Over 40? Buy National Insurance to boost your State Pension by thousands

National Insurance (NI) is a critical component of the UK social security system, designed to fund state benefits like the State Pension, maternity allowances, and certain unemployment benefits.

For most working adults in the UK, NI contributions are automatically deducted from their paychecks each month if they earn above a specific threshold. However, there are situations where someone may need to consider “buying” or making voluntary contributions to ensure they qualify for future benefits.

Currently, there is a fantastic opportunity which anyone over 40 should consider: until 5 April 2025 you can purchase additional years of NI that you may have missed between 2006 and 2016.

For some, purchasing additional years could boost their state pension by thousands of pounds! But there is a time limit on buying back years – so read on to find out whether buying additional NI is right for you.

Why Buy National Insurance?

The full UK State Pension is currently £221.20 a week. To qualify for it, you generally need 35 qualifying years of contributions. So how much you actually get depends on how many years of full NI you have paid. There is the ability to buy back up to six years – as well as the current time-limited arrangement which lets you fill any gaps going back to 2006.

Depending on your circumstances and employment history, there are some compelling reasons to consider buying extra years that you did not pay previously:

Filling Gaps in Your Record

If you have gaps in your National Insurance record—perhaps due to periods of low or no income, time spent abroad, or other reasons—you may not receive the full pension amount. Voluntary contributions can help bridge these gaps.

Self-Employment or Freelance Work

If you are self-employed you’ll be paying a different class of National Insurance (Class 2 or 4), which may not cover all benefits. Making additional voluntary contributions, usually Class 3, can help you access more comprehensive coverage.

Living or Working Abroad

If you’re a UK citizen who lives or works abroad you might miss out on contributing regularly to their National Insurance record. Buying contributions can help maintain your eligibility for UK benefits despite living outside the country.

Types of National Insurance Contributions

There are four classes of NI contributions, but those considering voluntary contributions typically focus on Class 3:

Class 1: Paid by employed individuals through payroll deductions.
Class 2: Paid by self-employed individuals, generally lower than Class 1.
Class 3: Voluntary contributions, typically for those filling gaps in their NI record.
Class 4: Paid by high-earning self-employed individuals, based on annual profits.

Is Buying National Insurance Right for You?

If you’re nearing retirement and close to reaching the required years, purchasing missing years can make a lot of sense – and potentially add thousands to your future pension. However, voluntary NI contributions aren’t always necessary or beneficial for everyone.

Younger people or those with significant work ahead might not need to buy contributions yet.

If you’re a man born before 5 April 1951 or a woman born before 5 April 1953 then you are on the old State Pension and don’t need to worry about buying additional years of NI.

Another caveat is if you claim Pension Credit. For those claiming this additional financial boost, it may also not be beneficial to buy additional NI years: it could push you over the Pension Credit threshold and mean that you lose this extra money plus the special discounts and bonuses it entitles you to.

It’s always wise to seek financial advice or consult with the UK government’s Pension Service before making any decisions.

How to Buy National Insurance

Check Your NI Record

Before making any payments, check your National Insurance record via the UK government website. This will show any gaps in your contributions.

Decide on Voluntary Contributions

If you have gaps and want to ensure eligibility for the full State Pension, consider buying Class 3 contributions. Each year of Class 3 contributions has a cost (around £824.20 as of recent years) but can have long-term benefits for your pension.

Make Payments

Once you’ve decided, you can make payments online, by bank transfer, or by post. It’s essential to keep track of payments and confirm they’ve been added to your record.

If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk.