In the 2022/23 tax year the maximum amount of State Pension you can receive is £185.15 per week.
This amount is on the condition that you have 35 years of National Insurance contributions or credits.
You need at least 10 years of National Insurance contributions to qualify for any State Pension at all.
You may have gaps in your National Insurance record due to being unemployed.
What are voluntary National Insurance contributions?
If you do not have 35 years of National Insurance Contributions then you do have the option to pay for additional years in order to receive a higher amount of State Pension per week.
How much are voluntary State Pension contributions?
The cost of paying voluntary contributions depends on when the gaps in your record were.
In the 2022/23 tax year, the standard cost of buying ‘Class 3’ National Insurance contributions is £15.85 for a week of contributions which is £824.20 for a year.
However, the rate for different tax years does vary. For example, if you are looking to fill gaps in the 2021/22 tax year, the cost was £15.40 per week; or in 2020/21 tax year, the cost is £15.30 per week.
A financial adviser at Four Wealth Management can let you know how much it will cost you for the years you are missing contributions.
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When will paying voluntary National Insurance contributions pay off?
Paying voluntary National Insurance contributions is often good value for money.
If you take income from your pension for more than three years then you will recover your initial voluntary contribution amount and anything you receive after three years will be profit, meaning it will have been worth you paying the voluntary contributions to top up your state pension.
Find out what option is best for your circumstances?
Pension and retirement rules are complex. To find out if it is worth you paying voluntary National Insurance contributions, you can book a no-obligation meeting with one of our financial advisers. This can be at your home address, at our Bristol or Cirencester office or on zoom. They will let you know all of your options and create a plan for your income at retirement to help make sure you have sufficient income for the lifestyle you hope to have.
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The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief generally depends on individual circumstances.
