State pension news: How to boost your retirement income by £55,000 - 'Act NOW or lose it'

A state pension scheme could help boost income by £55,000
A state pension scheme could help boost income by £55,000

Brits could boost their retirement income by £55,000 with a state pension scheme

Published

A “generous” state pension scheme could help people boost their retirement income by £55,000 after filling in historic gaps in their National Insurance record.

But those Brits whose National Insurance record doesn’t currently reflect what is needed for the full state pension need to be quick as the scheme ends in less than three months.

Under current rules, people usually need 35 years of qualifying NI contributions for a full new state pension, and some may get less if they were contracted out before April 6, 2016.

Pensioners will need to be quick to fill their historic gaps as the scheme ends in April
Pensioners will need to be quick to fill their historic gaps as the scheme ends in April

The Government scheme allows people to fill historic gaps in their record as someone with 10 missing years could pay a little over £8,000 to fix the gaps but could see a boost of £55,0000 - before tax - over a typical 20-year retirement, according to Lane, Clark, Peacock.

Normal rules only allow Britons to fill gaps up to six years after the year in question.

After this, the year would become a permanent gap in a record and as a result could stop somebody from building up a full state pension by retirement age.

The oldest year which could be filled is 2016/17 but for a limited time, some people will be able to go back further for any year from 2006/7 onwards.

Those who come under the new state pension system can check with the Future Pension Centre about topping up their state pension for earlier years until April 5, 2023.

The Government has urged people to check with the Future Pension Centre as there are some situations in which paying historic contributions would not boost state pension at all.

Brits can benefit from the pension scheme by fixing gaps in their NI contributions
Brits can benefit from the pension scheme by fixing gaps in their NI contributions

Sir Steve Webb, LCP partner and former pensions minister, said: “For many people, paying voluntary NI contributions can be great value for money and can help them boost their state pension in a cost-effective way.

“For people with gaps in their NI record going back more than six years, the window to fill those gaps will soon close.