Money expert Martin Lewis is urging people aged 40 to 73 to check if they could add as much as £100,000 to their state pension before a deadline in April.
Martin returned to his The Martin Lewis Podcast on Thursday with an urgent deadline for anyone who needs to boost their state pension eligibility which can be worth ‘tens of thousands’ and maybe even £100,000 in some circumstances.
Martin Lewis says: “These can add literally tens of thousands of pounds to the amount you will get in your state pension. It is the most lucrative subject I’ll talk about and is a must listen for anyone between the ages of 40 and 73. It is going to be complex…but it’s absolutely worth it.”
Martin said each year of your National Insurance in your record counts towards your eligibility for the state pension. He explained that you need to have earned at least £6,393 in each year to get a NI record for that year, or in some other circumstances you can get a free year added, such as for being a carer.
You need about 35 years in your records to qualify for a full state pension payout when you retire – which is set to be £230 a week from April. If you have less than 35 full years in your National Insurance records, you could get given less than the full amount per week. The good news is this can be topped up by buying missing NI years in your records, either before or after you retire, but the bad news is that 13 years currently available to buy records for will be removed from the buyback scheme in April.
So if you are missing years, now is your last chance to boost your NI records and max out your pension if you need to buy back one of the 13 years between 2006 and 2019, Martin said.
Martin added: “This is important to understand this is all about the new state pension which started in April 2016. That means it applies to any men born after April 5, 1951, so maximum age would be 73 currently, and any women born after April 5, 1953, so the maximum age is 71.
“When the new state pension was launched in 2016, there were transitional arrangements put in place that allowed you to buy back any missing years to 2006. They were due to end in April 2023, but because a certain person went everywhere telling everyone to check if they were missing certain years at the time, it busted the system, not enough people could do it in time and yes I was to blame.”
After another extension and the same happening again, Martin said it is unlikely to be extended again.
Martin added: “13 years of National Insurance is disappearing, that’s why this is so crucial.
“13 years can be equal if you have a typical life expectancy to about £100,000 if you were missing them, hence the importance of the urgency of this deadline.”
To check if you’re missing the years, you go online to check gov.uk and check your National Insurance Record.
Then you get a list of your records and it shows you any gaps.
If you’re missing a full NI year, it costs about £800 to buy back, but you are likely to get more than the cost back over the years.
Martin added: “For those who have to pay £800 for a full year, you get £330 a year extra pension if it makes the maximum difference.
“Therefore the break-even point is two and a half years of state pension which the vast majority of people will get.”
If you lived for 22 years after retiring – taking you to the typical life expectancy for a woman – and you got £330 extra per year for all 22 years, multiplied by 13 missing years, it would cost you about £10,400 to buy all 13 missing years but you would gain £94,380 extra in your pension.
The Martin Lewis Podcast is available to listen to via BBC Sounds, Spotify and Apple Music.
