How do I top up my state pension?
It might be cheaper than you think…
Why is my state pension forecast showing that I have missing years?
If you do not pay National Insurance, gaps may appear in your National Insurance record. This could occur if you were:
Employed with low earnings
Unemployed without claiming benefits
Self-employed with small profits, not requiring contributions
Living or working outside the UK
These gaps can result in insufficient National Insurance contributions, potentially affecting your ability to:
Receive a State Pension (referred to as 'qualifying years')
Qualify for certain benefits
What are qualifying years?
You will need 10 qualifying years on your National Insurance record to get any new State Pension. Once you reach 35 years, you will be entitled to a full State Pension.
A qualifying year is one in which you were:
Working and paid National Insurance contributions (employed or self-employed).
Getting National Insurance credits e.g. if you were unemployed, ill or a parent or carer.
Already paying Voluntary Contributions.
You might also qualify if you have lived or worked abroad or paid reduced-rate National Insurance contributions.
How do I rectify missing years?
One way you can rectify this is by paying Voluntary Contributions.
You might consider paying voluntary contributions for the following reasons:
You are nearing State Pension age and lack enough qualifying years to receive or increase your State Pension.
You know you will not be able to accumulate the necessary qualifying years for a full State Pension during your working life.
You are self-employed with annual profits of less than £6,725.
You live outside the UK but want to qualify for certain benefits or the State Pension.
You are not eligible for National Insurance credits.
Ways to pay Voluntary Contributions
There are 2 types of Voluntary Contributions - Class 2 and Class 3 National Insurance (NI).
The rates for the 2024 to 2025 tax year are:
£3.45 a week for Class 2
£17.45 a week for Class 3
Clearly, where possible, Class 2 NI is a MUCH CHEAPER method of making up the shortfall of qualifying years.
So what is the difference between Class 2 and Class 3 NI?
Class 2 NI will be paid (or deemed as paid) depending upon your self-employed profits. This will be paid through your self-assessment tax return.
Class 3 NI are Voluntary Contributions paid by people who want to complete their National Insurance record for benefit purposes, but are not otherwise liable to pay National Insurance.
What Voluntary Contributions should I pay?
You can only pay Class 2 NI Voluntary Contributions if your were self-employed and ELIGIBLE to pay Class 2 Contributions in the year where your shortfall exists.
If you were employed or not eligible, you will be required to pay Class 3 NI if you want to make up for any missing qualifying years. But remember that this is very expensive and it is worth speaking with your accountant to see if this is something you should consider.
You can usually pay voluntary contributions for the past six years.
The deadline is 5 April each year.
Example
You have until 5 April 2026 to make up for gaps for the tax year 2019 to 2020.
If you want to make voluntary contributions for the tax year 2016 to 2017 or 2017 to 2018, the deadline has been extended.
You have until 5 April 2025 to pay.
You can sometimes pay for gaps from more than six years ago, depending on your age.
