When planning for retirement, it may feel like your checklist is growing arms and legs. From how much to save to how long your savings should last, it’s a lot to think about.

One question that maybe hasn’t made its way to the list is how your national insurance contributions could impact your State Pension. The gaps in a National Insurance record can be like walking around in the rain with an umbrella filled with holes. It prevents you from the main benefit – staying dry.

Like your holey umbrella, gaps in your National Insurance record could prevent you from qualifying for benefits. They happen when not enough National Insurance contributions are made by you or your employer to qualify for benefits.

Why it matters

Most people in the UK rely on State Pensions for their retirement income, particularly those without personal savings or workplace pensions.  It’s a financial safety net that makes retirement easier and smoother.

At the moment (2024/2025), the new State Pension is £221.20 per week but how much you get can vary based on your National Insurance contributions. Since the amount you get, and when you get it, is linked to your National Insurance record it’s important to avoid any gaps in your history.  

What causes gaps?

Here are some factors that can impact your record negatively:

  • Unemployment or low earnings: you didn't make enough to contribute.
  • Self-employment: self-employment can negatively impact your National Insurance contributions and lead to gaps due to exemptions, irregular income, payment delays, and limited access to employment benefits.
  • Missing NI number: you don’t have an NI number, or you didn’t give it to your employer at any point, making it difficult to accurately track and attribute contributions to your account.
  • Living or working abroad: you may become exempt from UK National Insurance, lack contribution credits, and potentially lose eligibility for certain benefits if you work or live abroad, resulting in gaps.
  • If you rely on state benefits like Jobseeker's Allowance or Carer's Allowance for a long time, this causes gaps in your record as you may not be able to contribute or earn credits.

Surprisingly there are several other influences that may be positive life events but can unfortunately cause gaps in your history. You may have finally decided to dust off the bucket list and travel Asia for a couple of months. Or you made changes in your career, such as starting up your dream business or diving into an exciting job offer abroad. One of the most common reasons is that you took time off to raise your family. While all of these are priceless life moments, for National Insurance they can be viewed as obstacles.

So what’s the solution?

Don’t let the thought of holes in your history stress you out because there are several solutions you can turn to. The most common way to improve your entitlement to state benefits and pensions is through voluntary contributions.

There are different ways to do this, like:

  1. Class 2 voluntary contributions: typically used by self-employed people who haven’t contributed enough.
  2. Class 3 voluntary contributions: you can fill gaps in the past six years. These are typically used by people who’ve missed payments because of unemployment, illness, or caring responsibilities.
  3. Additional Class 3 contributions: this is for individuals who haven’t earned 35 qualifying years to receive a full state pension.

Your next steps:

  1. Check your national insurance record online. If you think you may have missing years, you can get your state pension forecast.
  2. To get advice contact the National Insurance Helpline on 0300 200 3500.
  3. Speak to a financial adviser or take a look at MoneyHelper for free government backed financial guidance.
  4. Get in touch with HMRC for guidance on voluntary contributions.

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