Pension warning to parents who risk losing out on £33,000

Experts have issued an urgent warning to any parents who took a break from work when caring for their young children in the last decade.

Failing to fill gaps in their National Insurance record before the deadline on April 5 could result in them losing up to £33,000.

Amy Knight, personal finance expert at NerdWallet UK, explained: “Having babies can lead to losing out on more than just sleep.

“Stay-at-home parents, or those working part-time hours may have ‘missing’ or ‘partial’ years on their NI record, where they have not paid in enough NICs, putting their state pension in jeopardy.

“Around 1.6 million parents who had young children between 2016 and 2018 need to check their NI record urgently before the tax year ends.

“Those who waited until their child started school at age 4 before returning to work could see their annual state pension income reduced by £1,310 per year.

“Over a 25-year retirement, this could amount to a loss of almost £33,000 or more as the state pension increases.

“Right now, voluntary contributions are being accepted for the tax years 2016-17 and 2017-18, but time is running out.

“The window to plug holes in your NI record for these years will close at midnight on April 5 – now is your chance to make the years you spent juggling toddlers count.

“It takes just 15 minutes to log into the government website to check your NI record, find out if you’re eligible to make voluntary payments to turn these into qualifying years, and complete the transaction to HMRC using online banking.”

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People have until April 5 to make voluntary National Insurance contributions and maximise their State Pension.

HMRC and Department for Work and Pensions (DWP) are encouraging people to act now and use the ‘Check your State Pension forecast’ tool on GOV.UK to see if they can increase their retirement income.

After the deadline, people will only be able to make voluntary contributions for the previous 6 tax years, in line with normal time limits.

Emma Reynolds, Minister for Pensions, said: “We want pensioners of today and tomorrow to enjoy the dignity and support they deserve in retirement.

“That’s why I urge everyone to check if they could benefit by filling gaps before the deadline passes.

“Using our online tool means only a few clicks could make a huge difference to your future.”