MARTIN Lewis has issued an urgent warning to millions of people who have just weeks left to boost their state pension.
In the latest MoneySavingExpert.com (MSE) newsletter, Martin encouraged people to check their pension pot before April 5
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The money expert said that if you’re aged between 45 and 70, you need to check if you can increase your state pension using a government scheme.
To get the full amount of state pension, you need to pay 35 years worth of National Insurance contributions.
The government is allowing people to fill in any gaps in their National Insurance – but the scheme closes in April.
People often have gaps if they were unemployed, on a low income, or self-employed.
Normally, you are only allowed to fill in gaps up to six years previously – so back to 2016.
But the government is allowing savers to fill in missing years dating back to 2006 – but only until April.
Martin said: “Now, this is why it’s so urgent. Transitional arrangements were put in place in April 2016, and they end this tax year – that is 5 April.
“It’s about six weeks away – and that’s not a long time to do something that’s quite complicated.
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“Until then, you can plug any gaps back to 2006 in your national insurance years.
“But after that, you can only go back six tax years to 2017. So there are 11 years that you will lose (on 6 April) the ability to buy back.”
Someone with 10 missing years could pay out a little over £8,000 to fix the gaps but see a boost of £55,000 in state pension over a typical 20-year retirement.
How to act now
National insurance contributions are usually taken directly from your wages if you’re employed or via self-assessment for the self-employed.
You can check how many years of NI payments you’ve made and see any missing years on the government website.
Though before making voluntary contributions, you need to get a pension forecast and speak to the Government’s Future Pension Centre.
The body will be able to tell you whether it’s worth you paying for extra qualifying years, as it may not be beneficial for everyone.
Earning back the years isn’t free so your voluntary contributions do come at a price.
It works out to be worth £15.85 a week which means it costs £824.20 to buy one year of contributions.
This will add £275 to your state pension every year.
But of course, there are risks – if you happened to die before the three years are up then you will have wasted the money, the savings experts explained.
It’s important to check if gaps in your contributions – for example when you’re not working and looking after children – can be made up by claiming NI credits instead.
Thousands are thought to be missing out on these credits, leaving them worse off in retirement.
You can check the full list of who’s eligible for claiming credits on the government website.
It explains the circumstances where you’ll need to claim and when you’ll get it automatically.
What is the state pension?
The state pension is a weekly payment from the government to men and women aged over 66.
The age when receipt begins is due to rise to 67 by 2028 and 68 between 2037 and 2039.
It’s intended to give anyone a retirement income to support them as they get older.
You can spend the money as you wish, but it is treated as income so you may have to pay tax on it if all your earnings are above the annual personal tax allowance, currently £12,570.
How do you qualify for the state pension?
The full state pension is only paid to those with a minimum 35 years of national insurance contributions.
This is one of the taxes you pay while working and builds up your entitlement to the state pension.
There may be gaps if you were unemployed, lived abroad or took time off to care for children or relatives, which means you could get a lower amount.
But in some cases, you can apply for credits to top up your retirement fund.
You need at least ten years of qualifying national insurance contributions to get any state pension payments.
This doesn’t have to be from ten years working in a row.
You can build up your eligibility as long as you have paid national insurance contributions for the equivalent of a decade during your working life.
It is possible to make voluntary national insurance contributions to top up your record, usually from the previous six years.
You can use a government tool to find out how many years of contributions you have and how much state pension you’re likely to get.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected]
This post first appeared on thesun.co.uk
