HMRC issues three month warning over pension pots

London: People are getting a heads-up that they have until April 5 to make the most of a government scheme. This lets them buy top-ups for their state pension from as far back as 18 years. After that date, the chance to reclaim those top-ups will be limited to just six years.

These top-ups are all about making up for National Insurance payments that folks might have missed. To get the maximum state pension, you usually need around 35 full years of NI contributions.

But life happens, right? Many people miss out during their working years. HMRC pointed out that this could be due to low earnings, not claiming benefits when unemployed, or even working abroad.

If someone wants to buy back a full year of missing NI payments, it costs £800. This can boost their pension by £330 a year, so they could get that money back in under three years. For example, a man living to 85 could see a return of £5,400, while a woman living to 87 might get around £6,100. And if you buy back multiple years, those numbers really add up.

You can buy back up to 13 years of missing contributions, which would set you back £10,400. It sounds like a lot, but the potential benefits for those who live into their 80s are huge.

Over a lifetime, the maximum pension boost could reach £74,100—£70,200 for men and £79,300 for women, based on life expectancy. In 2024, HMRC and DWP even launched a handy online tool to help people check for state pension gaps and make top-ups easier.

HMRC keeps track of National Insurance records, so it’s important to check for any gaps in your state pension. They also handle the payments for top-ups. Meanwhile, the DWP is responsible for updating pension forecasts after purchases.

But there are some worries about how this top-up system works. Some people have paid hundreds of pounds for top-ups and then waited months, or even years, to see their pension increase.

Take Lynne Cole, for example. She’s 71 and paid over £800 in early 2023 to buy top-ups going back to 2006. Nearly two years later, she still hadn’t seen a boost in her state pension, even after her MP tried to help.

It wasn’t until This is Money stepped in that she finally got a £530 back payment and a weekly pension increase of about £7.70. Lynne was frustrated, saying, “I’ve been going around in circles for almost two years. It’s ridiculous. You wouldn’t believe it.”

A government spokesperson reassured everyone that there’s still time to make voluntary contributions before April 5, 2025. They said HMRC and DWP are working closely together to manage demand, especially with deadlines approaching.

They also apologized to Lynne for the service she received, promising to resolve any errors as quickly as possible.