When to top up your national insurance to boost your state pension

If your national insurance contributions fall short of getting you a full state pension, you can make voluntary top-up contributions.

Should you top up your national insurance to boost your state pension? Reforms to state pensions mean anyone retiring after 5 April 2016 must have at least ten years' national insurance contributions to claim one, while you need 35 years to get the full amount of £8,767 a year.

However, if your national insurance record falls short, you can make voluntary top-up contributions, typically for up to six years after periods in which you didn't pay in full.

In principle, topping up national insurance is a good deal. It will cost you roughly £750 to buy each extra year. In return, each year after the minimum ten years you buy will generate roughly £250 of extra pension every year for the rest of your life.

The return is even higher if the top up takes you up to the minimum ten-year record, below which you're not entitled to any state pension.

Nevertheless, it's important to check your entitlement to means-tested benefits. If you expect to retire on a low income, with little or no private pension or savings and investments, there's a good chance you'll qualify for means-tested payments such as pension credit.

Extra state-pension entitlement will reduce your eligibility for these benefits, in which case there's no point in paying voluntary national insurance.

Recommended

The new social-care levy: an unfair tax that protects the “assetocracy”
National Insurance

The new social-care levy: an unfair tax that protects the “assetocracy”

The government’s regressive social-care levy will make Britain’s tax system even more complex. Root-and-branch reform is long overdue.
18 Sep 2021
Should you defer your pension and stay in work?
Pensions

Should you defer your pension and stay in work?

The pros and cons of deferring your pension and staying in employment beyond 66 are finely balanced.
15 Sep 2021
Why the government's plan for funding social care is a lousy one
UK Economy

Why the government's plan for funding social care is a lousy one

Insisting that people use their property wealth to pay for social care is perfectly reasonable, says Merryn Somerset Webb.
10 Sep 2021
What’s better than two types of income tax? Three types of income tax!
UK Economy

What’s better than two types of income tax? Three types of income tax!

The government is to fund social care costs by raising National Insurance contributions and adding a “health and social care levy”. John Stepek looks …
7 Sep 2021

Most Popular

A nightmare 1970s scenario for investors is edging closer
Investment strategy

A nightmare 1970s scenario for investors is edging closer

Inflation need not be a worry unless it is driven by labour market shortages. Unfortunately, writes macroeconomist Philip Pilkington, that’s exactly w…
17 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021