I’ll get £3,000 extra a YEAR in state pension with easy move – it’s a no-brainer and here’s how you can too
SAVVY entrepreneur JEMMA Harrison may be more than 20 years away from retiring but is taking steps now to ensure she can get the full state pension when she eventually stops working.
The 42-year-old, originally from Lincolnshire, now lives in Cornwall.
She owns her own business, Four Twentea, making and selling teas infused with CBD.
The entrepreneur was keen to ensure she could qualify for the full state pension when she retires, but was worried about the gaps in her National Insurance (NI) record.
For your state pension, you need 35 qualifying years of NI contributions to receive the full amount.
At the moment, this is worth £203.85 a week, or £10,608 a year.
Jemma told The Sun: “Over the past few years, I’ve started to get a bit panicky about my pension provision.
“I’ve been freelance for so long – and have worked overseas a lot – I had no idea how much state pension I might be entitled to.”
Jemma reckons she may have been abroad for around half of her working life.
“Prior to that, I had done some stints working in the UK,” she said.
“I took a bit of reassurance from the fact I would have made some NI contributions automatically when I was in employment, before going self-employed.
“But I didn’t know how far those would get me.”
The good news for Jemma – and for others like her with gaps in their record – is that if there are years in which you didn’t pay enough NI to provide a qualifying year, you can opt to top up your record.
You can do this by making what are known as voluntary Class 3 NI contributions.
If you’re filling gaps between 2006-07 and 2015-16, you’ll be paying the 2022-23 rates for contributions.
It costs £15.85 to buy one week’s worth of Class 3 NI, or £824.20 to buy one year’s worth.
This government scheme which allows people to fill in gaps in their history was set to end in April this year, before being extended to July.
This has since been extended for a second time, and is now due to run until April 5, 2025.
“I’d heard about the possibility of paying small amounts now to boost your state pension entitlement by thousands in retirement, so decided to give HMRC a call,” said Jemma.
“The person I spoke to was extremely helpful, and went all the way back to 2006 to see where I was missing years in my NI record.
“We were on the phone for well over an hour.”
The HMRC staff member talked Jemma through her record in detail, setting out which years were full, which were empty, and which were partially filled.
“To fill the gaps in five years of my record, I was told I needed to pay a total of £781.20,” said Jemma.
“Some of those years were only missing a few weeks’ worth of NI contributions.
“For example, in 2010, I only needed to make up 27 weeks to get the whole year, and in 2013, just 12 weeks to do the same. So I opted to top those up.”
Jemma adds that as some of the years she needed to make up were for years when she was self-employed, she was able to make voluntary Class 2 NI.
She said: “These were even cheaper.”
By taking steps to make up those extra years, Jemma is now on track for the full state pension.
She just needs to continue making NI contributions for all but one of the remaining years she has at work, assuming she continues until she reaches state pension age, which is currently 66.
She said: “By paying just under £800 now, I’ll end up getting an annual state pension boost of around £3,000 a year in retirement, based on getting an extra £60 per week.
Assuming a 20-year retirement, this amounts to an extra £60,000 in total.
“For me, this was a complete no-brainer,” Jemma said.
She’s now urging other people to do the same.
Jemma said: “If you think you might have gaps in your NI record, I’d really recommend putting in a call to HMRC.
“You should then try to make the top ups if you can.
“It won’t cost you loads, but could make a real difference to the amount you get when you stop working.”
Without making this one phone call, Jemma would have missed out on qualifying for a full state pension.
“I was so thrilled when I sorted this out,” she said. “I told all my friends about it, and have sent them all links to the HMRC website.”
While it did require Jemma to sit down and do a few workings in a notebook, she says it was totally worth the time and effort.
“It did take a bit of brain bandwidth to figure it all out,” she said.
“But at the same time, it was all done and dusted in the space of just one afternoon.
“And it’s probably one of the best investments I’ll ever make.”
How to check if you can boost your state pension
Anyone wanting to check to see if they’re eligible to buy back years can do so on Gov.UK.
It’s also important to check if you can claim free NICs credit, for example, when you temporarily stopped working to look after children.
How you can make voluntary contributions depends on which type you are going for, which we’ve explained in our guide.
It’s also worth bearing in mind that voluntary contributions won’t always increase your state pension so make sure to double-check.