Archive: MoneySavingExpert's Money Tips Email

Martin: The URGENT deadline worth £10,000s everyone needs to check (unless over age 73)

For each £180 to £800 you pay (free for some) many will gain £5,400 or more!
Last chance to buy extra National Insurance (NI) years

While 'boosting your State Pension' doesn't sound sexy, it's the most lucrative thing many can do with their money. Yet for likely millions across the UK, the door closes this 5 April, and it's not a quick process. To whet your appetite, here's one of the huge numbers of successes I've had both via my TV show and our State Pension boosting guide.

Neil emailed: "I've managed to buy an additional 5 NI years for a total £814 (turns out I'm eligible to pay class 2 NI contributions). This has increased my State Pension forecast from £192 to £221.20 a week, so £1,622 a year. If I live to my average life expectancy of 87, it'll total out at £34,070. Cannot thank you enough for the tips."

Think of National Insurance (NI) as a bit like a token you can earn each tax year. The more tokens you get, the bigger the proportion of the £221.20 a week State Pension you receive once you hit that age. 

Over a typical tax year, you earn NI credits from working, looking after children, or while on certain benefits. Once you've got enough credit in the tax year, you've then qualified for that tax year's National Insurance (ie, you've got the year's token).

- You need at least 10 qualifying NI years to get some State Pension.
- After that, the more years, the bigger your State Pension payout. 
- To get the FULL State Pension, you need 35ish qualifying NI years, and I can't stress enough the 'ish' - it varies widely for complex reasons.

Yet many are missing past NI years, commonly due to years abroad, low incomes, career breaks, or not claiming credits.

This is all about what's called the 'new' State Pension, introduced in 2016. It only applies to (if you're older this isn't for you)...

- Men born after 5 April 1951 (so max age 73)
- Women born after 5 April 1953 (so max age 71)

At this 'new' State Pension's launch, transitional arrangements were put in place allowing you to buy back any missing NI years for longer than normal - all the way back to 2006. These arrangements end this tax year. So the last day you can buy them is 5 April. After that the buyback rule reverts to the usual six tax years, so that'll then mean just back to 2019.

 So miss the deadline & you lose the chance on 13yrs' worth.

I've a bit of deja-vu writing this. Originally, the transitional arrangements were due to end in April 2023, then they were extended to July, then again to April 2025. And frankly we're to blame. The Govt told me that once MSE & I started explaining the importance of this, numbers jumped from 300 to 12,000 a day, and all the systems clogged up, so the deadline had to be extended.

I can't see another extension happening  - though some contingency plans are in place (see below) - so I think this is it. So check NOW. Leave it to nearer the deadline and if the systems get clogged, it could be very cumbersome to make it work.

This is complex so let's go slowly. Don't skip steps - it could cost you.

STEP 1) Two important checks EVERYONE should make. This only takes a couple of minutes (the links give you easy help).

1. Are you missing any National Insurance years? Speedily check your past NI record. Either you have a 'full year', in which case you get the credit towards your State Pension, or you have 'year is not full'. Even missing a week of credits can mean you get nothing for that year.
   
   If the year isn't full, click 'view details' to see how short you are. It'll tell you how much would be needed to make up what's missing.
   
   
   Update: Are you being told you're contracted out? If so, see our contracted out NI buy back help.
   
   Important: You CAN'T BUY BACK YEARS BEFORE 2006 (though if you wrongly missed claiming earlier years, a few may still be able to get them free - see step 2).
   
   
2. Are you on track to get the full State Pension? Now check your State Pension forecast. Someone on track for a full State Pension would currently see a £221.20 a week forecast. You can't go higher, so if it says this, you're good (providing you don't plan to move abroad or stop work early).
   
   

STEP 2) Check whether you can get old NI years for free - it could save you £1,000s and gain you £10,000s. While NI years are usually auto-added, in some cases they need claiming. If you didn't, likely as you weren't aware, you can usually back-claim. We've a full list of free NI years to claim, but I'd guess the biggest are...

• You didn't claim Child Benefit, or the wrong partner did. Claiming Child Benefit triggers eligibility for National Insurance credits if you're not working (ie, you're looking after your child). Yet many who don't work (or don't work enough - you currently need to earn over £6,396/yr) missed out for a couple of main reasons...
  
  a) The working partner claimed it, not the non-working. If your working partner claimed the Child Benefit, they were getting NI years anyway - the non-working partner should've claimed. Up to 200,000 people are in this situation, in which case ask to retrospectively transfer it to you.
  
  As Jacquie emailed me: "We felt salty that, due to my earnings, we received no Child Benefit when the children were little and my husband was at home looking after them. It'd be over £6,000 to top up my husband's NI for those missing employment years. We followed your suggestion on applying to transfer the NI from me to him and asked our neighbour to write a letter that we had been living together with our children for all those years!
  
  "A very welcome letter arrived today confirming those years now count towards his NI and he now has a full State Pension entitlement. So very grateful - a donation has been made to your Money and Mental Health Policy Institute as a small thank you." (I was very moved by this. Thank you Jacquie.)
  
  b) You didn't think there was any point. Many don't claim, as their partner earnt over the Child Benefit threshold, so you'd just have had to pay it all back due to the 'High Income Child Benefit Charge'. Yet as claiming Child Benefit is a trigger to getting NI credits, that means you missed out (best thing to do in these circumstances is claim but at the 'zero rate'). Unfortunately, at the moment you can only retrospectively claim back three months, so this is more of a warning to make sure you're claiming if still eligible.
  
  
• Grandparents (or other family members) providing childcare. If a family member looks after an under-12, or has done any time since 2011, before they were State Pension age (even if they are now) as the parents / guardians were working, then under the specified adult childcare credit system, the parent can apply to transfer the NI credit they're eligible for, for childcare, to the family member. It can sometimes be backdate-able to 2011. 
  
  As Marilyn emailed: "Thanks to your advice, I claimed for grandparent NI credits for the past six years. I gave up work in 2017 after kidney tumour surgery and devoted my time to looking after my baby granddaughters, helping my daughter, who is a nurse, return to work. When I heard on your show about the grandparent credits, I applied so I could make up the missing years and get a full State Pension later this year. It was quick and easy. My application was approved within three weeks."
  
  
• You didn't claim the Carer's Credit you were entitled to. Those aged 16 to State Pension age who provide unpaid care - such as washing, cooking, shopping or dressing - for at least 20hrs a week for someone receiving at least one qualifying benefit (including Personal Independence Payment and Disability Living Allowance) are eligible for free NI credits.
  
  This applies even if caring for your partner or child. If that rings a bell, and you didn't claim and are missing NI years, see how to back-claim Carer's Credit.

STEP 3) Missing years from 2006 to 2018? Decide soon whether it's 'likely' worth buying years. What matters most here is whether you're on track to get the full forecast, the cost of the years, and your age right now...

The older you are, the easier it is to know whether gaps in your NI years will have an impact on your pension...

• At / near State Pension age (60+)? It's easier to see whether topping up may help. If your State Pension is, or is forecast to be, under £221.20 a week, and you can't plug gaps for free, topping up by buying extra years could be a no-brainer (more below). If so, and you're already taking your pension, do it ASAP, as the sooner you do it, the sooner your pension will be enhanced.
  
  
• Aged 45 to 60ish? Less definite, as you may still naturally fill the gaps. The younger you are, the more time you have to earn enough qualifying years before you reach State Pension age. So consider...
  
  - The nearer 60 you are, the less time there is to fill the gaps naturally.
  - Have you got years missing after 2019? (If so, and they'd be enough to plug gaps, you could delay the decision, as you are always allowed to buy back up to six years ago.)
  - The more years missing, the more likely buying years would help.
  - If you can buy partial years cheaply, it's a better bet (eg, if it only costs £16 to buy, it's likely worth doing as a 'just in case').
  
  
• Under 45? It's not usually worth it, barring for cheap partial years. Generally, if you're planning to stay in the UK and work for much of the rest of your life, you've time to fill the gaps, so it's not worth it, unless you've missed a very large chunk of working years and therefore are a long way from the full forecast.
  
  The exception is if you can buy a cheap partial year, so it only costs, say, up to £50. In which case, if you've got the cash, you may see it as an insurance against you not earning years in future. At that price it can be worth it, even if it later turns out futile as you'd collect enough years to get the full pension anyway.

STEP 4) To buy a full old year costs £800ish (£180 if you're self-employed) and may gain you an inflation-proof £5,400+. Many people will only need to pay for a partial year. But if you need to buy a whole year, the cost varies slightly for employees (technically, class 3 National Insurance), usually between £795 and £824 depending on the missing year - see employees' year-by-year top-up cost.

If you were self-employed, you can buy class 2 contributions far cheaper, for around £180 - see self-employed year costs.

Each missing NI year you get adds an inflation-proof £329 to what you receive in State Pension every year. 

So, even if you had to pay for the whole year, you'd get back what you put in after about two and a half years of receiving the State Pension, and every year you get it after that is profit. We've built a simple State Pension NI contribution top-up calculator to help with the maths.

A 66-year-old man living for the typical life expectancy would get a total £5,400 back, a 66-year-old woman £6,400 as life expectancy is longer.

There are scenarios that can lower the return though, including...

- If you die sooner, thus don't collect your pension for as long.
- If the extra pension income (which is taxable) takes you up a tax threshold, so you pay a higher rate of tax on the amount earned above that threshold (see Income Tax rates). It's still worth doing though.
- If you were only a couple of hundred quid a year below the max State Pension, you obviously wouldn't get the full gain from buying a year (you'll find this out in step 5).

Pensions are, currently, inflation-proof too.

The State Pension has long had a 'triple lock', meaning it must go up by the HIGHEST of... 

 2.5% OR Consumer Prices Index inflation OR average earnings.

That means the amounts we're talking about are in reality much stronger as they'll rise with inflation. Even if the triple lock was ended (& most likely if it was, it'd still be inflation-proof), it's still a good bet.

STEP 5) Think buying NI years is right for you? Before you pay out... some important safety checks.

Even if you've passed all the checks, you need actual calculations, or you may pay for years that won't help or are unnecessary. Since the first postponed deadline (due to overdemand), a web service has been introduced which some can access. That takes some pressure off the system, but if you're unsure it's still best to do it by phone. 

1. Who CAN'T do this online... You won't be able to if:
   - You're at State Pension age or within 4mths 8 days of it.
   - You're filling gaps from self-employment or living/working abroad.
   - You hold a 'Married Women's Reduced Rate Election' certificate.
   - You're eligible for 'Home Responsibilities Protection'.
   
   
2. For the rest, you can do it online: here's how. The Check your State Pension forecast tool shows your State Pension forecast, NI record, payable gaps, and whether you can pay for gaps online. It'll then either decide you've a complex case and you must do it by phone, or let you select the year(s) to pay for, in full, online via bank transfer or via Open Banking. You can't pay in instalments.
   
   
3. How to do it via phone and get 1-on-1 help. Which number you call depends on your age...
   - Under State Pension age? Call the Future Pension Centre.
   - At or above State Pension age? Call the Pension Service. 
   
   Remember you can't buy back years from before 2006. If that's what you're trying to do, don't bother calling: it can't be done.
   
   

   New. Important form to fill in if the phone lines are clogged With the deadline approaching (and this email & my TV show due to drive huge demand, I suspect) yesterday the Department for Work & Pensions (DWP) launched a backstop for those who find the Pension Service phone line too busy so can't speak to someone. If so, submit this DWP callback request form, then even if it gets back to you after 5 April, you'll still be able to get this done. Best Practice: I'd urge you to take a picture/screengrab of the form you filled in, and a screengrab of the request sent screen, then email them to yourself, so you've a contemporaneous timestamped note in case something goes wrong, so you can prove you did it in time.

   
   While many have told me it can be a pain in the bum to get to speak to someone on these lines, once they do, most - including Niki - say it's helpful: "After working through all your NI advice, my husband and I applied for the NI contributions for overseas workers. After several calls to Future Pensions, we gained insights into what years to pay back and why (extremely helpful people). Not only have we boosted our pensions to help us for the future and claimed those precious pre-2016 gaps, we also saved a whopping £15,000+ in class 2 NI contributions compared to paying class 3. Wow! Thanks for the push."
   
   
4. If buying years is right for you - and you've done it by phone. 

   Then use the HM Revenue & Customs (HMRC) webchat to get an 18-digit reference code (you can call HMRC but it tends to take longer). This can be a frustration, but has to be done, as your money needs to be paid into the correct account. Be prepared for long wait times, though it now has a 'callback' system.
   
   Struggling to contact HMRC? As long as you've spoken to the DWP, you should be fine even if you don't go through until after 5 April (and if you call HMRC after 5 April, tell it you spoke to the DWP before the deadline. There will be a record of your call). Yet for belt 'n' braces, use the DWP callback form to say you want a callback to pay before 5 April to firmly lock in that you did it in time.

5. What they won't tell you online or on the phone. The advice doesn't cover every situation. The issues are mostly ones I've already mentioned, but to be sure - they WON'T usually tell you...
   ... whether you're entitled to free years

   ... whether the extra pension will push you into a higher tax bracket
   ... that if you're on a very low income, and would have otherwise got Pension Credit, this may reduce that.