March 22, 2025
By Merranti

Will You Get a Full State Pension?

As you approach retirement, it’s essential to check how much state pension you will receive. You can do this by logging into your personal tax account on GOV.UK, which also provides details about your NICs record, tax liabilities, and other financial information.

Qualifying for the Full State Pension

To receive the full state pension, you must have 35 years of National Insurance Contributions (NICs).
You need at least 10 years of NICs to qualify for any UK state pension.

Planning Points for Your NICs Record

Filling Gaps in Your NICs Record

You can pay voluntary Class 3 NICs to fill missing years, generally within six years of the gap.
Special Extension:
- Men born after 5 April 1951 and women born after 5 April 1953 can backdate NICs to 6 April 2006.
- Deadline: This opportunity closes on 5 April 2025—act now if you wish to fill in older gaps.
- Discounted Rate: Voluntary NICs can be paid at the 2022/23 rate (£15.85 per week) instead of the current £17.45 per week.

Self-Employed NICs Credits

In 2024/25, self-employed traders earning over £6,725 (rising to £6,845 in 2025/26) receive NIC credits automatically, even though they do not have to pay Class 2 NICs.
Those earning below this threshold can choose to pay voluntary Class 2 NICs, which is cheaper than Class 3 NICs and still counts towards state pension eligibility.

Claiming NICs Credits for Certain Years

If you claimed state benefits, Child Benefit, or were a foster carer, you may qualify for NICs credits.
Important: Some credits were not automatically applied, so it’s worth checking your NICs record via your GOV.UK personal tax account.

Personal Pensions – Maximising Tax Relief

Pensions remain one of the most tax-efficient ways to save for retirement due to:

Tax relief on contributions at your marginal tax rate.
Tax-free growth within the pension fund.
The ability to take a tax-free lump sum at retirement.

Annual Allowance (AA) & Contributions

The Annual Allowance (AA) is £60,000.
If your adjusted income exceeds £260,000, the AA is tapered by £1 for every £2 over this limit, down to a minimum of £10,000 for those earning £360,000+.
Unused AA can be carried forward for three years, meaning any unused allowance from 2021/22 must be used before 5 April 2025.

Planning Points for Pension Contributions

Maximise Pension Contributions for Higher Tax Relief

If your income falls between £100,000 and £125,140, pension contributions reduce taxable income, allowing you to claim effective tax relief of 60%.
Higher-rate (40%) and additional-rate (45%) taxpayers should consider making extra contributions before the end of the tax year.

Flexible Access to Pension Funds

From age 55, you can access your pension flexibly, with no limit on withdrawals.
However, withdrawals above the tax-free lump sum are taxed as income.

Spouse & Child Contributions

If your spouse or child has no earnings, you can contribute up to £2,880 per year, and HMRC will add basic rate tax relief of £720, bringing the total to £3,600.

Beware of Pension Scams

Pension scams are increasingly common, and falling victim to one could mean losing your pension pot and facing tax penalties from HMRC.
Always seek regulated financial advice before making any changes to your pension.

Take Action Now

Check your state pension forecast via GOV.UK.
Top up missing NICs before 5 April 2025 if you qualify for extended back payments.
Maximise pension contributions for tax efficiency and retirement planning.
Be cautious of scams and seek professional advice before making decisions.

If you need help reviewing your NICs record or pension contributions, contact us today!