Are You Maximising Your State Pension?

by | Mar 13, 2023 | Commentary & Insights | 0 comments

The Opportunity

There has been a lot of press recently about the opportunity to fill gaps in your National Insurance (NI) record back to 2006. This opportunity is available until 5 April 2023, so if you want to take advantage of it, you will need to act fast.

The reason this opportunity has come about is that in 2016, the UK government changed the rules around the State Pension. Previously, you needed to have 30 years of NI contributions to qualify for the full amount of Basic State Pension.  However, on 6 April 2016 the Government introduced the New State Pension and abolished the earnings-related elements that used to sit alongside the Basic State Pension (called at various times SERPS or S2P).

One advantage of the new system is that is it simpler, with just one element, but complications arise because most people’s NI records straddle both regimes.

Broadly speaking, the number of years needed for a full New State Pension is 35. However, there are instances where someone has accrued 35 years but is still not entitled to the full amount. In many cases this is because someone was contracted-out of the earnings-related part of the old State Pension at some time in their career. A one-off deduction to their entitlement was made at the point of change in 2016 to reflect the fact that they (and their employers) had paid less National Insurance over the years and so the person would have received a lower State Pension under the old system (with a separate pension being built up elsewhere).

They then had the opportunity to add further years in the new, post-2016 system until State Pension age to bring themselves, potentially, right back up to the maximum new State Pension.

From April 2023 the New State Pension will be £203.85 per week. Each year added will credit 1/35th of £203.85, or £5.82 a week, to your State Pension entitlement, up to a maximum of £203.85.

This is where the opportunity to fill in gaps in your NI record comes in, and not just those back to 2016. If you have any years from 2006/07 where you didn’t make NI contributions, you can pay to fill those gaps and increase your total number of years of contributions.

After 5 April 2023, this opportunity to fill gaps before 2017/18 will no longer be available so if you have any gaps in your NI record that you want to fill, you need to do so before that date.


Men born after 5 April 1951 and women born after 5 April 1953 will be most likely to benefit. More broadly, those who have had breaks in their employment history, such as those who have taken time off to care for children or family members, or those who have been self-employed and not made regular NI contributions could benefit from topping up now.

If you think you might be eligible, we strongly recommend you call The Pension Service on 0800 731 0175 as a matter of urgency. They will tell you exactly how many years you need to buy, and confirm which are the cheapest.

From 6 April 2023, you will only be able to go back six years. In addition, the cost of filling each year will be increasing.

The Value

Why is this potentially so valuable? Well, as an example, if you topped up the last five years before 5 April 2023, it would cost you £4,069 and would result in an increase of £29 per week, or £1,508 per annum, to your state pension entitlement. This is an effective return of 37% per annum and, assuming a normal life expectancy, very attractive.

Even if you are not eligible to top up at this point in time, it’s still worth checking that you contribute going forwards. For those with limited companies, it is important to draw a salary sufficient to credit your NI record. For those who have retired early, it is worth considering making voluntary contributions annually or prior to state pension age to ensure you get the full state pension.

If you would like to discuss maximising your state pension entitlement, please email your Wealth Manager or call 01326 210131 to make an appointment. 

Written by Philip Feast


General Disclosures: This article is based on current public information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The information, opinions, estimates and forecasts contained herein are as of the date hereof and are subject to change without prior notification. It does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The price and value of investments referred to in this research and the income from them may fluctuate. Past performance is not a guide to future performance, future returns are not guaranteed, and a loss of original capital may occur.

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