Govt to end NI record gaps concession

A Government scheme allowing people to fill gaps in their National Insurance records will come to an end on 5 April. Currently those who reached State Pension age after 5 April 2016 have been able to fill any NI gaps from the 2006/07 tax year onwards. From 5 April the normal rules will revert which only allow people to fill gaps in their NI record up to six years after the year in question. After that point, the year becomes a permanent gap in a person's NI record and could affect their ability to build up a full state pension. According to pension consultancy LCP, someone with 10 missing years could pay out a little over £8,000 to fix the gaps but see a boost of £55,000 in state pension over a typical 20 year retirement if they fill the gap before the concession ends. Taxpayers can fill the gaps in their record by buying back missing years. The current cost of voluntary Class 3 NI contributions is £15.85 per week or £824.20 per year. This one-off lump sum payment can add up to 1/35 of the full rate to the State Pension. As the State Pension is currently £185.15 per week, this boost is worth £5.29 per week or around £275 per year. Steve Webb, partner at LCP and former Pensions Minister, said: “For many people, paying voluntary NI contributions can be great value for money and can help them boost their state pension in a cost-effective way. For people with gaps in their NI record going back more than six years, the window to fill those gaps will soon close. “Some people have gaping holes in their NI record and this will be the last chance to fill them. Although topping up is not the right answer for everyone, and people should always check with DWP before handing over any money, for some people this could be by far the best rate of return they could get on any spare capital. Missing out could cost some workers thousands of pounds.” There are some situations in which paying historic contributions would not boost the State Pension, he added, so advice is vital. LCP has prepared a tool to help advisers and their clients understand the rules.

Govt to end NI record gaps concession

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