Mind the gap: why filling the holes in your NI record could pay dividends | National insurance

There has been a surge in the number of people who have boosted their state pension pots, potentially netting them thousands of pounds more for their retirement.

Figures from HM Revenue and Customs showed about 23,000 ­people handed over a total of £27m in the space of about 10 days earlier this month. They were paying to fill gaps in their national insurance (NI) records in order to improve their eventual state pension.

Under the new state pension system, if your NI record started before April 2016, you will need at least 35 years of NI contributions or credits to qualify for the full payment of £221.20 a week.

But if there are gaps in your NI record, perhaps from unemployment or time spent raising a family, you may not get the full amount.

Typically you can only pay voluntary contributions going back six years. But until 5 April 2025, the opportunity has been extended all the way back to the 2006-07 tax year, and this may particularly appeal to some in their 40s, 50s and 60s who have the cash.

By paying about £800 to £900 to plug a missing year, you could, over time, get back thousands of pounds – perhaps £10,000 or more if you end up living to a ripe old age. Though, of course, a lot depends on what happens to the state pension in future years.

HMRC has reported a spike in the number of people filling the NI gaps as the deadline nears. It has acknowledged this strong demand means its response times are slower, and it has apologised for any anxiety this may cause customers.

Between April and the beginning of this month, about 37,000 people added a total of £35m in top-ups to their pots online, but by 13 February the number had risen to 60,000, who had put in £62m. A spokesperson for HMRC says people have recognised the deadline is looming after publicity highlighting it.

But it is vital to be aware that the younger someone is, the more likely it is that they will over time build up their NI contribution record in the normal way – which means that for some, buying extra years now would be a waste of money.

How it works

If you don’t have the full 35 years of NI contributions or credits, you will get a pro rata amount of state pension. (You will need 10 qualifying years on your NI record to get any new state pension). Paying between £800-£900 for each missing year now could be worth thousands of pounds once you finish work, especially if you live for a long time.

Most people need to pay voluntary “class 3” NI contributions to top up their state pension. The cost of doing this varies. For example, the cost to fill in a gap in your NI record for the full 2022-23 tax year is £824.20, while the cost for 2023-24 is £907.40.

This one-off payment can add up to 1/35th of the full rate to your eventual state pension.

As the full rate of new state pension is currently £221.20 a week, this boost is worth £6.32 a week, or £328.64 a year.

If someone decided to top up 10 missing years of contributions, they might have to pay just over £8,200 to do that. In return, they would get a £3,286 annual state pension boost, based on today’s figures. That would add up to about £65,000 (before tax) over a 20-year retirement, or just under £100,000 if the person lives 30 years after retiring.

You can find out how much state pension you will get from your current level of contributions on the GOV.UK site or the HMRC app. These will tell you what gaps exist in your NI record, if any, and how much difference paying for extra years will make. You can also make the payments for the missing years if you wish.

From 6 April this year, you will only be able to fill NI gaps for the previous six tax years.

Last month, a Briton living in France got in touch to say he was trying to pay missing contributions but was worried that apparent delays could mean he would lose out. He said he contacted HMRC in January but received a message saying he could expect a reply in late November this year.

HMRC later told us it had spoken to the man and reassured him that people whose voluntary contributions applications were received but not processed before the 5 April 2025 deadline would not lose out: their NI record would be updated and their payment treated as paid on time. It added that the man’s circumstances were complex because he had lived and worked abroad.

Not for everyone

Tom Selby, the director of public policy at the investment platform AJ Bell, says that paying for “lost” years will work better for some people than others.

Among those who could benefit are people who have had some years out of the UK workforce, such as some parents or those who have spent time working abroad, he says. “Essentially anyone who has had significant periods of their life where they haven’t been paying NI and as a result has got gaps in their record.”

However, those who have taken time out to care for children or elderly relatives may be entitled to pension credits, which give the same entitlement but at no cost.

For others such as younger people, it may not make sense , as they will often still have plenty of time to pay the full 35 years of contributions.

“Most obviously, tThe younger you are, the more likely you are to naturally build up the 35-year NI record needed to entitle you to the full state pension,” says Selby. “In these circumstances, buying extra NI risks being a complete waste of money.”

People should also be aware that increasing the value of their state pension may push them into a different tax bracket, depending on how much their other streams of income bring in, he says.

“Where this is the case, the benefit of buying extra state pension years will effectively be lower, and so it will take a bit longer to break even,” he says. “In many cases it will still be worthwhile to buy extra NI years, but you should take the time to fully think through the financial implications, ideally with the help of a regulated financial adviser.”

How to do it

People now have a little over a month to check what they can do in terms of filling gaps and work out whether this is the best move for them.

If you have not yet reached state pension age, the first thing to do is to check your individual state pension forecast online: go to gov.uk/check-state-pension. This will let you find out how much state pension you are on course to receive, how much more you could get, and the voluntary NI contributions you would need to pay to achieve this.

Anyone with NI gaps in some of their tax years that could, if filled, increase their eventual state pension can use the service to choose which years they would like to pay to fill. They can then pay securely through the service, with HMRC saying it is a very straightforward process.