Tax advice of the week: catch up on NI contributions

It's worth topping up your National Insurance contributions to make sure you get a full state pension.

Anyone due to reach retirement age by 5 April 2015 is allowed to top up any missing years in their National Insurance (NI) records going back to April 1975. And that will increase their state pension, says Harriet Meyer in The Observer.

To qualify for a full basic state pension, currently £95.25 per week, men and women retiring after April 2010 need 30 years' worth of NI contributions.

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At current rates, that's £165 per year for life ie, (£95.25 x 52)/30. So "you'll only have to draw your pension for four years to get your money back".

Note you can buy a maximum of six years' contributions and you must already have at least one year on record with HMRC. Topping up may not suit those on lower incomes, as it can threaten their entitlement to pension credits.

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