On 6 April 2023, new rules came into force at the Department for Work and Pensions (DWP) that govern when you can fill the gaps in your National Insurance record.
The amendment should have meant that you can only pay voluntary National Insurance contributions (NICs) to fill gaps from the last six years.
However, due to consumer demand clogging up the department’s phone lines, the deadline has now been extended to 31 July.
This gives you an extra three months to plug gaps dating back 17 years and could make a huge difference to the State Pension amount you receive, especially in light of the huge 2023/24 increase resulting from high inflation and the State Pension triple lock.
Keep reading to find out more about the amount you might receive and the steps you should take now.
Recent government decisions have put the State Pension in the spotlight
The State Pension triple lock
The UK State Pension won’t be your main source of retirement income. Nonetheless, it could be a vital part of your overall long-term plan.
A stable income, which is also inflation-proofed, can be a great way to cover known and regular expenses. And with inflation high in 2022, the amount you receive in 2023/24 has received a massive boost.
This is because of a government decision to honour the triple lock, a mechanism that sees the annual State Pension amount rise each year in line with the highest of these three factors:
- 2.5%
- Average earnings growth
- The Consumer Prices Index (CPI).
After 2022 saw inflation reach 40-year highs and peak above 11%, the State Pension increased by 10.1% in April 2023, after the government finally announced the triple lock would be reinstated after a pandemic break.
Delays to future age rise decisions
The UK State Pension Age currently stands at 66 but will rise to 67 between 2026 and 2028.
It is then set to increase to 68 between 2044 and 2046.
Back in 2017, the government launched a review into the possibility of bringing this second rise closer, potentially as early as 2037.
This could have had a huge impact on those born in the early 1970s and could mean you need to wait an extra seven years before you receive your State Pension.
The government recently announced that it would delay making a decision on this change until after the next general election, making long-term financial planning trickier for those affected.
Check in with your National Insurance record to see how much you might receive
You can use the government website to check your National Insurance record and see what you might receive. If you find you have gaps dating back more than six years, you have until 31 July to fill them.
You’ll need 35 “qualifying years” of National Insurance credits on your record to receive the full new State Pension. If you have less than 10 qualifying years you won’t receive any State Pension at all. The exact number of years will be used to calculate your entitlement where they sit between 10 and 35 years.
Following the 10.1% rise from 6 April 2023, the full new State Pension stands at £204 a week, or £10,600 a year.
Globe IFA can help you integrate the State Pension into your long-term plans
The recent extension to the DWP deadline for making voluntary contributions could make a huge difference to the amount of State Pension you receive.
In turn, this will affect other areas of your retirement.
While the State Pension won’t be your main source of retirement income, it can be a solid foundation on which to build.
The long-term retirement plan we help you to put in place will consider all of your pension and non-pension retirement income, from investments to the rent from buy-to-let properties.
Maximising the regular and inflation-proofed income you receive from your State Pension could open possibilities elsewhere. It could allow you more flexibility with your private or workplace pensions, for example, or help you make the most of the recent abolition of the Lifetime Allowance (LTA) to embed your pensions more firmly into your estate planning.
Get in touch
If you would like to take advantage of the DWP’s deadline extension to check your current entitlement to the State Pension, or you have any questions about your long-term retirement plans, get in touch.
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Workplace pensions are regulated by The Pension Regulator.
