EASY LIFE
‘Finally’ cries Martin Lewis as new tool can help anyone aged 45-70 who risks missing out on up to £30,000
Plus we reveal everything you need to know about topping up
MARTIN Lewis has shared his reaction after a long-awaited tool has "finally" been launched by the government.
Today, HMRC revealed that the highly anticipated online tool to help people top up their National Insurance contributions is now available.
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The online service is designed to simplify how you check and pay for voluntary NI contributions.
These contributions are essential to making sure you get the maximum amount of state pension currently worth over £11,000 a year.
It's called the Check Your State Pension Forecast and is a joint service by HMRC and the Department for Work and Pensions (DWP).
Customers will see how much their State Pension could increase by buying contributions and details of the voluntary NI contributions they would need to pay to achieve this.
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It also allows most people under State Pension age to view gaps in their NI record and pay voluntary contributions to fill those gaps if it will benefit them.
Consumer champion Martin Lewis has been calling for this online service to be introduced since last year.
It was originally expected to launch before the end of the 2023/24 financial year.
Posting on X, formerly known as Twitter, he said: "Finally the govt has launched its long-promised online tool for topping up your state pension NI years... though not everyone can use it."
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What are the different types of pensions?
Martin is referring to the fact that pensioners won't be able to use this initial launch version of the tool if they're already getting their state pension or they're looking to fill gaps from when they were self-employed or working abroad.
As it stands there isn't an update as yet on when a version that can do those things will be available.
The news today comes after a government scheme that allowed people to fill in gaps in their history as far back as 2006 was set to end in April 2023 before being extended to July last year.
The move was due to DWP phone lines being jammed in the run-up to the initial deadline.
Callers were finding it increasingly difficult to get through but Martin Lewis was among those who warned it's still worth the wait as some people could "boost their pension pot by £10, £20, £30,000 in total."
The hold-up is largely the reason the new end-to-end digital service has been introduced, to alleviate the volume of calls.
In June last year, the deadline for the scheme was extended again to April 5, 2025.
You might have holes in your record for various reasons, like if you took time out to raise children.
If you don't fill in the gaps you could end up missing out on the full state pension when you retire, which as of this month, is worth £221.20 a week or £11,501 a year.
It takes 35 "qualifying" years of NI contributions to get the full new state pension and at least 10 years to get anything at all.
Currently, you can backfill holes from 2006 to 2016.
After April 5 next year, you'll only be able to backdate payments by up to six years.
This scheme only applies to people who reached (or will reach) state pension age after April 5, 2016.
What is National Insurance?
NATIONAL Insurance is a tax on your earnings, or profits if you're self-employed.
These contributions make you eligible for things like the state pension and certain benefits.
You'll usually pay National Insurance Contributions (NICs) when you're over the age of 16 and earning a certain amount.
For example, if you earn £1,000 a week, you pay nothing on the first £242.
Earn over that and you pay 10% on the next £725 - so £72.50. Then you pay 2%o on the rest, so £33, which works out as 66p.
For the self-employed rates are slightly different.
You can also get something known as National Insurance in some circumstances when you're not working, for example when you have kids and claim certain benefits.
NICs are usually taken automatically by your employer and paid to HMRC, so you don't need to do anything.
You can see how much NICs you pay on your wage slip.
Anyone working for themselves usually has to pay NICs themselves when completing a self-assessment tax return.
What we know so far about the new tool
You can access it through the 'Check your State Pension forecast' page on Gov.uk.
It's also available through the HMRC app, which you can download free on the Apple App Store and Google Play Store.
You'll need to log in using your Personal Tax Account login details. If you don't already have an online HMRC account, you can register at Gov.uk.
It shows you how much your state pension could increase by and what NI years you'll need to buy to achieve this.
You'll then be able to pay for these missing years securely online, without having to call up separately.
You need to pay for these in full – you can't pay in instalments.
You can't use the online service if you're already getting your state pension or if you're looking to fill gaps from when you were self-employed or working abroad.
Until this becomes possible, you can still buy missing NI years by ringing up – see below for more info.
If you're applying to pay voluntary 'class 2' or 'class 3' NI contributions for periods you've lived or worked abroad, you may be able to submit an application digitally.
Steve Webb, former pensions minister and partner at LCP, said that the new tool could be a "big step forward".
He said: "Until now people have had to battle through on two different phone lines – one to check with DWP which years they can top up and then one to HMRC to get a reference number to make a payment.
"It must be a step in the right direction to be able to do all of this without hanging on a telephone.
"However, simply getting your NI record updated by HMRC is only half of the story."
Steve explained that the DWP then has to reassess your state pension entitlement based on your improved contribution record.
Adding: "There are already too many cases where people wait months or longer to get their pension figure revised.
"It is vital that the government puts in place new capacity at DWP to process all of these changes, otherwise they will simply have created a new bottleneck in the system."
How does the state pension work?
AT the moment the current state pension is paid to both men and women from age 66 - but it's due to rise to 67 by 2028 and 68 by 2046.
The state pension is a recurring payment from the government most Brits start getting when they reach State Pension age.
But not everyone gets the same amount, and you are awarded depending on your National Insurance record.
For most pensioners, it forms only part of their retirement income, as they could have other pots from a workplace pension, earning and savings.
The new state pension is based on people's National Insurance records.
Workers must have 35 qualifying years of National Insurance to get the maximum amount of the new state pension.
You earn National Insurance qualifying years through work, or by getting credits, for instance when you are looking after children and claiming child benefit.
If you have gaps, you can top up your record by paying in voluntary National Insurance contributions.
To get the old, full basic state pension, you will need 30 years of contributions or credits.
You will need at least 10 years on your NI record to get any state pension.
How to top up National Insurance contributions and how much you can get
In some cases, buying back missing years can be really valuable.
But, earning back the years isn't free so your voluntary contributions do come at a price.
If you're filling gaps between 2006/07 to 2015/16 you'll be paying the 2022/23 rates for contributions.
It works out to be worth £15.85 a week which means it costs £824.20 to buy one year of contributions.
As the state pension was £185.15 per week in 2022/23, this boost would add £5.29 per week or around £275 per year.
Although you'd have to pay £8,242 (10 lots of £824.20), the annual state pension boost would be around £2,750.
Someone who was retired for 20 years would get back around £55,000 in total (before tax).
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Anyone who tops up their record after April 2025 will pay those rates.
If you're currently unable to use the new online tool, or you'd prefer to talk to someone on the phone, you can still call up to find out more information about your NI record and to pay for missing years.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
Plus, you can join our Facebook group to share your tips and stories
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