If you were offered interest on your savings at 1168% you’d snap my hand off, wouldn’t you? Even 100% return on investment would be great in most people’s books.
So why are some people so reluctant to top up any missing years of National Insurance Contributions?
You need to spend (invest rather) £15.85 now to get £185.15 later – that’s an uplift of more than 1000%!!!
OK so this is a rather simplistic view, I’ll admit it.
Of course you need approximately 35 years of qualifying contributions to get your full state pension amount, so that’s a whopping £28,847 at today’s rate that you will have paid in total.
Which might seem a lot.
But to put it into perspective, with state pension currently paying out at £9,627.80 per annum, you only need to survive 3 years post state pension age to have more than made your money back!
We are living longer than ever before, with the current life expectancy in the UK being 81.77 years! With women living on average 3-4 years longer than men.
With state pension age currently 66 years old for both men and women (rising to 68 in 2033), it doesn’t seem too much of a risk to bet on at least making your money back. And if you survive 15 years post retirement, then you will have realised a 500% tax free return on your investment
It’s an absolute no brainer in my humble opinion.
And right now there is a short window to take advantage of a very generous scheme allowing individuals to top up any missing contributions as far back as 2006-2007.
In normal times you can only go back six years to make top up contributions, and this additional ten year window will close on 31 July 2023 (extended from the original closing deadline of 5 April 2023 to allow more people to participate)
So act now by logging into your personal tax account, or setting one up if you don’t already have one: https://www.gov.uk/personal-tax-account
You can then Check your State Pension forecast: https://www.gov.uk/check-state-pension
And understand more about topping up missing periods or making voluntary National Insurance Contributions: https://www.gov.uk/voluntary-national-insurance-contributions/deadlines
Please do contact the Future Pension Centre (https://www.gov.uk/future-pension-centre) to check your own personal circumstances and find out exactly how many years you need to contribute to be eligible for your full state pension as each individual may be different and not require a full 35 qualifying years (my record for example seems to indicate that I will have full State Pension Rights with only 31 contributing years, so it would make no sense for me to top up the additional four years!)
And please also heed the message coming loud and clear that the State Pension age is under review and may change in the future.
If you need any support with your personal tax affairs, please do contact the IN Accountancy team who will be happy to help.
