UK State Pension Shortfall Top Up Deadline

Published / Last Updated on 16/08/2022

To be entitled to a full UK state pension you must have 35 years national insurance credits either by PAYE employee deductions, self-employed Class 2 contributions, other benefit related receipts such as unemployment or cares or child benefit, where you still receive a credit on your National Insurance record.

You may or may not be aware but there is a window of opportunity for people to go back 17 years to top up any gaps in your UK National Insurance record to maximise your UK state pension.  It is usually only 6 years you can go back but currently it is up to 17 years.

For men born after 05/04/1951 and women born after 05/04/1953, you can pay Voluntary National Insurance Contributions (NIC):

  • 2006-2016 (2016 was when old basic state pension ended, and the new state pension started) – up to 10 years available.
  • 2016 – 05/04/2023 – 7 years available.
  • Total 17 years of potential gaps if any to be filled.
  • This ends on 06/04/2023 = maximum 6 years you can go back.

Class 2 Voluntary National Insurance Contributions – Self Employed

  • £3.15 per week or
  • £163.80 pa
  • This will buy 1 year of NIC credit

Available for self-employed who were perhaps below the low profits threshold for self assessment so did not pay any NICs and lost yearly NIC credits.  Also available for non-residents who were self-employed in UK, self employment via certain land and property works, UK registered self employed working overseas and also investors that make their living via investing makining gains or other income streams.  You will need to check with the Department for Work and Pensions (DWP) to see if you qualify for this low rate of NICs.

Class 3 Voluntary National Insurance Contributions – Normal Rate

  • £15.85 per week or
  • £824.20 pa
  • This will buy 1 year of NIC credit

Most people with NIC gaps will qualify for normal voluntary NICs.  If you were not working (and did not claim unemployment benefit or child benefit as you get credits), if you retired early e.g..  55 and had not made 35 years full credits, have spent a significant amount of time working or living overseas so have NIC gaps.

Is it worth paying voluntary NIC?

The full state pension (35 years credits) for 2022/23 is £185.15 per week or £9,627.80 per annum.

30 years credits = UK state pension 30/35 X £9,627.80 = £8,252.40 pa pension and a shortfall of £1,375.40 pa which will cost either £816.00 Class 2 Voluntary NICs with a breakeven point of around 0.59 years or £4,121.00 Class 3 Voluntary with a breakeven point of 3 years.  This pattern is followed across all shortfall years, so provided you live in the UK or a country with reciprocal inflation linked state pensions, then it is usually value for money to make up any shortfalls.

NIC Credits (years)

Shortfall (years)

State Pension pa 2022/23

Shortfall pa

Class 2 NIC Cost

Class 2 Breakeven ignoring inflation increases (years)

Class 3 NIC Cost

Class 3 Breakeven ignoring inflation increases (years)

35

0

£9,627.80

£0.00

£0.00

N/A

£0.00

N/A

30

5

£8,252.40

£1,375.40

£816.00

0.59

£4,121.00

3.00

25

10

£6,877.00

£2,750.80

£1,632.00

0.59

£8,242.00

3.00

20

15

£5,501.60

£4,126.20

£2,448.00

0.59

£12,363.00

3.00

18

17

£4,951.44

£4,676.36

£2,774.40

0.59

£14,011.40

3.00

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