Q. I’m a retired teacher with a small occupational pension at the moment. I retired early due to ill health. My current NI contributions credit me with some time for raising my children, now adults - however, I fall short of the full State Pension by three years. Now I am busy looking after an elderly relative’s grandchildren in my retirement. I have a bit of cash I could invest. What are my options in making up those years please?
A. Nathan Long, pensions expert at Hargreaves Lansdown says:
Start by working out if you’re eligible to top up your State Pension. Usually it’s only possible to pay extra catch up contributions to cover gaps in the last six years (ie from the 2011/12 tax year onwards). So if you weren’t working, weren’t earning enough to pay National Insurance (NI) or weren’t being credited with National Insurance contributions in the last six years, you may be able to catch up.
However, even if this is not the case, additional options to catch up may be possible depending on how old you are:
- Some women born after April 5, 1953 (it’s different for men) can make contributions to cover gaps between April 2006 & April 2016 although this opportunity ends on April 5, 2023.
- If you were born before 6th October 1952, you can make voluntary contributions to increase your State Pension for up to 6 years after you reached your State Pension age.
If it turns out you’re eligible, you must then consider if further contributions make sense. Generally speaking you get a good deal when buying extra State Pension, but of course you must be aware that while a higher guaranteed income is attractive, you will lose the flexibility that comes with holding money as cash.
You mention that you’re looking after elderly relatives & grandchildren, so you should be aware that you may be eligible to receive NI credits which would award you with additional years of NI contributions. There are a number of situations where someone will either qualify for NI credits automatically or be able to claim them, including being on Employment Support Allowance or Carer’s Allowance and being a grandparent (or other family member) caring for a child under 12.
- Find out more about the so-called Grandparents' Credit.
- The Government's website provides more information on NI credits.
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