Tackle confusion over NICs and state pension entitlement, says ATT

Voluntary NICs are commonly used by individuals seeking to fill gaps in their National Insurance record to protect or increase entitlement to the state pension and certain contributory benefits.

Responding to an HMRC call for evidence, the ATT said voluntary NICs provide a fair and proportionate way for people with genuine gaps in their contribution history to protect their state pension entitlement. However, it believes the current system could do more to help individuals make informed decisions.

The Association highlighted concerns that people can find it difficult to establish whether paying voluntary contributions will actually increase their entitlement, whether credits are already available to them for certain years, or whether they have time to accumulate sufficient qualifying years before retirement.

Jon Stride, chair of the ATT’s Technical Steering Group, said:

"Many people understandably want to maximise their state pension entitlement, particularly as retirement finances come under increasing pressure.

"Paying voluntary national insurance contributions can be an effective way of filling gaps in a contribution record, but the decision is not always straightforward. People need clear, accessible information so they can understand whether making a payment will benefit them and whether there may be alternative options available.

"Greater personalisation and clearer explanations would help taxpayers make informed decisions and provide reassurance that they are taking the right course of action."

The ATT said individuals and their agents should be able to establish easily whether a voluntary payment is advisable, whether it is likely to increase pension entitlement and whether national insurance credits or other alternatives may be available.

Notes for editors:

1. ATT response: Call for Evidence: Voluntary National Insurance contributions.