24 October 2008
The government will today propose an amendment to the Pensions
Bill to allow people to buy up to an additional six years of
voluntary National Insurance contributions (NIC), over and above
those permitted under the current time limits, in order to enjoy a
higher state pension.
The measures are the latest part of a programme of reform that
will see the state pension system offer a fairer deal to women and
carers. They will benefit thousands of women who traditionally have
incomplete National Insurance records and therefore often receive a
low state pension.
The proposals will apply to those who reach State Pension age
between 6 April 2008 and 5 April 2015 and who already have 20
qualifying years on their National Insurance record, taking account
of Home Responsibilities Protection.
The value of class 3 National Insurance contributions is
increasing significantly because of the Government's pension
reforms, in particular the reduction in the number of qualifying
years needed for a full state pension from 44 (for a man) and 39
(for a woman) to 30 for both men and women from April 2010. The
Government will increase the price of a Class 3 contribution
accordingly. This will ensure the package will overall be cost
neutral.
Voluntary Class 3 NICs were introduced to enable people with
deficient contributions records to maximise their basic State
Pension entitlement. They also count for Bereavement
Benefits.
Under current rules an individual who is able to pay voluntary
Class 3 NICs can pay for them up to 6 years after the end of the
year for which payment is made. People may have to pay a higher
rate if they delay payment.
Currently, the time limits have been extended for the tax years
1996/97 to 2001/02 when the issue of Deficiency Notices was
suspended. People who reach state pension age on or after 24
October 2004 have until 5 April 2009 to pay and people who reached
state pension age before 24 October 2004 have until 5 April 2010.
No higher rate charge applies for the tax years 1996/97 to 2001/02
if contributions are paid within these time limits.
In 2008-2009, the full basic State Pension is £90.70 a week
for an individual, but your individual circumstances may affect the
amount you get.
