For a limited time, you have the opportunity to plug any shortfalls in your national insurance record which, depending on your current age, could pay out far more than you put in.
To recap, the state pension is paid out based on the number of qualifying national insurance years someone has. For those raising children or with a disability, national insurance credits may be given instead which keeps their state pension pot topped up. Though sometimes this is not always the case and there may be gaps in your record you are unaware of. Likewise, those who have spent time abroad or who had a low income may also have missing national insurance credits.
Those who are missing any years have until 5th April 2023 to top their state pension pots based on the new state pension that was introduced in 2016.
Putting in £800 could give a return of £5,550 according to Money Saving Expert Martin Lewis.
The next step is to check your national insurance payment history on the GOV.UK website. A full pension forecast will then be revealed, including whether there are any gaps on your record.
Those who do have a national insurance shortfall can buy more years going back to 2006. For context, this was 16 years ago, and any gaps from then until now would allow you to top up your pot up to the value of £800.
However, as noted the ability to top your national insurance credits up to this degree is time sensitive. After this date, the maximum time you would be able to go back is 6 years, meaning the return on investment would not be as lucrative.
Anyone younger than 45 could also technically plug any gaps, although as you have a lot longer left until you reach state pension age, there are plenty more opportunities to cover any lost years versus those closer to retirement age.
It’s also worth noting that if you are missing any years, you may be eligible for national insurance credits which can be redeemed for free. So do check this before topping up any missing years, to ensure you do not top up any missing credits with your own money unnecessarily.
Experts have also warned that lost pension pots amount to £26 billion in the UK. Some of the reasons cited for this include due to changing jobs or moving house, meaning providers have lost touch with pension holders.
Therefore, it’s also worth consulting the government’s pension tracing service in addition to checking for any gaps in your national insurance record. Doing so will ensure both state and private pensions pay out at their maximum values.
As always, anyone wanting to make an investment into their pension should independently verify whether any advice is right for them. It’s also good to be aware that Martin Lewis advises it would require at least 3 years to break even on the £800 investment, making this a tip that is best for those who are yet to retire, or who are financially comfortable now to be able to wait for their return to come through.