28 January 2013

Should I ... Top Up my State Pension?

Although the State Pension is likely to change from 2017 (see my Flat Rate State Pension post), until then you may still have the option to top-up your pension if you are not expecting the full amount.
You would be entitled to less than the full amount if you have less than 30 years of National Insurance contributions (or have been receiving equivalent state benefits). That might have happened if you were working abroad, a low earner at some time, or if you were unemployed and didn't claim benefits.
But if you have less than 30 years of contributions you can pay HMRC a lump sum to buy extra years. These are "Voluntary Class 3 National Insurance contributions". You will normally get invited to make that payment if HMRC detect that you have a gap in your National Insurance contributions.
If this applies to you it may be well worth your while making that payment. On the other hand it may not! Take a look at HMRC's own information on http://www.hmrc.gov.uk/ni/volcontr/toppingup.htm.
For a consumer view you could try http://www.moneysavingexpert.com/reclaim/increase-state-pensions which has a calculator (not updated recently, though, so beware).

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