a unique opportunity to boost your State Pension. Here’s why you should act now and how you can benefit from topping up your State Pension.
The urgency of the deadline
The Government’s decision to extend the deadline to April 2025 means you still have a limited window to make up for any shortfalls in your NI record from the past 20 years. After this date, you will only be able to backdate contributions for the previous six years. This extension is a rare opportunity to significantly enhance your retirement income, but it requires prompt action. Delaying could mean missing out on the chance to increase your State Pension, which could have long-term financial implications.
Benefits of topping up your state pension
1. Increased retirement income: By filling gaps in your NI record, you can increase the amount you receive in your State Pension. This can provide a more comfortable and secure retirement.
2. Cost-effective investment: The cost of making voluntary contributions is relatively low compared to the potential increase in your pension. Typically, you need to receive just 3-4 years of extra State Pension to recoup the cost of the contributions.
3. Secure income: The State Pension is a guaranteed income for life, which increases with inflation. This makes it a reliable source of income in retirement.
4. Peace of mind: Knowing you have maximised your State Pension entitlement can provide peace of mind, allowing you to enjoy your retirement without financial worries.
How to check your state pension forecast and make contributions
To determine if you have gaps in your NI record and how much you need to contribute, you can use the Government’s online service:
1. Check your state pension forecast: Visit the GOV.UK website or use the HMRC app to check your State Pension forecast. This service will show you how much State Pension you could get, when you can get it, and how to increase it if possible.
2. Calculate your contributions: The online service will also detail the voluntary NI contributions needed to fill any gaps in your record. This will help you understand the cost and the potential increase in your State Pension.
3. Make payments: You can make voluntary contributions directly through the online service. Payments are secure, and you will receive confirmation once your NI record is updated.
Comment
The extended deadline to top up your State Pension is a golden opportunity to enhance your retirement income. By acting now, you can ensure you receive the maximum State Pension you’re entitled to, providing financial security and peace of mind in your later years. Don’t wait until the last minute—check your State Pension forecast today and consider making voluntary contributions to fill any gaps. Your future self will thank you.
How can we help?
Sam Cawley is an Investment Director and Chartered Financial Planner in our expert Investment Management team. His areas of expertise include Inheritance Tax planning, investment advice for individuals, cash flow planning, and pension and retirement planning.
If you would like some advice on the above or any related subjects, please do not hesitate to get in touch with Sam or another member of the team in Derby, Leicester, or Nottingham on 0800 024 1976 or via our online form.
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