HM Revenue and Customs (HMRC) has seen a further surge in the amount of voluntary National Insurance contributions being paid, as Britons rush to boost their state pension.
Voluntary (Class Three) contributions can help people who have gaps in their National Insurance record and can’t claim National Insurance credits.
This can help them to build up a full state pension entitlement.
In the year to March 31, 2023, a total of £392million was paid in voluntary contributions, compared with £212million in the same period to March 2022.
Voluntary (Class Three) National Insurance contributions could help to boost a person's state pension
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A total of £172million was paid in voluntary contributions, in the year to March 2021.
One reason for the surge in contributions has been the deadlines for filling gaps beyond the normal six years people can backdate, pensions expert Steve Webb has suggested.
Sir Steve, partner at LCP, said: “The surge in voluntary payments of National Insurance Contributions highlights the great opportunity which they present.
“At best, voluntary NICs are a relatively cheap way of boosting your state retirement pension and represent excellent value for most people.”
Under normal rules, it’s only possible to fill gaps for the past six years, however, a special concession allowed savers to backdate to 2006/07.
The deadline for this was April 5, 2023, however a surge in contributions just before the deadline led to significantly higher demand on the phone lines.
As a consequence, the deadline was extended to July 2023, and then to April 2025.
Former pensions minister Sir Steve Webb said for most people, voluntary National Insurance contributions represent “exceptionally good value” as they are subsidised by the Government.
People who pay for previous years are currently charged £15.85 per week or £824.20 to fill a full historic gap year.
It typically adds 1/35th of the full state pension rate, which equates to around £300 per year.
Voluntary National Insurance contributions do not always increase a person’s state pension, and it is crucial people check they would benefit before they make any payments. They should also check to see if they can get National Insurance credits beforehand.
Customers can check their National Insurance record, which could be done online, to see what gap years they have, how much they would need to pay, and by when, to make a gap year into a full qualifying year.
People who want to make Voluntary National Insurance contributions and haven’t reached state pension age will need to first phone the Future Pension Centre to find out about filling gaps.
To subsequently get a reference number for payments, customers need to contact HM Revenue and Customs (HMRC).
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Steve Webb said for most people, voluntary National Insurance contributions represent “exceptionally good value” as they are subsidised by the Government
LCP
Those who have reached state pension age already would need to call the Pension Service.
While extra staff are answering phone calls and correspondence, there have been complaints from contributors about problems getting through on the phone.
While the Government has vowed to set up an online version of the system, but this hasn’t yet gone live.
Sir Steve said: “Too many people have had problems getting through on phone lines or getting their NI records updated.
“The government urgently needs to streamline this process so that more people can benefit.”
A Government spokesperson said: “There is no general delay in the processing of payments.
“The vast majority of voluntary contributions paid result in records being updated within days, though some particular complex cases requiring specialist caseworkers can take longer to resolve.
“A new online service to allow people to see if making voluntary contributions would increase their state pension, and then make any payments, is expected to be ready later this financial year.
“The government has extended the deadline to April 5, 2025 to give taxpayers more time to fill gaps in their National Insurance record and help increase the amount they receive in state pension.”
