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Should I buy state pension top-ups or am I wasting my money? STEVE WEBB replies Has your pension question been answered? Read Steve Webb's replies Most popular Steve Webb columns on the state pension: The 14 hot topics By STEVE WEBB FOR THIS IS MONEY Updated: 02:00 EDT, 31 March 2025 e-mail View comments I have been reading what you say regarding National Insurance contributions and I'm unsure which way to proceed. I was going to pay to fill in the gaps in my state pension which is a few hundred pounds. I went online and did the forecast for 2030 when my pension is due and it says I have the maximum forecast of £221.
20. Is it worth me paying for gaps if I have the maximum forecast for my pension or would I be just wasting money? Steve Webb replies: As regular readers of This is Money will know, we have repeatedly flagged the potential gains from making voluntary NI contributions to top up your state pension. For many people this can be excellent value-for-money, providing a relatively low-cost way of increasing your state pension through retirement.
A round-up of our latest state pension top-ups coverage including on the 5 April deadline is here. However, as your question demonstrates, not everyone should be rushing to top up. In this week's column I will run through five examples of situations in which paying voluntary NI could prove to be a waste of money.
Got a question for Steve Webb? Scroll down to find out how to contact him 1. You're going to get a full pension in any case When you obtain a state pension forecast it should tell you how much pension you have built up to date (based on your NI record up to April 2024) and what you could get if you continue to contribute up to pension age. If your online forecast shows that you have *already* reached the standard figure of £221.
20, based on contributions to date, then paying extra contributions would not add to this figure and would be a waste of money. Similarly, if your forecast says that you have not reached the flat rate figure yet but are set to do so by the time you retire, then there may be no point filling gaps. For example, if you are going to be working and paying NI until pension age (or will be getting NI credits each year) and if the website shows that this will get you to the full rate, then buying extra years is unlikely to be worthwhile.
I should stress that it is perfectly possible to have gaps in your record but still get a full new state pension. Someone starting work at 18 and drawing a pension at 66 could have a potential working life of 48 years but may only need 35 years for a full pension. Just because you have gaps, it doesn't mean you must fill them or that you would necessarily benefit from doing so.
2. You could deprive yourself of benefit by doing so At present rates, the full new state pension is £221.20 per week and the pension credit line for a single person is £218.
15 per week. This means that someone with a full new state pension and no other additional needs (such as a disability) will not be entitled to pension credit. However, someone with (say) 34 years of contributions will get 34/35 of the full rate which is £214.
88 – less than the pension credit level. If you qualify for pension credit you will also get a winter fuel payment, cold weather payments when it is below freezing, a 'warm home discount' on your electricity bill, a free TV licence from age 75, full help with rent and council tax and other benefits on top. It may be tempting for someone short of the full flat rate to buy voluntary contributions to get them up to the full state pension figure.
But if they have little or no other income, they need to be careful that they are not costing themselves more in lost benefits than they gain in a higher pension. Read More Buying state pension top-ups: Everything you need to know 3. Your gap is due to not claiming child benefit since 2013 Many thousands of families responded to the introduction of the High Income Child Benefit Charge in 2013 by deciding not to claim child benefit.
But for a non-working parent this can mean missing out on the NI credit that would come with receipt of child benefit for a child under 12. Such years could show as a gap on your record and it may be tempting to fill them while you can. However, the Government has recently confirmed that it will be creating a new class of NI credit for people in precisely this situation.
Assuming that these plans go ahead, you could find that you have wasted your money paying voluntarily for years since 2013 if you are going to get a credit in any case. 4. Your gap is before 2016/17 and you were in a workplace pension for many years Due to the complicated way in which the new state pension is worked out, it is quite possible that filling older gaps in your record may have no impact on your state pension entitlement.
This is most commonly the case where you spent many years as a member of a 'contracted out' workplace pension. In this case, you paid a reduced or 'contracted out' rate, and this means that a deduction is made from your state pension rights up to 2016. Whilst post 2016 contributions can gradually 'burn off' this deduction, pre 2016 contributions do not.
You should therefore make sure that you have checked – either via the HMRC app or by speaking to the Future Pension Centre – that any additional contribution will actually increase your pension *before* you hand over any cash. Read More Has Steve Webb answered YOUR pension question? Search his previous replies 5. You could apply for an NI credit for the year in question It is obviously cheaper to get a free year on your NI record in the form of an NI credit than to pay voluntary NI for that year.
Some NI credits should be automatic (like those for people receiving Universal Credit or Carers Allowance), but others need to be claimed. Two credits to be aware of in particular are as follows. 'Grandparents credits' (or 'specified adult childcare credits' as they are more formally known) – if you are under pension age and have been looking after a child so that their parent can go out to work, they may be able to transfer to you the NI credit they get for receiving Child Benefit.
This is because they don't need the credit if they are working and paying NI themselves. At the moment you can still claim for any year back to 2011/12, when the scheme was introduced. 'Carers Credits' – even if you are not getting Carers Allowance , provided that you are spending 20 hours per week or more looking after a disabled person in receipt of certain disability benefits, you can apply for NI credits.
I would stress that for many people, voluntary NI contributions remain a valuable option. But I hope I have demonstrated that this is not true in all situations, and you should explore all your options first before assuming that voluntary NI is right for you. Ask Steve Webb a pension question Former pensions minister Steve Webb is This Is Money's agony uncle.
He is ready to answer your questions, whether you are still saving, in the process of stopping work, or juggling your finances in retirement. Steve left the Department for Work and Pensions after the May 2015 election. He is now a partner at actuary and consulting firm Lane Clark & Peacock.
If you would like to ask Steve a question about pensions, please email him at [email protected] .
Steve will do his best to reply to your message in a forthcoming column, but he won't be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.
Please include a daytime contact number with your message - this will be kept confidential and not used for marketing purposes. If Steve is unable to answer your question, you can also contact MoneyHelper, a Government-backed organisation which gives free assistance on pensions to the public. It can be found here and its number is 0800 011 3797.
Stev e receives many questions about the state pension and 'contracting out'. If you are writing to Steve on this topic, he responds to a typical reader question about the state pension and contracting out here SIPPS FOR DIY PENSION INVESTORS 0.25% funds fee Online dealing starting from £1.
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35% Flexible retirement options Affiliate links: If you take out a product This is Money may earn a commission. This does not affect our editorial independence. > Compare the best investing platform for you Share or comment on this article: Should I buy state pension top-ups or am I wasting my money? STEVE WEBB replies e-mail Add comment Some links in this article may be affiliate links.
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We do not allow any commercial relationship to affect our editorial independence. Comments 0 Share what you think No comments have so far been submitted. Why not be the first to send us your thoughts, or debate this issue live on our message boards.
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