Approaching retirement or State Pension age

In this section:

Notifying your Tax Office when you retire
Why it's important to fill in your Pension Enquiry form
Do you need to top up your National Insurance contributions?

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Do you need to top up your National Insurance contributions?

Do you need to top up your National Insurance contributions?

Your entitlement to the basic State Pension and certain bereavement benefits could be affected if there are gaps in your National Insurance contributions (NICs) record. Therefore you may want to consider filling in the gaps by paying voluntary NICs. Whether it will make sense for you to do so will depend on a number of factors, including the amount you've contributed already and the date you reach State Pension age.

NICs and your State Pension

The amount of basic State Pension (and certain other state benefits) you're entitled to is based on your NICs record over your working life from age 16 until State Pension age. This record is made up from NICs paid or credited to you in each tax year. A minimum amount of contributions is required to make each year count as a 'qualifying year' towards your overall contributions record.

How gaps in your NICs record might occur

There could be gaps in your NICs record for various reasons. For example, you may have been:

employed and had low earnings (below the lower earnings limit of £90 a week (2008-09 rates)
unemployed and not claiming benefit
self-employed and exempt from paying Class 2 contributions because you applied for, and were issued with, a Certificate of Exception
living abroad

How many qualifying years do you need to get the full basic State Pension?

This depends on when you reach State Pension age. If this is on or after 6 April 2010 you'll need fewer qualifying years than at present. Also, from that date the number of qualifying years needed for a full basic State Pension for men and women will be the same, whereas at present they are different. See the table below.

Note that the number of qualifying years you need for a full basic State Pension can be reduced if you get Home Responsibilities Protection (HRP) for years when you have not worked or your earnings were too low to get a qualifying year and you had caring responsibilities.

Qualifying years needed for entitlement to the full basic State Pension
Number of qualifying years	Men	Women
If you reach State Pension age before 6 April 2010	normally 44	normally 39
If you reach State Pension age on or after 6 April 2010	30	30

Effect on your basic State Pension if you don't have the full number of qualifying years

If you don't have the full number of qualifying years at State Pension age the amount you'll receive will depend on the date you reached State Pension age and the number of qualifying years you've built up.

Effect of a shortfall in the number of qualifying years on your basic State Pension if you reach State Pension age before 6 April 2010
Number of qualifying years	Amount of basic State Pension you will receive (2008-09 rates)
Men: 11-44 Women: 10 -39	Between the minimum of £22.67 a week and the maximum of £90.70 a week
Men: 0-10 Women: 0-9	You won't get any State Pension based on your own NICs record (but you might still get something on your spouse's or civil partner's record if they've paid enough NICs - more below).

Effect of a shortfall in the number of qualifying years on your basic State Pension if you reach State Pension age on or after 6 April 2010

From 6 April 2010 the number of qualifying years needed are the same for men and women.
You'll get 1/30 of the full basic State Pension for each qualifying year you have. In practice this means that any number of qualifying years will give you entitlement to at least some basic State Pension.

So if, for example, you had ten qualifying years you would be entitled to 10/30th of the full basic State Pension.

How do you know if you have a NICs shortfall?

There are a number of ways you can find out:

Shortfall letter

You might receive a letter from us ('Gap in your NI record') between September and January each year if you have any gaps in your record. The letter isn't a demand - but it will tell you how much you can pay if you want to fill the gaps and how you can pay if you opt to do so.

Get a State Pension forecast

You can check whether you're likely to have a National Insurance contributions shortfall by requesting a State Pension forecast from The Pension Service.

Find out more about getting a State Pension forecast online or by phone on the Directgov website.

National Insurance Enquiry Line

You can also ask HMRC's National Insurance Enquiry Helpline on 0845 915 5996 to check your NICs record. They will tell you how much, if anything, your shortfall is, whether you are able to make up that shortfall, and how you can pay if you wish to make the amount up.

If you live or have lived abroad

If you've lived abroad please refer to the later section 'Paying voluntary contributions for periods spent abroad' after reading the rest of this guide.

Deciding whether to make up a NICs shortfall

It's up to you whether you make up any shortfall. However, remember that because the number of qualifying years you need for a full basic State Pension will reduce to 30 for people reaching State Pension age on or after 6 April 2010, you'll need to consider carefully whether you need to top up at all. At the same time, you'll need to bear in mind the effect on certain bereavement benefits of not topping up - see the next section on this for more information.

If you're unsure, the Citizens Advice Bureau or a number of other free organisations may be able to help you - or you could consult a financial adviser (though bear in mind that there may be a charge).

Find out about getting help and advice on pensions on the Directgov website

Find your nearest Citizens Advice Bureau office

Bereavement benefits and qualifying years

It's important to note that if you reach State Pension age on or after 6 April 2010 eligibility for bereavement benefits (payable if someone dies to their spouse or civil partner if under State Pension age, and based on the deceased's National Insurance contributions) will remain at up to 39 qualifying years for a woman and up to 44 for a man. You may want to take this into account when deciding whether or not to top up your NICs.

Deadlines for making up a NICs shortfall

You usually have to make up the shortfall within six years from the end of the tax year for which they are being paid - and you can do this even if you've already reached State Pension age.

For example, voluntary Class 3 NICs for the 2008-09 year have to be paid by 5 April 2015. But the rate may increase if you pay more than two years after the end of the relevant tax year.

However there are some exceptions, as described below.

Voluntary Class 3 NICs for the tax years 1996-97 and 2001-02

For the 1996-97 to 2001-02 years there are special extended limits which mean you can still pay Class 3 NICs for all those years - and at the original rate relevant for that year - provided you pay by:

5 April 2009 if you reached State Pension age on or after 24 October 2004
5 April 2010 if you reached State Pension age before 24 October 2004

Voluntary Class 2 or Class 3 NICs for the tax year 2006-07

If you reach State Pension age on or after 6 April 2010 and want to pay voluntary Class 2 or Class 3 NICs for the 2006-07 tax year, you can do so at the original rates up to and including the final date for payment of 5 April 2013.

Keeping up your payments in future

If you're not working or getting NIC credits you can decide to make regular voluntary contributions, to ensure that you get a better or full State Pension when you retire.

There are two main ways of paying your Class 3 NICs, both in arrears:

monthly by direct debit
quarterly by having a bill sent to you every 13 weeks (if you live in the UK) - you can pay this bill at a bank, Post Office or by Girobank

You can download the relevant forms below.

Go to form CA5603 to pay voluntary NICs

Go to direct debit leaflet and application form (PDF 246 KB)

Paying voluntary contributions for periods spent abroad

If you are living abroad and want to pay voluntary NICs or you want to pay voluntary NICs for a past period when you were abroad, there are special rules.

Find out about topping up NICs if you live or have lived abroad