Check Your National Insurance Contributions History

For clients planning to claim the UK state pension at retirement should check their national insurance (NI) record before 5 April 2023. Currently, voluntary contributions can be made to plug gaps back to April 2006, but this will not be possible after April 2023. WSM Partners LLP have created a checklist of actions that you should consider taking to make the most of your qualifying years in order to get the full basic state pension.

National insurance contributions (NIC) are normally made by employed and self-employed individuals based on their earnings above the statutory thresholds which are set annually. Individuals may also receive National Insurance Credits if they are eligible. These NI contributions or credits make up a person’s NIC qualifying history, which may affect their entitlement to the state pension as well as other benefits, such as employment and income support allowance.

In general, to qualify for the maximum ‘new state pension’ (received by those retiring on or after 6 April 2016) a person must have 35 qualifying years of National Insurance Contributions. For entitlement to a pro rata part of the ‘new state pension’ a person must have contributed for at least 10 years. For those who reached state retirement age before 6 April 2016, different rules may apply; the number of required years of NI contributions/credits to obtain the full state pension ‘may’ be higher. 

If individuals have not contributed enough prior to reaching the state pension age, they may not be able to claim state pension at all (if qualifying contributions are under 10 years), or will receive a reduced state pension amount if they have not attained the maximum contribution record.

To protect your state pension and other benefits it may be beneficial for people to make voluntary Class 3 NI contributions to top up their contribution history, potentially increasing the amount of state pension they will receive. Advice is recommended when making that decision as it requires predicting, to an extent, what contributions will be made before state retirement age and whether or not you intend to carry on working until state pension retirement age.

Normally, it is only possible to make voluntary contributions for the past six tax years although currently there is an extension in place and individuals can fill gaps in their NIC history from 6 April 2006 to the present date by making voluntary contributions.

However, from 6 April 2023, the deadline for making voluntary contributions will revert to the normal six years. This means that in the 2023/24 tax year, it will only be possible to make contributions going back to the 2017/18 tax year.

Individuals should therefore take this opportunity to check their NIC record to identify any shortfalls in their NI history.

Taxpayers should also check that their record includes NI contributions paid through PAYE or self-assessment, and NI credits earned.

Actions for clients to take before 5 April 2023: 

• Check your NIC record
• Identify any NIC credits that are missing from periods in which they should have been received (e.g. on receipt of universal credit or child benefit)
• Identify any shortfalls in contributions
• Contact HMRC if you think there are any errors
• Decide whether to make voluntary Class 3 NI contributions based on (a) how many qualifying years you have attained so far and (b) how many years you will attain between now and retirement age.

Click Here to check your own National Insurance Contribution

***Update to above blog***

The deadline to top up missing national insurance years between 2006 and 2016 has been extended to 31 July 2023, while the price of doing so will be frozen at current costs during this period. The moves come after many people reported being unable to access essential Government helplines to get vital information ahead of the previous 5 April deadline.