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Our resident pensions expert deals with a query about accessing this entitlement
Thursday 05 Nov 2020 Author: Tom Selby

My wife turned 65 in August, which I believe is before the state pension age increased to 66 (in October)? She was also born
in Japan but became a British citizen after living in the UK for more than 14 years. She has recently applied for a small pension from Japan.

After checking her National Insurance (NI) contributions, she only has seven years’ NI contributions and currently will not receive a UK state pension. However, she does have the option to pay additional voluntary contributions making this up to a maximum of 14 years. I have checked this informally (over the phone) with HMRC and the Pension Advisory Service.

I worry about parting with such a large amount and my questions are:

• Should she have qualified for the state pension at 65 or is 66 correct?

• Making the additional contributions seems to be a good choice (she is in excellent health) - are there any pitfalls to look out for and how do we pay? When is the latest we can pay (funds are currently invested)?

Matt 


Tom Selby AJ Bell Senior Analyst says:

Let’s start with your wife’s state pension age (if she were to qualify for the UK state pension). As I’ve mentioned in this column before, the state pension age has been rising since 2010 and now stands at 66 for men and women. It is expected to rise to 67 by 2028 and 68 by 2039.

Anyone born from 6th October 1954 onwards now has a state pension age of at least 66. As your wife was born in August 1955, she will therefore become eligible to receive the state pension on her 66th birthday in August 2021.

The ‘new’ full flat-rate state pension is worth £175.20 a week
in 2020/21, but to qualify for this you need to be a UK resident and have a 35-year National Insurance (NI) contribution record.

You need at least a 10-year NI record to qualify for any state pension (although a deduction will be made if you have an NI contribution record lower than 35 years). They do not have to be 10 qualifying years in a row.

Note that you can usually only pay for gaps in your NI record from the past six years. However, as your wife was born after 5th April 1953, she has until 5th April 2023 to pay voluntary contributions to make up for any gaps between April 2006 and April 2016.

The rate for ‘Class 3’ NI in 2020/21 is £15.30 a week, so if your wife needed to buy exactly three years of missing NI at this rate it would cost £2,386.80.

The main things to consider before going down this road include your wife’s current NI record and whether buying extra NI will increase her state pension entitlement and your wife’s health.

Before going ahead you should contact the Future Pension Centre to double-check buying extra NI will boost your wife’s state pension. You should also consider speaking to a regulated financial adviser to discuss the available options.

If you do want to go ahead, you can buy Class 3 NI credits online here


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