Martin also shared that the price of buying missing NI years has been frozen until July 31, 2023
The UK Government has extended the deadline for people to voluntarily plug gaps in their National Insurance record in order to boost their State Pension entitlement until the end of July. Something which Martin Lewis said could be worth “tens of thousands of pounds to people aged between 45 and 70.
Martin calculated that for Brian’s payment of £4,070 and with the average life expectancy of 20 years after reaching retirement age, which is currently 66, Brian has just made an “inflation-proof” investment return of £28,000. The deadline for contributions was previously set at April 5, 2023 - but customer phone lines have been busy with people trying to make top-ups - and the UK Government has now confirmed an extension to July 31.
"This applies to years that would otherwise have been out of time to pay after April 5, up to and including the 2016/17 tax year. All voluntary NICs payments will be accepted at the existing 2022/23 rates until July 31." "People need time to talk through their options with DWP and then make the correct payment to HMRC and this extension to the deadline should give them time to do this.
The danger of gaps is that you don’t accrue enough qualifying years to receive a full State Pension. Britons typically need at least 10 years of NI contributions to receive anything at all and at least 35 years to receive the maximum amount, which currently stands at £9,600 a year for those retiring after 6 April 2016 and will rise to £10,600 from April.
The summary also outlines how much you would receive if you continued to contribute and what steps you need to take to improve the forecast if there are any shortfalls. Whether you need to pay up depends on factors such as how many more years you plan to work. Those aged 45 and over who are close to retirement age and won’t have enough time to achieve 35 qualifying years to receive the full New Sate Pension may be more inclined to top up, while someone close to retirement and in poor health might not feel it is worth it.
Latest State Pension News Step 4: Calculate the cost of topping up For most people the cost to make up a full year by April 5 is:However, people pay different rates depending on their situation. While those in full employment pay Class 1 NI contributions which are based on earnings and automatically deducted by their employer, the self-employed pay Class 2 and 4 based on their taxable profits and those living abroad pay Class 2.
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