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Is it Worth Topping up NI contributions?

Newsletter issue - July 07.

Paying National Insurance contributions (NICs) builds up your entitlement to the state retirement pension, and to certain social security benefits, such as the jobseekers allowance, if you lose your job. However to receive most benefits you must have a complete NI record covering at least two tax years, and to get a full state retirement pension you must pay NICs (or been credited with them) for up to 40 years.

If you don't pay NICs for a significant period, because you are studying, travelling, bringing up children, or caring for relatives, your NI record will have gaps. However some state benefits such as the carers allowance or child benefit, should plug these gaps with NI credits, but that credit system does not always work perfectly.

The Taxman's computer system should automatically send you a letter if you have a gap in your NI contributions. The letter recommends that you pay some voluntary NI contributions to complete your NI record for a certain tax year. If you receive such a letter ask us to check the details. Even if do you have a gap in your NI record you may be better off contributing extra funds into an independent pension scheme, rather than paying more for your state pension. It all depends on your personal circumstances and your retirement plans.