31 July: an important deadline for pension provision

If you have gaps in your national insurance contributions (NICs) record, then 31 July should be marked on your calendar.

The introduction of the new state pension in April 2016 was one of the most significant reforms to state benefits in decades. If you did not reach state pension age before 6 April 2016, there were two important adjustments to rules relating to pension entitlement and NICs:

The period of NICs (including any credits) required to obtain a full pension was increased from 30 tax years to 35 tax years; and
The corresponding minimum period for entitlement to any pension benefit moved from just one year to ten.

Voluntary NICs

These changes left some people worse off, particularly those with contribution records of under ten years. To mitigate the effects, the government relaxed the rules permitting voluntary NICs to be made to fill in any missing years. These had normally only been payable for a maximum of the previous six tax years, but a temporary extension of the backdating period was introduced to allow voluntary contributions to cover the years from 2006/07 onwards. This concessionary payment period was meant to end on 5 April 2023, after which voluntary contributions could only have been made to cover periods from 2017/18 onwards.

Extended Pension Provision Deadline

As is often the case with financial deadlines, publicity in the form of press stories and subsequent public awareness both arrived late in the day. However, when it did appear, there was a tsunami that the Department for Work and Pensions and HMRC had not anticipated. On 7 March, the government was forced to announce that the payment deadline would be extended to 31 July 2023. In addition, the Treasury said that all voluntary contributions would be payable at 2022/23 rates – a useful perk when the main voluntary rate (Class 3) was raised by 10.1% for 2023/24 to £907.40 a year.

Last Opportunity

It seems unlikely that there will be any further extension of the voluntary deadline beyond 31 July. If you have any gaps in your NIC record between April 2006 and April 2017 – even if you have now passed state pension age – now is probably your last opportunity to fill them. However, it will not always be beneficial to make the top up, so you should seek advice before making any payments.