Top-up, anyone?

It might seem like forever until you retire, but it’s important to plan for the day when it actually happens.

In our experience, many people fund their retirement income through a range of sources, maybe through their own pension income, possibly some investment income as an example and normally the State Pension.

As you might know, State Pension income is based on your National Insurance contribution (NIC) record when you reach State Pension age. A full State Pension at the moment (tax year 2018/19) should provide income of about £164.35 gross per week (£8,546 gross pa). The benefit is paid gross, but it's taxable and more can be found here: https://www.gov.uk/new-state-pension/what-youll-get

Individuals would normally need at least 10 qualifying years on their National Insurance record to receive any new State Pension under the new rules which came into effect on 06 April 2016. A higher State Pension may be payable if you would have been entitled to a certain amount of Additional State Pension under the old rules.

For those without a National Insurance record before 06 April 2016, 35 qualifying years of National Insurance contributions will be needed to receive the full new State Pension.

It's good to check your State Pension entitlement to make sure you're on track for the maximum entitlement and you can do this here: https://www.gov.uk/check-state-pension

If there is a shortfall in your NIC records, it might be possible to top this up, and currently the costs of topping up National Insurance contributions for the tax years 2006/07 to 2015/16 are set at favourable rates.

However, it is important to note that these concessionary rates expire on 05 April 2019 and so it could cost more to top up missing years after this date.

One pension provider, Royal London, has looked at this position further and notes that those considering topping up their State Pension should check that doing so will actually boost their State Pension. This may not always be the case because of transitional rules.

The national press has recently reported on this position and an example of one of these articles can be found here: https://www.theguardian.com/money/2019/jan/19/top-up-your-state-pension-now-to-beat-april-price-increase

Planning for retirement, and leaving as much time as possible to consider your options, is important, and the SaidSo team can help and support you in this process.