An online state pension top-up service has finally by launched by the Department for Work and Pensions (DWP) and HMRC.
The long awaited service allows people to check for and fill any gaps they may have in their National Insurance (NI) record online. The new system aims to make it easier for Brits to top up their National Insurance Contributions (NIC) which will help increase the the amount of state pension they will receive.
Under the current rules, you need 35 qualifying years on your National Insurance record - some people may need to more - to claim the full new state pension. You normally need 10 years to receive anything at all. If you have gaps in your record, you could receive much less than you expected - however, you can purchase National Insurance years or claim free National Insurance credits to plug any holes.
If you do have some gaps, the new online service will tell you if you would benefit from buying the years - as opposed to claiming credits - and show you how much your state pension could increase if you make a voluntary contribution. The online system also allows you to buy contributions for the years you need them.
Before this, to fill in gaps in your record you needed to make two calls to check for gaps in your record and then make payments for any top-ups needed. First, they needed to contact the Future Pension Centre at the DWP to discuss which years they could top up, how much it would cost and what impact it would have on their pension. Then they needed to phone HMRC to get an 18-digit reference number for the payment to be made.
Self-employed Brits have just weeks left to submit tax return or risk £100 fine
The previous system was often described as "tedious" and "unusable" as Brits often struggled to get through to the phone line due to long queues. When all this was completed they then had to wait for the DWP to act on the updated National Insurance record and revise their state pension or state pension forecast.
Have you plugged gaps in your National Insurance record to boost your state pension? Let us know: mirror.money.saving@mirror.co.uk
Customers will need to login to the new digital service using their Personal Tax Account login details and those without an online HMRC account can register on GOV.UK. However, you can't use this initial version if you've already started claiming your state pension or if you're looking to fill gaps from when you were self-employed or working abroad.
Minister for Pensions, Paul Maynard, said: "The State Pension is the foundation of income in retirement, which is why we have introduced this new online tool to help simplify boosting it for those who are able to. I would encourage everyone to check their State Pension forecast and to take a look at how they could improve their State Pension award with only a few simple clicks.”
Last year, the Government had a deadline for how far back National Insurance could be bought to plug any gaps in a person's record The original deadline was April 5, 2023, but this was extended once until July 2023, and then until April 2025 after a public awareness campaign, spearheaded by MoneySavingExpert.com founder Martin Lewis, caused phone lines to the Future Pension Centre to become jammed.
Right now, you can currently buy back missing National Insurance years dating back to 2006 but after the deadline, you will only be able to go back six tax years. A top-up for a missed qualifying year currently costs £824 and boosts your pre-tax annual state pension entitlement by £302.
Former pension minister and LCP partner Steve Webb, who has long campaigned for a more streamlined process, has welcomed the news - but warned of the risk that a rush of applications could create a new logjam in the system. He said: “It is very good news if people will be able to top up their National Insurance record online.
"However, simply getting your National Insurance record updated by HMRC is only half of the story. It then needs the DWP to reassess your state pension entitlement based on your improved contribution record. There are already too many cases where people wait months or longer to get their pension figures revised. It is vital that the government puts in place new capacity at DWP to process all of these changes, otherwise they will simply have created a new bottleneck in the system”.
Before buying any National Insurance contributions, check if you'd benefit from plugging any gaps in your record. If you do have gaps, you should also check if you can plug them for free using National Insurance Credits.
Read more similar news:
Comments:
comments powered by Disqus
