Lifestyle Financial PlanningRetirement PlanningAAM Maximise UK State Pension

Act now to Maximise your UK State Pension

If you have gaps in your national insurance contributions, you can pay voluntary contributions to maximise your State Pension entitlement.

You may be able to pay Class 2 contributions which are around 80% less expensive than Class 3 contributions, if you meet the following requirements:

  • You have at least 3 years of National Insurance Contributions
  • You have lived in the UK for 3 years in a row
  • You were working full time overseas in the tax year for which you wish to pay the voluntary contributions

Topping up your state pension through paying voluntary NI contributions can produce a good rate of return, because the cost of doing so is subsidised by the government.

The full new state pension is £175.20 per week (rising to £179.60 in April 2021), and requires at least 10 qualifying years paying NI contributions, though they do not have to be consecutive years. This means 10 years in work paying national insurance, getting NI credits if unemployed, ill or a parent or carer, or paying voluntary NI contributions

If you do not have sufficient qualifying years you can pay voluntary contributions to catch up. There are 2 types of voluntary contributions: Type 2 and Type 3.

The type of contributions you will pay depends on your current and past work history:

If you are Living and Working full time outside the UK you can pay class 2 contributions but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.

If you are Living outside the UK but are not working full time you can pay Class 3 contributions but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.

The rates for the 2020 to 2021 tax year are:

£3.05 a week for Class 2

£15.30 a week for Class 3

You usually pay the current rate when you make a voluntary contribution.

When you shouldn’t top up

Those with more than 10 years of contributions should first check whether doing so will boost their state pension.

This is because not everyone will benefit, as when HMRC works out your new state pension it uses two calculations – what you would have got under the “old rules” as at April 2016, and what you would get under the new rules from April 2016. Your state pension as at April 2016 is based on the higher of these two numbers.

Many people will retire with a pension largely based on the old rules, especially those who “contracted out” of the state earnings-related pension scheme (SERPS), and so paid less national insurance.

Paying voluntary national insurance contributions now, for years before April 2016, might not boost your basic pension because you may already have the 30 years needed under the old rules and adding more won’t count towards SERPS.

For example, someone who already had a 32-year NI record may find no point buying a missing year such as 2010/11 because they would still only get an old-style full basic pension plus SERPS.

Those who are already set to get more than the full flat rate amount, perhaps because they have a lot of SERPS entitlement, also needn’t bother topping up.

The first step is to check your national insurance record and get a State Pension forecast. You can do this online at

Once you have your forecast, to check if buying back an extra year will boost your pension, contact the DWP Future Pension Centre on +44 191 218 3600. They are open from Monday to Friday, 8am to 6pm UK time.




This article is intended for general circulation and for information purposes only. It may not be published, circulated, reproduced or distributed in whole or part to any other person without prior consent of AAM. This article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed wealth manager regarding the suitability of the investment product before making a commitment to purchase the investment product. Whilst we have taken all reasonable care to ensure that the information contained in this article is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this article is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data. AAM Advisory Pte Ltd is licensed by the Monetary Authority of Singapore, FA Licence no 100032.