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Top up your state pension ahead of April rule change

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Written by: Danielle Levy
16/01/2019
Workers looking to make voluntary National Insurance Contributions are being urged to do so before the rules change in April 2019.

Insurer Royal London has warned individuals who plan to make voluntary National Insurance Contributions (NICs) to do so before 6 April of this year. People normally do this to boost their contribution record, which can potentially increase the amount of state pension they are eligible to receive.

At the moment, it is possible for an individual (who reaches the pension age after 5 April 2016) to fill gaps in their national insurance record at favourable rates.

However, the rules are set to change from 5 April – when these concessionary rates expire. After this date, it could cost hundreds of pounds more to try to fill in the same gaps in your national insurance record, according to Steve Webb, Royal London’s director of policy.

“For many people, topping up their state pension through paying voluntary NICs can produce a good rate of return because the cost of doing so is subsidised by the government.

“But the price of voluntary NICs will rise sharply in April so those considering doing so may wish to act quickly and could save hundreds of pounds by doing so,” Webb explained.

For example, Royal London has found that someone wishing to fill a gap for 2010/11 will save over £150 if they act before 6 April. Meanwhile, an individual wishing to fill six years from 2010/11 to 2015/16 could save over £500.

In the table below, Royal London outlines how much more individuals will have to pay for voluntary NICs:

Contribution year(s) Weekly rate Annual rate if bought by 5/4/19 Annual rate after 5/4/19 Additional cost
2006/07-2009/10 inclusive £13.25 £689.00 £780 £91.00
2010/11 £12.05 £626.60 £780 £153.40
2011/12 £12.60 £655.20 £780 £124.80
2012/13 £13.25 £689.00 £780 £91.00
2013/14 £13.55 £704.60 £780 £75.40
2014/15 £13.90 £722.80 £780 £57.20
2015/16 £14.10 £733.30 £780 £46.70

Source: Royal London

What should I do if I am considering making voluntary NICs?

Royal London also pointed out that those considering topping up should check that doing so will actually boost their state pension. This is because complex transitional rules may mean that this is not necessarily be the case.

If you are trying to work this out, you should contact the DWP Future Pension Centre – gov.uk/future-pension-centre

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