When approaching retirement, ensuring you get the most out of your pension is paramount. With recent announcements from the government, you may be able to increase your contributions to the State Pension during a limited window.
The State Pension is the retirement income paid on reaching the Government’s State Pension age, in exchange for National Insurance contributions (NICs) or credits.
Under the new State Pension arrangements, clients will need a minimum of:
- 10 full qualifying National Insurance years to receive any state pension
- 35 qualifying National Insurance years needed for the full state pension.
Some individuals may have gaps in their National Insurance contributions due to years spent not earning up to the threshold or years spent abroad. Voluntary contributions of NI to fill these gaps is an opportunity for individuals to ensure they get the most out of their State Pension. However, there is a deadline to benefit from these additional contributions.
Following a recent announcement from the government, the April 2023 deadline to fill the gap has now been extended to 5 April 2025 for individuals who reached state pension age after 5 April 2016.
From 6 April 2025, any gaps preceding the previous 6 tax years become a permanent gap in NIC records which could affect full BSP and ultimately reduce income in retirement.
If you are eligible to make these changes, it could be important to consider the benefit you could have in retirement by filling your National Insurance contribution gap.
You can check for any gaps in your NIC by visiting the government website here.
Speak to a financial adviser today to discover more about your pension.
This article does not constitute financial advice.
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Friday 7 July 2023