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It does cost £907 to add an extra year of voluntary contributions – though partial years are cheaper. For that amount you’ll get an extra £5.82 added to your weekly state pension. That’s £302 per year, or £6,052 over a 20-year retirement.
You could break even within a few years: paying an extra year of voluntary contributions means that as long as you live at least three years after state pension age you’ll get your money back.
It’s especially good value when you think that the state pension rises each year, becoming even more valuable over time.
Sounds straightforward? But there’s often confusion over whether paying these extra contributions is worthwhile, which years to opt for, and difficulties doing so due to recent poor service from the Department for Work and Pensions (DWP).
Generally, voluntary contributions are limited to only the previous six tax years, but there is currently a temporary window open until April 2025 allowing people to buy NI credits to fill in any gaps between tax years April 2006 to April 2016.
You can check your National Insurance record here: – you will need a Government Gateway user ID and password.
Helen Morrissey of Hargreaves Lansdown, said: “It is really important to check with the DWP whether you will benefit from buying voluntary credits, as there may be cases – for instance, periods when you qualified for something like Child Benefit or Universal Credit, which come with a National Insurance credit. If this is the case, then you may be able to backdate a claim.”
Gauging how much state pension you should be getting paid can be tricky. The widely publicised figures detail the “full” amount, but there are various reasons why you might get more or less than this.
Variations can be down to your National Insurance record, the date at which you retired (this will dictate whether or not you receive the “new” state pension amount), as well as other variable such as whether you “contracted out”, whether you’re receiving a spouse’s state pension payments, and whether you started receiving state pension payments as soon as you became eligible for them.
This complication has meant that thousands of people are being underpaid the state pension each year without even knowing it. Government errors that have come to light over the past few years meant that in 2022 alone meant that more than £500m in retirement income went unpaid.
While the Government is working to rectify some of these errors, the process of identifying those who are owed money, and getting the money to them has been very slow. Therefore, it’s worth taking steps to find out how much you should be receiving, and what to do if it turns out you’re not being paid as much as you should.
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