Near state retirement age? Topping up NI contributions may buy £190 extra state pension a year for life

5th December 2013


Those approaching the state retirement age will be offered the chance to top up their state pension by making extra national insurance contributions.

Those who reach state pension age before 2016 will be able to pay in around £700 in extra class 3A contributions. That in turn should allow them to receive an extra £190 a year for life. That represents a quite remarkable return on their investment and clearly one not available from any pension firm. Although the full details of the scheme have not been published, it looks likely that pensioners would have to live just four years to make such a contribution worth their while.

The Treasury statement says: “The Autumn Statement document said: “The government will introduce a scheme to allow current pensioners, and those who reach State Pension age before the introduction of the new single tier pension, an option to top up their Additional State Pension record through a new class of voluntary National Insurance contributions.

“The scheme will be introduced in October 2015 and will be time limited. The details of the scheme will be set out closer to the time of implementation, with the price of the new class of National Insurance being set at a broadly actuarially fair rate. The government will legislate for this scheme at the earliest available opportunity.”

Currently pensioners can pay additional NI contributions to qualify for a full state pension if they have not worked enough years.

Andy James, head of retirement planning at advisory firm Towry Law says: “There is some welcome news for those at or approaching retirement, that they can make voluntary national insurance contributions to boost their overall state retirement income. This will allow those who don’t qualify for the full amount of new simplified flat rate pension, being introduced in April 2016, to make contributions that could help them in later life.

“While this scheme will undoubtedly help those who see the opportunity to add to their retirement pot just prior to retirement itself (or soon after retiring, where their funds are hopefully still sizeable), the devil will undoubtedly be in the detail. This scheme is not set to be introduced until October 2015, and given the various changes that have affected pensions over the past few years, and the fact that we have an election between now and then, don’t be surprised if the exact details of implementation are not concluded for some time to come”.



1 thought on “Near state retirement age? Topping up NI contributions may buy £190 extra state pension a year for life”

  1. GrumpyOldMan says:

    OK, but how does this relate to an individual(me!) who is still paying National Insurance contributions, and have done for 42 years. I have to continue to pay even though I get no benefit out of it and to cap it all I am due to retire in November 2015. As far as I can see this is state sponsored mugging and to get a larger pension I will have to find another £700 on top of the (by then extra 7 years) contributions paid! There are those that have made no provision at all getting a far higher pension.

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