Martin Lewis issues urgent state pension warning – or risk missing out on cash
MARTIN Lewis has issued an urgent state pension warning for anyone aged between 45 and 70.
The consumer champion shared the advice on the latest episode of his podcast.
Anyone aged between 45 and 70 set to receive the new state pension and missing National Insurance contributions (NICs) can plug gaps back to 2006.
But after April 5 you will only be allowed to backdate missing payments by up to six years. So you should fill any gaps before April 5.
You need 35 years’ worth of NICs to get the full pension amount which is currently £185.15 per week.
Currently, the state pension age is 66.
But you might have gaps in your NICs if you were not earning enough, or were unemployed and not claiming benefits.
Plus, you won’t get NICs if you were self-employed but did not pay contributions because of small profits or you were living or working outside the UK.
Martin explained: “On April 6, 2016, that was the day they introduced the new state pension.
“For those who hit pension age since then, you have been put on the new state pension.
“As part of that, transitional arrangements were put in place.
“Those transitional arrangements end this tax year, they end on April 5, 2023.”
Martin explained you can see if you might be missing National Insurance years by going on the government’s website and checking your record.
“That will tell you when you are due to get your state pension and it will give you a forecast based on your current National Insurance record of how much you are likely to get,” he said.
He added: “For those who are already at state pension age, go check your National Insurance record, which will tell you how many years of full contributions you have and whether, crucially, you have any gaps in your contribution record.”
What is the new state pension?
The new state pension was introduced in April 2016.
You can claim the benefit once you have reached state pension age and if you have at least 10 years National Insurance contributions.
You also have to have been born on or after April 6, 1951, if you are a man and after April 6, 1953, if you are a woman.
If you were born before these dates it means you will get the basic state pension instead.
The full rate of the new state pension is £185.15 per week, but this is set to go up by 10.1% from April to £203.85.
You get NI contributions through earning a salary or if you are raising children or have a disability.
How can I top up my new state pension?
How much you can get for the new state pension depends on your National Insurance contributions.
You can get the full amount if you have made 35 years’ worth and have to have made 10 years to get at least something.
But you can top up any missing gaps in your NI record through voluntary contributions.
Steve Webb, LCP partner and former pensions minister, previously told The Sun topping up contributions can get people a better “rate of return” than other ways of saving.
But you have to pay if you want to plug any gaps.
Earning back your missing NI years costs £15.85 a week so it will work out as £824.20 to buy one year of contributions.
Steve said as an extreme case, someone who missed the April 5 deadline to fill their gaps would lose the chance to top up another 10 years of NI contributions.
This would be the period between 2006/07 to 2015/16.
Although you’d have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
So someone who was retired for 20 years would get back around £55,000 in total, before tax.
How you can claim voluntary contributions depends on which type you are going for.
For example, if you want to buy Class 2 National Insurance contributions you can pay for them as part of your Self Assessment tax bill.
Or you can pay for them online on gov.uk.
But you’ll need your online banking details and the 18-digit reference number shown on your HMRC payment request ready.
You’ll need your Class 2 National Insurance reference number to hand as well.
If you want to buy Class 3 contributions you can pay on gov.uk as well.
You’ll need your Class 3 National Insurance reference number to hand though.
It’s also worth bearing in mind voluntary contributions won’t always increase your state pension.
If you have the budget, you can pay a financial advisor to see whether it’s worth you buying them back.
Do you have a money problem that needs sorting? Get in touch by emailing money-sm@news.co.uk