Most employees have National Insurance Contributions (NICs) deducted from their pay, which are added to amounts paid by their employers to provide entitlement to the State Pension. They also contribute towards other state benefits such as Job Seeker’s Allowance and Maternity Allowance.

A ‘new’ State Pension was introduced in April 2016 for people retiring after that date, and generally requires 35 complete years of NIC contributions in order to receive the full State Pension. Anything between 10 and 35 complete years will normally result in a pro-rata reduced State Pension entitlement, although these criteria may differ for people who were already paying NICs before April 2016.

Incomplete years can arise in an individual’s NIC record if their earnings are below the threshold for full NICs to be payable (for instance due to low earnings, career breaks, working part-time or working overseas). The amount required to make a complete year of NIC payments can vary between tax years – for the tax year ending 5 April 2023 an individual will need to earn at least £6,396 in order to pay sufficient NICs to have a complete year. An individual’s NIC record is made up not only of NICs paid on employment income, but also any NICs paid either voluntarily or in respect of self-employment. NIC credits are also available in some circumstances such as when on parental leave or claiming Jobseeker’s or Carer’s Allowances, so it is important for individuals to review their NIC record to ensure any life events qualifying for NIC credits have been treated correctly.

When the new State Pension was introduced, the Government extended the window for people to pay voluntary NIC contributions in order to make up gaps in their NIC record from the normal six year period to allow ‘top ups’ to be paid for the period from 6 April 2006 onwards. That opportunity was due to expire on 5 April 2023 but has recently been extended to give people until 31 July 2023 to make good any gaps in their NIC records since April 2006.

Voluntary NICs can be paid to make up for any gaps identified since 6 April 2006, with the weekly rates being £15.85 for Class 3 NICs (the most likely option for employees) or £3.15 for Class 2 NICs (only available to employees if their NIC gap relates to working overseas, subject to certain conditions).

Individuals can review their current NIC record at https://www.gov.uk/check-national-insurance-record and check their forecast State Pension entitlement at https://www.gov.uk/check-state-pension. Both services require a Government Gateway login to access, and can also be accessed via the Personal Tax Account. If anything does not look right with their NIC record, employees should contact HMRC's NIC team to discuss their concerns. Independent financial advice may be appropriate before making voluntary contributions.

 

This article reflects the position at the date of publication (14 March 2023). If you are reading this at a later date you are advised to check that that position has not changed in the time since.   

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