Top up your national insurance
Mar 20, 2009
Print this article
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.
Related articles
-
By Tim Bennett, Aug 28, 2009
-
By Laura Henderson, Aug 28, 2009
FREE - MoneyWeek's latest money-saving tips
For no-nonsense, practical advice on saving money and managing your finances, sign up now to our free weekly email, MoneyWeek Saver. Written by personal finance expert Ruth Jackson, these tips could save you hundreds, even thousands, of pounds!
Sign up FREE to MoneyWeek Saver here.
