Make the most of your state pension by ensuring there are no gaps in your NI contributions
When I wrote my recent state pension guide, I was surprised to find that it helped me boost my own state pension, let me explain how.
Because I am a self employed business owner, I engage my accountant to file my tax return, I could do it myself, but I feel I have better uses of my time and I believe, that because they file 1000’s each year, they will have a better understanding of the allowances I can claim, and cannot.
When I completed my state pension guide, which explains how the basic state pension works, how you qualify and how you can check your entitlement, I thought it would be wise, to ‘walk my talk’, as I do with everything I share, and go through the process myself.
So, I logged into the government gateway, which I must say I found fairly easy to follow and I had no hiccups. When I get to the stage where I looked at my contribution history, I was shocked to find that from about 1998/99 to 2003/04 I had insufficient contribution history – basically this means I did not pay, or qualify (these are different) for national insurance benefits.
I knew this would not be right, I feel the pain when I pay my taxes each year and if you earn enough to pay income tax, you earn enough to qualify for national insurance credits, so I contacted my accountant who acted for me at the time for some evidence, you see you only ‘need’ to retain documentation for six-years, so being an efficient person, I’d discarded this information, you can’t be expected to keep everything forever, or should we? Thankfully my accountant had it archived.
Well after the January tax return rush had passed, they kindly send me copies of my tax return’s, which I will now, follow my guide’s process and send these off to HMRC to, hopefully, be credited with my national insurance credits, I am duly owed, for these years.
The message I want to share with you from this is that if a Certified Financial Planner, a professional in the business can have gaps like this, when I do this everyday, could you? Check out your own national insurance contribution history, before it may be too late, you can obtain a free copy of my guide by clicking here www.warrenshute.com/state-pension-guide
Now is a great time to ensure you fill in any gaps in your national insurance history, to ensure you obtain the full state pension. At present anyone who receives state pension after April 2016 have until April 2023 to fill in any gaps between 2006/7 and 20015/16, and doing this before 5th April 2019 (when rates get set to £15 a week) will be able to benefit from especially favourable rates.
For example, buying one week of national insurance contributions for 2010/11 currently costs £12.05 or £626.60 for the year. After 5 April 2019 this will cost £780, an extra £153.40. Buying the extra year can increase your state pension by more than £244 for the rest of your life, meaning a yield of almost 40%.