State pension National Insurance contributions – have you paid enough?

Did you know that HMRC recently reported that £1.5 billion of National Insurance contributions are sat unallocated in a suspense account? It’s a huge sum and one that encourages you to check your state pension National Insurance contributions over the years. If you haven’t paid enough, you run the risk of not getting the full state pension. In this post, we take a quick look at the rules regarding state pensions and show you how to make sure you’ve paid enough for the full entitlement.

Qualifying for the maximum state pension

Generally speaking, you need 35 National Insurance qualifying years to obtain the maximum state pension. This is currently £203.85 per week.

If you have between 10 and 35 qualifying years, you’ll get a proportion of the full amount. For example, if you have 25 qualifying years, you can calculate the amount in the following way:

£203.85 ÷ 35 x 25 = £145.60

As you can see, having only 25 qualifying years means you miss out on £58.24 per week, or £3029 per year.

This means that each extra qualifying year currently adds approximately £303 per year to your state pension. This figure will rise incrementally as the full pension amount is increased.

However, using current figures, each full NI year is worth an average total of £5,225 for men and £5,775 for women. These calculations are based on mean life expectancy beyond pensionable age.

Have I paid enough state pension National Insurance contributions?

So, how do you find out whether you have paid enough NI to qualify for the state pension?

The simplest way is to use HMRC’s online tool that allows you to check your National Insurance Record. You’ll need a Government Gateway account to access the calculator, which is on this page.

If you have 35 full qualifying years, or you are easily on course to get them, then relax – you should get the full state pension.

However, if you don’t have enough qualifying years, or you don’t expect to have them by the time you retire, you can take steps to remedy the situation.

How do I top up my NI contributions?

You can top up the most recent six years in your NI record.

But you can sometimes pay for gaps from more than 6 years ago, depending on your age.

If you are a man born after 5 April 1951 or a woman born after 5 April 1953

You currently have until 5 April 2025 to pay voluntary contributions to make up for any gaps in your record between April 2006 and April 2016 if you’re eligible.

After 5 April 2025 you’ll only be able to pay for voluntary contributions for the past 6 years. This may not be enough to qualify for a new State Pension if you have fewer than four qualifying years on your National Insurance record. You’ll normally need at least ten qualifying years in total to be able to qualify.

Can THP help me?

If you would like some help with reviewing your state pension entitlement, THP would be very happy to help you. If you are already a THP client, please get in touch with your account manager and request a pension review. On the other hand, if you are looking for a new accountant to help you with your tax returns and much more, give us a call today – we’ll happily review your pension entitlement after you’ve become one of our clients.