24 March 2025
Even for those who have a private pension, the state pension can play an important part in delivering the lifestyle you want in retirement. The full rate of the new state pension (for the tax year 2024/2025) is £221.20 per week, that’s just over £11,000 a year. However, how much you receive depends on how many ‘qualifying’ full National Insurance (NI) years you have. You need at least 35 years of NI contributions in order to receive the full amount – if you’ve made between ten and 34 years of contributions, you’ll only receive a proportion of that full amount.
Shazna Bishop, financial planner at RBC Brewin Dolphin said, “There are many reasons why someone might not have made the full 35 years of contributions. You may have taken a break from work – to look after children, for example – or you may have lived and worked abroad for some of this time.”
Fortunately, the government allows individuals to make voluntary NI contributions (NICs) to fill any gaps in their record – these are typically Class 3 NICs. The cost of filling the gaps depends on the rate charged in those years. In 2024/25, for instance, the charge is £907.40 for the year, whereas it’s £800.80 for 2021/22.
Shazna said, “The benefits of topping up can be significant. Filling in a missing year will usually boost your state pension by 1/35th of the standard rate. That works out around £329 a year based on the full level of state pension in 2024/25. Over a 20-year retirement, that would add up to an extra £6,000 – all in exchange for a payment of just £907.40 (based on the cost for 2024/25).1”
The deadline for making payments is 5 April 2025. The lookback period will also revert to only six years after this date. Normally the lookback period for making missed payments is six years but currently these payments can be retroacted to 2006, when the ‘new’ State Pension was introduced, due to the high volume of those making back payments in previous years. However, anyone who is unable to make contact with the DWP ahead of the April 5 deadline can use an online call-back request form. People who submit a call-back request by the 5 April deadline will still be able to pay voluntary National Insurance Contributions back to April 2006, after the deadline has passed.2
However, it’s essential to first establish if you can make voluntary payments and whether it will be worth doing so. There are various scenarios where buying voluntary NICs might not be beneficial – for example, if you were ‘contracted out’ of the additional state pension before 2016.
Shazna Bishop said, “The first port of call is to get a state pension forecast. The easiest way to do this is through the Government Gateway. This will show you what your expected pension will be, where there are any gaps and the cost of filling them. From there you can decide the best way forward.
People will have their own reasons for not checking. They may have assumed they’re getting the full amount or assumed they’re not getting the full amount and have left it at that. But making such assumptions can result in a significantly reduced state pension.
When we talk to clients about retirement – probably the most important question is what income they think they’ll need to maintain the lifestyle they want. We then break down the different sources they’ll get their income from. One of the sources, obviously, is the state pension.”
-ENDS-
Disclaimers
- The value of investments can fall and you may get back less than you invested. Information is provided only as an example and is not a recommendation to pursue a particular strategy.
- This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
- Neither simulated nor actual past performance are reliable indicators of future performance.
- Information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.
- Information is provided only as an example and is not a recommendation to pursue a particular strategy.
- Forecasts are not a reliable indicator of future performance.
RBC Brewin Dolphin is a trading name of RBC Europe Limited. RBC Europe Limited is registered in England and Wales No. 995939. Registered Address: 100 Bishopsgate, London EC2N 4AA. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
® / ™ Trademark(s) of Royal Bank of Canada. Used under licence.
PRESS INFORMATION
For further information, please contact:
Siân Robertson: Sian.Robertson@brewin.co.uk / Tel: +44 (0) 20 3201 3026
Payal Nair payal.nair@brewin.co.uk / Tel: +44 (0) 20 3201 3342
Georgia Embrey Georgia.embrey@rbc.com / Tel: +44 (0)7704 667 842
NOTES TO EDITORS
ABOUT RBC BREWIN DOLPHIN
RBC Brewin Dolphin is one of the UK and Ireland’s leading wealth managers and traces its origins back to 1762. With £57.6bn* billion in assets under management, it offers award-winning, bespoke wealth management services, including discretionary investment management and financial planning.
Its qualified investment managers and financial planners are based in over 30 offices across the UK, Jersey and Republic of Ireland, with a commitment to high standards of client service, long-term thinking and absolute focus on clients’ needs at the core.
As part of Royal Bank of Canada (RBC), RBC Brewin Dolphin is now able to draw on the strength of a global financial institution to enhance the services it provides to clients and to drive further innovation across the business.
*as at 31st October 2024.
ABOUT RBC
Royal Bank of Canada is a global financial institution with a purpose-driven, principles-led approach to delivering leading performance. Our success comes from the 98,000+ employees who leverage their imaginations and insights to bring our vision, values and strategy to life so we can help our clients thrive and communities prosper. As Canada’s biggest bank and one of the largest in the world, based on market capitalization, we have a diversified business model with a focus on innovation and providing exceptional experiences to our more than 19 million clients in Canada, the U.S. and 27 other countries. Learn more at rbc.com.
We are proud to support a broad range of community initiatives through donations, community investments and employee volunteer activities. See how at rbc.com/peopleandplanet.
[1] https://www.bbc.co.uk/news/articles/c99n1550510o
[2] https://www.which.co.uk/money/pensions-and-retirement/state-pension/can-i-top-up-my-state-pension-aVwgx1p28af4