AJ Bell expert Tom Selby has the answers to your retirement questions
Thursday 31 Jan 2019 Author: Daniel Coatsworth

Stephen says:

‘I’m 63 and a little short on what I need for retirement, so looking to boost my income in any way I can. I understand you can increase the value of your state pension by purchasing National Insurance credits – is that correct?’

Tom says:

It is possible to boost the value of your state pension by ‘topping up’, but only if you are filling in gaps in your National Insurance record. Indeed, for some people there is a limited-time opportunity to benefit from special, cheaper rates.

Here’s how it works. The amount of state pension you will receive depends on your National Insurance contribution record. Anyone reaching state pension age after 5 April 2016 is eligible for the flat-rate state pension, currently set at £164.35 a week (rising to £168.60 a week in 2019/20).

To qualify for the full flat-rate state pension you need to have a 35-year National Insurance record, with deductions made for every year missing. At current rates you’ll receive a £4.70 per week deduction (1/35th of £164.35) for every year of missing National Insurance.

Anyone with a National Insurance record of 10 years or less will not be eligible for the state pension at all.

If you’re covered by the new state pension system you can buy missing National Insurance credits from 2006/07 onwards. You need to do this before 6 April 2023, at which point any gaps will have to be filled within six years.

For the current tax year buying a week of missing National Insurance costs £14.65, rising to £15 in 2019/20. However, cheaper rates are available for previous tax years going back to 2006/07 – but you must claim these before 6 April 2019.

The applicable rates are as follows:

2006/07 to 2009/10: £13.25

2010/11: £12.05

2011/12: £12.60

2012/13: £13.25

2013/14: £13.55

2014/15: £13.90

2015/16: £14.10

If we take the 2010/11 rate as an example, buying one year of extra state pension – worth £4.70 a week in retirement – would cost £626.60 before 6 April 2019. After this point it will cost £780.

At either price the increase in value to your state pension – which will be paid for the rest of your life – is likely to represent good value for money.

However, before you jump in make sure that buying extra National Insurance credits will increase the value of your state pension. Complicated rules introduced as part of the switch from the old system to the new system mean this will not always be the case.

You can do this by contacting the DWP Future Pension Centre here. For more information, I’d also recommend this detailed guide from Royal London. 


Send an email to editorial@sharesmagazine.co.uk with the words ‘Retirement question’ in the subject line. We’ll do our best to respond in a future edition of Shares.

Please note, we only provide guidance and we do not provide financial advice. If you’re unsure please consult a suitably qualified financial adviser. We cannot comment on individual investment portfolios.

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