To ensure that our clients receive the best possible retirement benefits, we ask each client to provide us with a state pension forecast. Recently, we had a client who had made contributions to the State pension scheme for over 40 years. At first glance, the client appeared to have qualified for the full State pension as they had over 35 contributory credits.
However, upon closer inspection, we discovered that the client had worked for a company that had a contracted-out pension scheme. As a result, when the client retired around six years ago, they did not receive any additional credits towards their state pension. The projection for their state pension was only £146 per week, which falls short of the maximum State pension of just over £2,000 per annum or £40 per week (indexed linked).
To rectify this, we worked out the contribution necessary to increase the client’s pension to the maximum amount. The cost came to £5,140, which may seem like a significant amount of money. However, if the client were to purchase an indexed linked annuity of £2,000 per annum at the age of 65, it would cost six times that amount.
The UK government has responded to concerns raised by members of the public regarding the deadline for voluntary National Insurance contributions. In order to provide taxpayers with more time to fill gaps in their National Insurance record and increase the amount they receive in State Pension, the government has extended the deadline to 31 July 2023. This extension was announced via a Written Ministerial Statement on 7 March 2023.
According to HM Revenue and Customs (HMRC), anyone with gaps in their National Insurance record from April 2006 now has more time to decide whether to fill the gaps to boost their new State Pension. The HMRC urges taxpayers to take advantage of this opportunity and not miss out. It is important to note that any payments made will be at the lower 2022 to 2023 tax year rates.
As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions to any incomplete years in their National Insurance record between April 2006 and April 2016. This measure was put in place to help increase the amount they receive when they retire. However, due to an increase in customer contact and concerns raised by members of the public, the government has extended the deadline to ensure that taxpayers have adequate time to make these voluntary contributions.
This move by the UK government demonstrates its commitment to ensuring that taxpayers are able to plan effectively for their retirement and receive the State Pension they are entitled to. By extending the voluntary National Insurance contributions deadline, the government is giving taxpayers more time to take control of their financial future and make informed decisions about their retirement planning. Taxpayers need to take advantage of this opportunity and fill any gaps in their National Insurance record before the new deadline of 31 July 2023.
Here is the link https://www.gov.uk/check-state-pension
We are committed to helping our clients make the most of their retirement and are always looking for ways to improve their pension benefits. By providing our clients with detailed forecasts and analysis, we can help them make informed decisions about their retirement savings and secure their financial future.
If you wish any assistance on this matter, please feel free to contact me.