Wednesday , September 27 2023

State pension deadline looms as Britons have last chance to boost sum | Personal Finance | Finance

The chance to boost a state pension is likely to be an opportunity many Britons will want to take. This could be possible for many, but with a key deadline to bear in mind which is rapidly approaching.

State pension payments typically hinge on the number of eligible National Insurance contributions a person has made throughout their lifetime.

For a number of reasons, many will have gaps in their record which could mean they fall short of the amount needed for a full state pension.

Normally, people can fill in gaps in their National Insurance record over the past six years.

However, the Government has created a one-off concession, allowing Britons to buy back missing years from 2006/7 to 2015/6.

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The demand to boost the state pension has been high, with the DWP stating over 500,000 calls to the Future Pension Centre have now been made.

Such was the influx of calls that the April 5 deadline has now been extended until July 31, 2023, providing Britons with more time to act.

Laura Trott, pensions minister, shared in a “normal month” the DWP typically receives 30,000 to 50,000 calls, with additional staff deployed to help Britons with their queries.

Voluntary National Insurance contributions could be a great way for people to boost their retirement income, according to Alice Haine, personal finance expert at Bestinvest.

She said: “Just one qualifying year of NI at the standard rate of £824.20 adds up to £275 per year – 1/35th of the full rate of the new state pension – to your pre-tax state pension.

“That puts the breakeven point of making those contributions at three years after you start claiming your state pension.”

The cost for voluntary National Insurance contributions will also jump to £907.40 from April 6, 2023, so acting sooner rather than later may end up cheaper.

However, Andrew Tully, technical director at Canada Life, warned people should check their entitlement before acting.

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He said: “Care needs to be taken as many people will have sufficient NI to qualify for a full state pension, so have no need to pay more.

“Even if you have gaps in your record you may be able to fill these for free by making sure you have received credits, for example if you were unemployed, or caring for relatives.”

People will be able to check their entitlement by requesting a state pension forecast on the Government’s website.

This will show if a person is on track to receive a full state pension, and will highlight any gaps in their NI record.

In the same sense, voluntary contributions do not always increase a person’s state pension, so it is vital to check before paying.

Those below state pension age can contact the Future Pension Centre to find out, while those who have reached state pension age can contact the Pension Service.

The Government website added: “You may also want to get financial advice before you decide to make voluntary contributions.”

Victoria Atkins, financial secretary to the Treasury, discussed why the decision to extend the deadline was made.

She said: “We’ve listened to concerned members of the public and have acted.

“We recognise how important state pensions are for retired individuals, which is why we are giving people more time to fill any gaps in their National Insurance record to help bolster their entitlement.”

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