MARTIN Lewis has revealed how thousands of households could turn £800 into more than £5,000 by doing a simple check.
But the MoneySavingExpert founder warned that you could risk losing out on the cash if you don’t take action soon.
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In the latest episode of The Martin Lewis podcast, the consumer expert advised people between the age of 45 and 70 to check if they are able to boost their state pension.
It takes 35 years of National Insurance contributions to get the full amount of state pension and you can pay for gaps in your record.
At the moment you can top up for any missing years dating back to 2006 but a six-year limit will return in April 2023, restricting how far you can go back.
National insurance contributions are usually taken directly from your wages if you’re employed or via self-assessment for the self-employed.
People often have gaps if they were unemployed, on a low income, or self-employed.
You can check how many years of NI payments you’ve made and see any missing years on the government website.
Martin said: “If you’re missing a gap, and you’re not going to make it up another way – and you have the money to do this – then spending £800 to boost your state pension, unless you have a very short life expectancy after doing it, is odds on to be an incredibly lucrative thing to do with your money.
“Which is why I would caution anybody listening who falls into the bracket to go and check if you are missing any years.
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“And the nearer you are to state pension age, you need to be looking quite quickly.”
Until 5 April 2023, workers looking to top up their payments can go back so far as 16 years in the past, which is particularly useful for those near state pension age.
But after this date, you will only be able to go back six years.
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.
A man living the typical 19 more years and a woman living 21 more years after they reach the state pension age of 66 can expect to get £5,300 and £5,800 respectively.
Speaking in the podcast, Martin said it will take just three years after getting your pension to break even.
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.
Martin also explained that it is 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 credits instead.
Thousands are thought to be missing out on these NI 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.
Besides topping up missing NI payments, we explain other ways you can boost your state pension by up to £700 a year.
Plus, pensioners on low income could get extra help from Pension Credit – here’s how.
