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2. Assess whether filling any NI gaps makes sense
A person’s state pension summary will clearly state how many years of contributions they already have, how many they have left to contribute before they retire and the number of years in which they did not contribute enough.
These will be marked as ‘Year is not full’ with guidance on how much a person needs to pay in voluntary contributions for each year by April 5.
Ms Haine said: “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 state pension may be more inclined to top up, while someone close to retirement and in poor health might not feel it is worth it.”
For younger people, it may not be worth the expense of filling the gaps as they are likely to hit the 35-year contribution target anyway throughout their lives through work or NI credits. For them, Ms Haine said it would be “taking a real risk” to buy now unless they are sure they won’t make them up later, for example, because they live overseas.
The specific years missed are also important to factor in. Those who have gaps between the 2006/07 and the 2016/2017 tax years will no longer be able to buy them back after midnight on April 5, so these could be prioritised first.
After that, Ms Haine said: “The number of extra years that can be filled drops down to the last six tax years, which gives you more time to plug missed years between April 2017 and today.”
Ms Haine added: “Ultimately, any potential gain from buying voluntary NI contributions will be wiped out if your health is poor and you are unlikely to live long enough to benefit – with the breakeven point for buying back one year to make financial sense three years after you start claiming your state pension.
“There are also lots of complexities to consider. If you are a higher earner, it might not be worth topping up your NI record as it could tip you into a higher tax bracket when you receive your state pension income taking you longer to break even on voluntary top-ups.
3. Get bespoke advice before making a decision
Calculating whether to top up can be confusing and ultimately there is no point in someone paying for more years than needed because they won’t get that money back.
Ms Haine said: “The best solution is to call the Government’s Future Pension Service to double check how many years you can buy and whether voluntary contributions will add to your state pension. Those who have already reached pension age must contact the Pension Service.”
