National insurance contributions are typically made by employed and self-employed individuals based on their earnings. Individuals may also receive NI credits if they are eligible. These NI contributions or credits make up a person’s NI history, which may affect their entitlement to the state pension as well as other benefits, such as employment and support allowance.
In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of NI contributions. For part payment of the ‘new state pension’ a person must have contributed for at least 10 years. For those whose NI record started before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension may be higher.
If individuals have not contributed enough prior to reaching state pension age, they may not be able to claim state pension, or receive the full state pension amount. To protect state pension and other benefits it may be beneficial for people to make voluntary NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive. Specific financial advice is recommended when making that decision as it requires predicting, to an extent, what contributions will be made before state retirement age and the risk of future changes in the rules.
Currently there is an extension in place. Individuals can fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions. Individuals should therefore take the opportunity to check their NI record to identify any shortfalls in their NI history.
Actions before 5 April 2023:
- Check your NI record
- Identify any discrepancies between NI contributions paid and those showing on HMRC’s system
- Identify any NI credits that are missing from periods in which they should have been received (eg, on receipt of universal credit or child benefit)
- Identify any shortfalls in contributions
- Contact HMRC if you think there are any errors
- Decide whether to make voluntary NI contributions