Want to boost your State Pension? Make sure you don’t miss this important deadline


By HarperLees

While the chancellor Jeremy Hunt may not have given us much to cheer about in his autumn statement in November 2022, he did deliver one piece of welcome news for those who are retired. As from April 2023, the State Pension is set to rise by a record 10.1%, something that’s likely to be welcomed by millions of pensioners after 2022’s surge in the cost of living.

This means that in 2023/24, you’ll receive £203.85 a week if you’re entitled to the full single-tier State Pension, totalling £10,600 a year. This is up from £185.15 in 2022/23, or £9,627 a year, meaning you’ll be more than £972 better off by the end of the 2023/24 tax year.

In order to receive all of your State Pension you will usually typically need to have paid your National Insurance contributions (NICs) for 35 years. If you have fewer than 35, you will typically receive a portion of the full amount, although you are allowed to buy extra NICs to help boost your State Pension .

That said, the rules are set to change in April 2023, and might mean that you can no longer fill in as many gaps in your NICs record as you can before the deadline. As clients of HarperLees Financial Planning, we will have discussed this with you in the past, although you might have family and friends who are unaware of these important changes.

If they do not act before the changes come into force, it could result in them having a lower State Pension than if they act now and fill in any gaps in their NICs record before April. Read on to discover more.

£800 in additional contributions is likely to be money well spent

In 2022/23, you can make additional Class 3 NICs payments to fill in the gaps if you have them. It will cost you £15.85 for every additional week you buy, meaning you could boost your NICs record for a whole year for less than £825.

According to Money Helper, this could then boost your State Pension by £5.29 a week, or £275 a year. This means that it would take just three years to recover the amount you spend.

When you consider that in 2022/23 the State Pension Age is 66 for men and the Office for National Statistics shows that they can expect to live until 85, you could be £5,225 better off if you’re male. As a woman, you will typically be £6,600 better off as you’re expected to live until the age of 89.

As you can see, paying the additional Class 3 NICs could be a very savvy financial decision. Now let’s look at how the rules around additional contributions are set to change, and why taking action now is vital.

The government’s transitional arrangement changes in 2023

When the new single tier state pension was introduced in April 2016, a “transitional arrangement” was put in place. This was to make it easier for people on the new system to boost their NICs record using Class 3 payments to fill in gaps in their record, giving them the 35 years needed to claim the full amount.

This may include you if you lived abroad and didn’t work, were unemployed and did not claim any benefits or were employed and earned less than £123 a week. Under this amount you are not eligible for NICs credits.

If this includes you, you could plug gaps in your NICs record dating all the way back to 2006 under the original transitional agreement. That changes on 5 April 2023, after which you can only fill gaps going back six tax years.

As you can see, this could significantly reduce the number of years you could buy to fill in gaps in your NICs record, which in turn, may substantially reduce your State Pension.

Get in touch

Before you use Class 3 NICs to buy additional years, you should make sure it’s the right decision for you. For example, if you or someone you know already has 35 years, you will already be entitled to the full State Pension, which means that the additional years that you buy would not boost your income in retirement.

If you want to check whether you have a full NICs record, or have any gaps, you can use the government’s State Pension forecast to check. It will also confirm when you should be entitled to receive your State Pension.

If you, a friend or family member would like to discuss whether it’s appropriate to use Class 3 NICs to fill in gaps, or would like to discuss a retirement strategy or pensions, we would be happy to help. Please email us on info@harperlees.co.uk or call 01277 350560.

Please note

This blog is for general information only and does not constitute advice. It should not be seen as a substitute for financial advice as everyone’s situation will be different.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.