In this section:
- Notifying your Tax Office when you retire
- Why it's important to fill in your Pension Coding form
- 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 record. Therefore you may want to consider filling in the gaps by paying voluntary National Insurance contributions. 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.
On this page:
- National Insurance contributions and your State Pension
- How gaps in your National Insurance contributions record might occur
- How many qualifying years do you need to get the full basic State Pension?
- How do you know if you have a National Insurance contributions shortfall?
- Deciding whether to make up a National Insurance contributions shortfall
- Bereavement benefits and qualifying years
- Deadlines for making up a National Insurance contributions shortfall
- Buying additional years of voluntary National Insurance contributions – new rules from 6 April 2009
- Keeping up your payments in future
- Paying voluntary contributions for periods spent abroad
- More useful links
National Insurance contributions and your State Pension
The amount of basic State Pension (and certain other state benefits) you're entitled to is based on your National Insurance contributions record over your working life from age 16 until State Pension age. This record is made up from National Insurance contributions 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.
Read more about how you qualify for the State Pension on the Directgov website
How gaps in your National Insurance contributions record might occur
There could be gaps in your National Insurance contributions record for various reasons. For example, you may have been:
- employed and had low earnings (below the lower earnings limit of £95 a week (2009-10 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.
Read more about HRP on the Directgov website
| 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.
| Number of qualifying years | Amount of basic State Pension you will receive (2009-10 rates) |
|---|---|
| Men: 11-44 Women: 10 -39 |
Between the minimum of £23.81 a week and the maximum of £95.25 a week |
| Men: 0-10 Women: 0-9 |
You won't get any State Pension based on your own National Insurance contributions record (but you might still get something on your spouse's or civil partner's record if they've paid enough National Insurance contributions - 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 National Insurance contributions shortfall?
There are a number of ways you can find out:
Shortfall letter
You might receive a letter from us (''Gap in your National Insurance contributions 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 National Insurance contributions 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 National Insurance contributions 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 National Insurance contributions.
Read more about bereavement benefits on the Directgov website
Deadlines for making up a National Insurance contributions 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 National Insurance contributions 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 National Insurance contributions for the tax years 1996-97 to 2001-02
For the 1996-97 to 2001-02 years there are special extended limits which mean you can still pay Class 3 National Insurance contributions for all those years - and at the original rate relevant for that year - provided you pay by 5 April 2010 if you reached State Pension age before 24 October 2004.
Voluntary Class 2 or Class 3 National Insurance contributions for the tax year 2005-06
If you reach State Pension age on or after 6 April 2010 and want to pay voluntary Class 2 or Class 3 National Insurance contributions for the 2005-06 tax year, you can do so at the original rates up to and including the final date for payment of 5 April 2012.
Buying additional years of voluntary National Insurance contributions – new rules from 6 April 2009
From April 2009 changes introduced by the Pensions Act 2008 allow some people to make up any gaps in their National Insurance contributions records by buying up to an additional six years of voluntary Class 3 National Insurance contributions. This is over and above those permitted under existing rules and described above in the section ‘Deadline for making up a National Insurance contributions shortfall’. To find out more about buying additional years going back to 1975-76 download The Pension Service leaflets below from the Directgov website.
Keeping up your payments in future
If you're not working or getting National Insurance contributions 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 National Insurance contributions, 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 National Insurance contributions
Paying voluntary contributions for periods spent abroad
If you are living abroad and want to pay voluntary National Insurance contributions or you want to pay voluntary National Insurance contributions for a past period when you were abroad, there are special rules.
Find out about topping up National Insurance contributions if you live or have lived abroad
More useful links
A
basic guide to understanding the State Pension on the Directgov website
Read
about changes to the State Pension from April 2010 on the Directgov website
More
about changes to the State Pension on the Directgov website (Opens new
window)
How to ensure you stop paying National Insurance from State Pension age
