Check your state pension forecast

If you have gaps in your national insurance payments dating back to 2006, you can go online to see if you need to make additional contributions, to secure a full state pension.

You can use the new HMRC online tool to check your state pension forecast, which is now live. This is a joint service run by HMRC and the Department for Work and Pensions. It calculates if any outstanding contributions are required to ensure that you receive the full state pension when you retire.

This new HMRC online tool will allow taxpayers under the state pension age to view gaps in their NI record and then make voluntary contributions to fill in these gaps and benefit from them.

You may have gaps in your NIC payments record because you took a career break or at one stage lived abroad.

For the current fiscal year, 2024-25, you can go back and make up the gaps back to 6^th April 2006.

From 6^th April 2025, taxpayers will only be able to make voluntary contributions for the previous six fiscal years, in accordance with normal time limits. Accordingly, in some cases, taxpayers will have to act fast and make the additional NI contributions prior to 6^th April 2025 in order to go back much further.

Taxpayers must log in to the new digital service with their personal tax account details or through the HMRC app.

An individual needs 35 years of national insurance contributions in order to get a full state pension, which is £11,500 a year.

It normally costs approximately £825 to fill in a missing year. This will then boost your state pension by approximately £330 a year and will be worth £6,700 over a 20 year retirement.

This is an incredible return on investment over average life expectancy and is well worth doing!

However, making voluntary national insurance contributions is not always the best choice for everyone. If you have gaps in your record but are still quite a few years away from retirement, you may work long enough to reach the full 35 years anyway, and not need to pay extra for the gay years. But, for a lot of older workers, with gaps in their NIC payments records, making the extra payments will be very worthwhile. In fact, a ‘no-brainer’!

If you are, say, a 66 year old and wish to replicate the guaranteed yearly income produced by the full state pension, you will need a pension pot of approximately £260,000 in order to secure the equivalent annuity to last you throughout your retirement.

If appropriate, act now!

For more information, contact Gravita Tax Consultant, Tim Palmer CTA ATT