The relaxation of top-up rules for the UK State Pension has an end date…. so what should you do before the deadline?
What is the state pension top-up deadline?
Normally, you can backdate your credits by up to six years, even if you no longer live in the UK .
You could do this by a one-off top-up payment and effectively “buy” a qualifying year retrospectively up to a maximum of 6 tax years.
However, the rules were relaxed a few years ago when the government put up the state pension age. This meant that you can plug any gaps in your NI record to as far back as 2006.
However, this relaxation of the rules lasts only until 5th April 2025.
Therefore if:
- you are a man born after the 5th April 1951
- or
- a woman born after 5th April 1953
and you want to plug any holes in your NI record dating back to 2006, you have a little over six months left before that extended window closes.
Why top up your State Pension
You may have a significant gap in your contributions and want to see if you can close that in order to receive the maximum State Pension.
It currently costs around £825 to buy an additional year of Class 3 NI contributions, and this would give you an extra £302 a year in pension income at today’s rates. That means you’ll have got your money back after three years of taking your pension.
This is just a guide, though, and you’ll need to make a judgement based on your own personal situation.
If you have already built up 35 qualifying years, or if you’re on track to have done so by the time you retire, you might decide it’s not worth voluntarily buying any additional years.
How can we help
We speak to all our clients about their State Pension Forecast and can offer a free mini report on the impact of buying back years.
Contact us to arrange a free review of your state pension forecast.
Please bear in mind that if you want to go ahead with any top-ups, you’ll have to take action yourself.