Those with a shortfall on their National Insurance record will not receive the full state pension.
Experts have warned Briton that they need to act swiftly to secure their full state pension amount.
With less than a year remaining, individuals are urged to check their entitlement and address any National Insurance contribution gaps.
Britons who work for decades to build up their state pension entitlement may be shocked to discover that some of their contributions did not count.
To qualify for any state pension, Britons need at least 10 qualifying years of contributions, while a full new state pension, now increased to £221.20, requires at least 35 qualifying years.
Just because someone has paid their National Insurance, it does not automatically mean they have earned a qualifying year, there is a set criteria to take into account.
The new full state pension is worth £11,000
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A qualifying year is one in which someone was:
- working and made National Insurance contributions
- getting National Insurance credits for example if they were unemployed, ill or a parent or carer
- paying voluntary National Insurance contributions
People might also qualify if they’ve lived or worked abroad or paid reduced rate National Insurance for married women.
Britons pay mandatory National Insurance if they’re 16 or over and are either an employee earning more than £242 per week from one job or a self-employed and making a profit of more than £12,570 a year.
Alice Haine, personal finance analyst from Bestinvest explained that checking one's tax account for any gaps in their National Insurance record quickly identifies whether they have enough qualifying years to receive a full state pension.
The state pension rose by 8.5 per cent this month. The new state pension rates for 2024/25 will be:
- £221.20 per week for the new state pension (for those who reached state pension age after April 2016). This will be £11,502.40 a year.
- £169.50 per week for the basic state pension (for those who reached state pension age before April 2016). This will be £8,814 a year.
Haine encouraged those approaching retirement to check their State Pension Forecast in their Personal Tax Account. This will provide them with information such as what year they will receive their pension, the amount they will get weekly, monthly and per year (without factoring in inflation) according to their current and projected contribution level, and a forecast of what they will receive if they continue to pay in.
The record also lists the number of years with full NI contributions and the years where someone may not have contributed enough. These are marked as 'year is not full' with guidance on how to fill them, which includes how much to pay in voluntary contributions.
Haine continued: "Whether someone needs to top up depends on how many more years they plan to work, as they may or may not have enough time to make up the shortfall, or whether they are eligible for NI tax credits, which fill the gaps, such as those who are sick, were unemployed or took time out to raise a family or care for elderly relations.
"Remember, taxpayers can typically only backdate their NI contribution history by six years. However, the Government is currently allowing people to pay for gaps on their NI record all the way back to April 2006.
"While the deadline for this one-off concession was initially April 2023, this was extended twice last year due to high demand.
"This unique window of opportunity to plug up to 17 years of missed NI contributions in one go closes on April 5, 2025, so it is imperative taxpayers take advantage while they can."
For Class 1 NICs (those payable by employees) Britons need to earn £123 per week, or £6,396 per year to secure a qualifying year.
For the self-employed, this is £129 per week, £560 a month or £6,725 a year.
NI Class 3 voluntary contributions are designed to fill in any gaps in one's NI record. The weekly Class 3 rate for the tax year 2024-25 tax year is £17.45 a week.
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People who may need to top up include those who took a career break as well as low earners or expatriates living and working abroad. Plugging any gaps will ensure savers receive your full state pension entitlement later on.
Chris Demetriou, accountant ar Archimedia Accounts, said “For those with contribution gaps that may lead to an incomplete National Insurance record, there are steps that can be taken to improve your pension entitlement.
“One is paying voluntary [NICs] to plug missing years due to self-employment without contributions, time spent unemployed or overseas residence, for example.”
He added: “Generally, making further contributions is worthwhile if the increased pension amount over the course of your retirement exceeds the money you need to put in.”
People can check their State Pension Forecast on GOV.UK.