Cost of making up NIC gaps set to rise

Pension experts have warned that special rates on voluntary National Insurance Contributions (NICs) will expire at the end of the tax year.

If you're thinking about paying voluntary NICs to fill past gaps in your contribution record, you should do it before 6th April, Royal London said.

Under the current rules, anyone who comes under the new state pension system (those reaching pension age after 5th April 2016) can fill gaps in their NI record for any year from 2006/07 to 2015/16 at especially favourable rates, ranging from £12.05 to £14.10 per week.

But these concessionary rates expire on 5th April 2019. After that date, the normal rate for buying back one week of NI contributions will be £15.

As a result, making back-payments to cover those same years could cost several hundred pounds more in total.

"For many people, topping up their state pension through paying voluntary NICs can produce a good rate of return because the cost of doing so is subsidised by the government," said Steve Webb, director of policy at Royal London. "But the price of voluntary NICs will rise sharply in April so those considering doing so may wish to act quickly and could save hundreds of pounds by doing so."

Anyone considering topping up should check that doing so will actually boost their state pension, as complex transitional rules mean that this will not necessarily be the case, Royal London noted.

You can do this by contacting the DWP Future Pension Centre or by speaking to a financial adviser.