UK. LCP launches state pension NICs calculation tool
Consultants LCP have launched a tool to help the public calculate if they can benefit from topping up the new state pension by paying voluntary national insurance contributions.
The amount of state pension an individual receives depends on their record of NICs and for those who reached pension age after April 5, 2016, the full flat rate pension is currently £185.15.
However, for various reasons some people may receive less than this amount, and, in some cases, they may be able to boost their pension by paying voluntary NICs.
The new tool calculates if an individual can benefit from this.
LCP said the tool is timely as there is a deadline at the end of the current financial year for paying back historic missing years between 2006 and 2016.
The firm explained that one year of voluntary NICs typically costs £824.20 at current rates for Class 3 contributions. In many cases, this will boost state pension entitlement by 1/35th of the standard rate, or around £275 per year.
This means that someone who tops up by one year will get their money back within four years of drawing their pension, even allowing for basic rate tax.
Someone who draws a state pension for 20 years will get back £4,400 (net of basic rate tax) for their initial outlay of £824.20.
LCP said more than half a billion pounds has been paid by the public in voluntary NICs in the past four years alone.
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