National treasure alert – Martin Lewis is right, you need to check this
You’ve gotta love Martin.
Fighting the good fight and genuinely doing his best to ensure the great British public get their fair share and don’t miss out. He’s a national treasure but what about your treasure?
You know, the pension you’ve been carefully squirrelling away ever since you were employed?
Wait, you’re self-employed now…OK, that’s harder than ever but hey, at least there’s the safety net of the State Pension.
Well, the problem is, for a lot of people, there are some “gaps” in earnings and there’s only a short window right now in which you can fill these gaps. These gaps also mean there’s an opportunity to turn £800 into £5,500 according to our Martin, which is technically true but is a tad trickier than the headline-grabbing alchemy suggests.
It all comes down to something called “Transitional Arrangements” which is very dull but essentially it means you CAN go back and fill in any lost national insurance contributions to top up your future nest egg but you have only got a small window here.
Like, April 5th small. (ed – as of April 2023 – this got extended to 5th April 2025)
Loads of people are affected by this, either by gaps in employment, low income, not claiming certain benefits or…being self-employed. If you have been self-employed any time in the last 15 years or so, you may not have earned enough money to pay towards the Class 2 National Insurance. For example, if you had low profits, you are exempt from paying it or were due to pay it by the 31st January and did not pay your tax bill on time.
If you didn’t have any self-employed income above a certain threshold, then it’s likely you have not paid into the national insurance system that will give you your state pension.
Right NOW, you can go back to 2006 to make up any years you are missing for your state pension. You can even have a nosey online and see what national insurance credits you’ve got and if the year is full or not.
Handy links below.
The thing is, by the time you come to retire, you need to have at least 35 qualifying years of national insurance contributions. Most people don’t worry about it because their PAYE and their salary is over the threshold to make sure they’re paying into that pot. But self-employed folk often don’t have this certainty, especially in the Performing Arts and
especially over the last couple of years!
So at the moment, yes, you can go back to 2006 and ask for them to give you a fee of how to make up any missing years.
But from April 2023, the time limit for making voluntary contributions to update all your years is back to the normal six years. You can only go back to 2017, (2018 once we hit the 6th of April 2023). So what do I do to save my treasure hoard Louise? (Edit – Special arrangements means you can still go back to 2006 until 6th April 2025).
Right, all you need to is log onto your personal tax account and have a look at the national insurance section
You’ve probably never noticed it but it’s there and right now, their phone lines will be ringing so crack on with this please guys and girls. From there you can open each year.
It may say “full” in which case, a small victory dance of smugness if permitted.
Of course, it may not.
If it says a year is not full, it may give you an approximate amount of how much you have to pay to make that year full. It is often something like £16 a week and this is where Martin is conjuring his alchemy from.
The thing is, you could be looking at rather than an expensive bill if you have a number of years to complete but at least be aware of this and act if you can.
Do this now.
1. Check your National Insurance record to see if there are any shortfalls.
2. If you have shortfalls, the system will say how many more years of contributions you can make, but that’s only for National Insurance. It’s not to increase your pension. So there
is another section on your personal tax account that shows you your pension forecast.
3. Go into that and you will be able to see how many years you’ve got that are completed contribution years, and then it will tell you how many more years you need to contribute
to get to the full state pension.
Loads of folk actually opted out of the State Pension in the ‘80s so you are not alone.
Just remember that the clock is ticking on this one, so if you need to go back to 2006, you must get everything in place and pay it by the 5th of April 2023.
Otherwise, you can only go back six years.
Now let’s go find some treasure.