The current State Pension is £11,502 and is due to rise to around £12,000 a year for 2025/26. Given that it would cost over £300,000 to secure an index-linked annuity starting at £12,000 annually based on current rates, it’s important to maximise your entitlement.

 

In order to receive a full State Pension, you need 35 qualifying years, but is it worth topping up voluntary Class 3 National Insurance contributions for any missing years? This can be a financially significant decision, as the breakdown period is relatively short—about three years for employees, and even less for self-employed individuals, who can pay Class 2 contributions to cover missing years. You may also receive credits for missing years if you were not working due to raising children.

 

Employees need to make Class 3 contributions of £824.20 or £907.40 a year for extra years, which yields £302.86 a year in additional annual state pension. Self-employed individuals can pay Class 2 contributions at the rate of £179.40 for each missing year to yield £302.86 per annum.

 

Normally, you can only go back six years to make up for missing contributions, but there is currently an opportunity to fill gaps going back to 2006/07. Please note that the deadline for the extended carry back is 5 April 2025.