To receive any UK state retirement pension on retirement after 5 April 2016, you need at least ten complete years on your National Insurance Contribution (NIC) record. The full state pension is paid to those who have 35 or more complete NIC years.
You may not receive the full pension if you were contracted out of the second state pension or State Earnings Related Pension (SERPs) for part of your working life. You can check how much state pension you are due to receive on gov.uk under ‘check state pension’, or through your personal digital tax account. We can help you with this.
It is possible to plug gaps in your NIC record by paying voluntary class 2 or class 3 NIC. This payment generally needs to be made within six years of the gap year, but there are a number of exceptions which extend that period.
You may also qualify for NI credits for some years if you were claiming state benefits, child benefit or were a foster carer. The NI credits were not always applied automatically, so it’s worth checking your own NI record.
If you attained state pension age before 6 April 2016, you can boost the value of your state pension by up to £25 per week by paying voluntary class 3A NIC. You choose how many extra £1/ week units to buy, and make a lump sum payment determined by your age at the time you make the payment.
This is like buying a state-backed annuity but, unlike most annuities, the amount payable is identical for men and women, and there is no adjustment for the health of the annuitant. This opportunity to pay class 3A NIC closes on 5 April 2017.
As with any investment, you should consider other uses for your money and the returns you could achieve elsewhere.