State Pensions – should you buy additional years?

November 17, 2022

There has been a lot in the press recently about buying additional State pension years – when the New State Pension was introduced in 2016, transitional arrangements were put in place to make it easier to get the full amount, but these arrangements finish soon and action is needed to benefit.

If you’re aged between (roughly) 50 and 70, this is worth checking ASAP – c.£800 spent today could earn you thousands more in retirement!

The amount of your State pension depends on how many ‘qualifying’ National Insurance (NI) years you have: the maximum is currently £185.15 per week, and the qualifying years needed depend on personal circumstances but is usually 35.

Some people are missing qualifying years, so you need to check your NI history. You can do this by logging into your Government Gateway account (www.gov.uk/log-in-register-hmrc-online-services) and going to your State pension forecast. If you have gaps between 2006-2017 you can often pay to fill these, but only if you do so before 5 April 2023. A voluntary contribution can cost around £800 but could add as much as £275 per year to your State pension, meaning you could get your money back in as little as 3 years and you could end up getting thousands over the course of your lifetime

But before you pay, you need to consider the following:

• These figures are generalised and simplified, so you should consider your own circumstances. You can contact the Government’s Future Pension Centre for a bespoke calculation of the cost, and you can speak to us at Lexington if you need help calculating if it is worthwhile for you.
• You should also check your NI record is complete and accurate; even if you did not pay any NI in a particular tax year, you might have still qualified for credits depending on your circumstances (e.g. if you were claiming certain benefits such as Child Benefit, Carer’s Allowance or Jobseeker’s Allowance)

We generally check your State pension forecast ahead of a planning meeting, but we cannot check your NI record. If you think you might be affected and wish to discuss this, please do get in touch.