Top up your national insurance
Mar 20, 2009
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You can get a pension worth more than £35,000 for a little over £400, says Jennifer Hill in The Sunday Times, but you must act by 5 April. About 70% of women and 15% of men don’t get the full basic state pension because they have not paid enough national insurance contributions (Nics). However, you can buy additional years at £421.20 a year until the end of the 2008-2009 tax year, at which point the figure jumps to £627.60.
Women with nine years’ Nics stand to benefit most. You need at least ten years’ Nics to get any state pension at all – this will get you 26% of the full £90.70 a week (£23.58). Buying an index-linked pension of £23.58 a week on the open market would cost £35,240.
Even if you have ten years’ worth, topping up can be worth it. The cost of an annuity to generate income comparable with buying a year’s extra state pension entitlement varies from £2,711 and £4,066. But buying back years is not suitable for everyone. And from April 2010 you will need only 30 years’ Nics for a full basic state pension – so don’t buy years you don’t need.
To check your Nics record, call HMRC on 0845-915 5996.