Martin Lewis has issued an urgent warning to people under 73 about a crucial six-month deadline to boost their state pension.
The money saving expert emphasised that this opportunity, which closes in April 2025, could be “the most lucrative thing” many can do, potentially gaining thousands of pounds in retirement income.
Lewis explained that for each £825 or less spent on buying National Insurance years, individuals could gain over £5,400 in their state pension. Some may even benefit by £10,000s.
In the latest MoneySavingExpert’s Money Tips Email, the founder said: “While boosting your State Pension doesn’t sound sexy, this is about big money,”
To check eligibility and take action, Lewis advised two crucial steps.
Firstly, individuals should check their National Insurance record to identify any missing full years since 2006. Partial years can often be topped up for as little as £20 to count as a full year.
Secondly, people should check if they’re due to receive the full state pension. If not, and there are gaps in the NI record, the goal is to explore options for filling these gaps.
Lewis emphasised the importance of checking for free National Insurance credits before making any payments
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Lewis emphasised the importance of checking for free National Insurance credits before making any payments.
These credits can potentially save thousands of pounds and may be available for various circumstances, such as claiming certain benefits or providing childcare.
The money saving expert recommended contacting the Future Pension Centre or Pension Service helpline for personalised advice.
The ‘new’ state pension was introduced in 2016 for men born after April 5, 1951 and women born after April 5, 1953. To receive the full amount, individuals need approximately 35 qualifying National Insurance years. And for any state pension at all, Britons need 10 qualifying years.
However, many people have gaps in their NI records due to various reasons such as living abroad, low incomes, or career breaks.
Transitional arrangements from 2016 allowed individuals to buy back years to 2006, rather than just the usual six years. These arrangements were set to end in April 2023 but were extended twice due to high demand.
The current deadline of April 2025 was intended to allow time for an online system to be developed. However, HM Revenue & Customs has admitted that the online tool won’t work for everyone, potentially leading to increased phone demand as the deadline approaches.
Given the looming deadline and potential high demand, Lewis stressed the importance of acting quickly. He said: “The deadline’s half a year away, but the process ain’t quick, so start now.
“Don’t delay. Today you can buy missing years back to 2006, soon it’ll only be to 2019.”
He shared a success story from a reader named Cheryl who was able to add thousands to her state pension after buying back years.
She wrote: “Thank you so much for making the nation aware of the National Insurance buyback. I’d been unaware my 36 years didn’t entitle me to a full State Pension (some had been contracted out).
“I’ve now paid for seven extra years, which will gain me £40,000 – £50,000 depending on lifespan. A huge thank you.”
The financial expert emphasised that while the concept might not sound exciting, it can result in significant financial gains for many.
Martin Lewis outlined five key steps to determine if buying NI years is worthwhile:
- Check your NI record and state pension forecast.
- Investigate if you can plug NI gaps for free, potentially saving thousands.
- For missing years from 2006 to 2018, decide soon if buying is beneficial.
- Consider your age: those near state pension age may benefit most, while those under 45 might not need to act.
- Evaluate the cost-benefit ratio: a full year costs up to £825 but can add £329 annually to your state pension.
Lewis said: “Each extra NI year typically adds £329 annually to your state pension. So even for a full year, it’d pay you back after two and a half years of State Pension – after that, it’s profit.”
He advised tailoring decisions based on individual circumstances and seeking professional guidance if unsure.
