I have a nine-year NI record, so only just miss out on a state pension – how can I top it up? Steve Webb replies
I have been told I can’t have a state pension because I have only nine years of contributions. I was born in March 1953. I am still working at the moment.
I was told I just missed the 10 years. Please can you advise me if I can do anything to change this?
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Retirement planning: I have a nine-year NI record, so only just miss out on a state pension
Steve Webb replies: For much of the time that the state pension system has been in operation there has been a minimum level of contributions which had to be made before any pension could be paid.
Until 2010 there was a requirement to have contributions for at least 25 per cent of your working life, and since 2016 the rule has been that you must have at least 10 years of contributions or credits.
Only for those reaching pension age between 2010 and 2016 was there no minimum level of contributions.
As a man born in March 1953 you come under the new state pension as you reached state pension age in March 2018.
As you are just one year short of the minimum number of contributions required to get any state pension, you could look for gaps in your NI record that could be filled by paying one year of voluntary contributions.
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Until April 5 2023 you can go back to any year from 2006/07 onwards, and if you only have nine years in the system you must have at least one gap year since then. I’m assuming that you were living in the UK and eligible to pay National Insurance for the year in question.
In principle, this could be a very attractive thing to do. Voluntary National Insurance contributions are already very good value for money, but if they make the difference between getting a pension and not getting a pension then they become even more valuable.
To show how this works, consider someone such as yourself who has 9 years of contributions and no pension. One extra year of voluntary ‘Class 3’ NICs currently costs just over £824. But buying one year would take your state pension from zero to 10/35 of the full rate.
This would give you a weekly pension of £52.90 or an annual pension of around £2,750. In short, you would get your money back within a year.
If you have other gaps, you could also consider topping them up. Although the impact would not be so dramatic (for example, you would go from 10/35 of the full rate to 11/35 of the full rate by buying one further year) this could still be good value.
Before paying any money, you should talk first to the DWP ‘Future Pension Centre’ which can explain your options.
As well as talking to the DWP, there are a few other things to think about before going ahead.
The first is to check whether there would be a knock-on effect on any benefits you might receive once you are no longer working.
If you have no state pension and have little other income coming into the household, I would imagine you might find yourself on a benefit such as pension credit.
If so, then it may not be a good idea to spend money topping up your state pension. Any increase in your pension would result in a reduction in your pension credit and you may be no better off overall.
The second thing to check is whether you were entitled to any National Insurance credits for past years which are not showing on your record.
To give one example, if the reason you had a gap was that you were looking after a child and getting child benefit then you may be able to get NI credits.
Or if you were signing on and claiming a benefit such as Jobseekers Allowance, you should get credits for that period.
Obviously, if you can fill a gap via a credit rather than paying for a year of NI contributions, then that would make more sense.
You can find a comprehensive description of all the different NI credits which are available in a guide which I wrote here.
Finally, if the reason you only have 9 years of contributions is that you came to the UK relatively late in your working life and you have made contributions in another country, there are some situations in which this could help to satisfy the ‘10-year rule’.
The rules are complex and it depends which country you worked in, but there is more information here.