PENSIONERS could be at risk of wasting hundreds of pounds topping up their pension unnecessarily.
The Government website designed to help them check their National Insurance record has been branded as ‘confusing’ and ‘misleading’ by former pensions minister Sir Steve Webb.
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State Pension is currently worth up to £185.15 a week.
In order to obtain this you’ll need 35 qualifying years of National Insurance Contributions.
If you don’t have this many years you’ll get a lower pension amount, and nothing at all if you have less than 10 years of NICs
National Insurance is a tax you pay after you’re over the age of 16 and earn a certain wage.
The Department of Work and Pensions website will allow you to check the state pension forecast.
This means you can spot if there are any gaps in your National Insurance record.
If there are any that mean you fall short of the required years you can pay the amount missing through voluntary NI contributions.
It’s often worth doing this as you get more back from your state pension than you pay in.
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However Sir Steve, who is a partner at pensions consultancy Lane Clark and Peacock, has warned that the information displayed could potentially be misleading.
The website displays gaps in people’s National Insurance records – and displays the cost of “making up the shortfall”.
But this display still appears even when an individual has the full number of years and will already get a full state pension
It could lead some people to paying hundreds of pounds more to the Government for no reason at all.
Sir Steve was contacted by David Kemp, a 62-year-old retired HR consultant from Devon who was encouraged to top up his pension.
The DWP website stated he had 44 years of full contributions, meaning he is entitled to a full pension.
But upon further scrolling down the page, it stated there was a gap. In order to close it he needed to pay £600.
Sir Steve said: “When people visit a government website which is supposed to provide them with personalised information, they would expect that information to be relevant to them.
“In this case, and no doubt many others, Mr Kemp was presented with a very precise figure to make up a ‘shortfall’ in his NI record, yet it was utterly irrelevant to his situation.”
“Worse than this, he could have ended up wasting hundreds of pounds by making an unnecessary payment.”
The pensions expert said that the DWP should make change to the website “as a matter of urgency” so that those who can’t benefit, like Mr Kemp, will not get quoted figures for making such payments.
The DWP has been contacted for comment.
How to check your National Insurance record
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.If you don’t have one already, you’ll need to create a government gateway account online.
You can also request a statement online, over the phone or by post, but writing to: National Insurance contributions and Employers Office, HM Revenue and Customs, BX9 1ANThe closer you get to retirement, the more important it is to check how many years you have.If you have any gaps that mean you might not hit 35 qualifying years, you can still take action so you don’t miss out on the cash.
If you don’t have enough National Insurance contributions to get the full state pension, or even any state pension at all, then you can choose to buy extra credits.
You can do this before state pension age and once you reach it.
Most people will do this by buying what’s known as class 3 National Insurance credits to fill gaps in their record at a cost of £15.40 a week for the 2021/22 financial year.
So to get a whole year’s worth, and you’d pay £800.80.
For those with gaps in their record on or after April 6, 2016, you can add 1/35 to your state pension for life.
This may sound like a lot, but it would boost your state pension by over £200 each year.
This means it would take less than four years of getting more from the state pension to recoup the cash you’d have to shell out for contributions in the first place – and you would continue to get this boosted state pension for the rest of your life.
Just bear in mind that you can usually only pay for gaps in your National Insurance record from the past six years.
The rules on how much you pay are also slightly different if you’re self-employed and buying class 2 contributions.
You can find out more about making voluntary National insurance contributions from gov.uk.
The rules are complex so it could be worth seeking financial advice or contacting the Future Pension Centre to find out if you’ll benefit from making extra payments.
There may be other payments you might’ve missed. Money Saving Expert Martin Lewis explains how you can check to see if you’ve miss a £150 council tax rebate.
If you receive universal credit this is the date you will start getting £326 cost of living payment after it becomes law.
