A savings expert has issued an ‘urgent’ warning to Brits to check their National Insurance contributions amid a ‘ticking £6k time bomb’.
With over 27 million workers reportedly paying National Insurance (NI) contributions in the UK amounting to over £177.7 billion a year, the stakes are high for securing a comfortable retirement.
To qualify for a state pension and ensure financial stability in retirement, most people will need to accumulate 35 years of NI contributions. However, many may not be aware of potential gaps in their contributions that could affect their pension entitlements.
Kevin Mountford, co-founder of the online savings platform Raisin UK, emphasized the importance of checking National Insurance records to identify and fill any gaps. Gaps in your National Insurance record could mean you will not have enough years of contributions to claim full State Pension or even qualify for some benefits,” Mountford warned.
From now until April 2025, individuals have the opportunity to pay to plug National Insurance gaps dating back to 2006. However, starting from April next year, voluntary contributions will only be accepted for the past six tax years.
Mountford highlighted the potential financial benefits of boosting National Insurance contributions, stating that a full-year class 3 contribution at £824 could yield £328 per year towards a pre-tax pension, potentially adding up to over £6,000 before retirement.
To assess whether purchasing missing National Insurance years would be beneficial, individuals are advised to check both their National Insurance record and their State Pension forecast on the Gov.uk website.
Raisin UK also shared data revealing a contribution gap between men and women. Women, especially those with children, are at risk of falling behind on National Insurance contributions, potentially resulting in an extra year of working life. According to Raisin UK’s data, over 43 million women may be behind on their National Insurance contributions by around £2,572.
In light of these findings, periodic review of National Insurance records is essential to ensure a secure financial future and a better pension.
For further information and guidance on National Insurance contributions and pension planning, individuals are encouraged to seek advice from financial experts and utilize available online resources.
