Older people are at risk of wasting hundreds or even thousands of pounds by topping up their state pension unnecessarily.
Former pensions minister Sir Steve Webb has slammed the Government website designed to help people check their National Insurance record as ‘confusing’ and ‘misleading’. And it means many users could end up mistakenly buying extra years they don’t need.
The full new state pension is worth £185.15 a week. To get this, you must have 35 qualifying years of National Insurance contributions.
Lifeline: The full new state pension is worth £185.15 a week. To get this you must have 35 qualifying years of National Insurance contributions
If you have less, you will get a smaller pension. But you can plug any gaps by paying voluntary contributions, which are known as Class 3 contributions.
This usually needs to be done within six years, but there are some exceptions.
The Department for Work and Pensions’ website allows people to check their state pension forecast. This should inform you if there are any gaps in your NI record.
If you are missing any qualifying years during your working life, you are then shown how much you need to pay to make up the shortfall.
But research by Sir Steve, who is now a partner at pensions consultancy Lane Clark and Peacock, says this information may still be displayed even when people have already built up a full state pension and have nothing to gain from making extra contributions.
In one case, David Kemp, 62, was mistakenly told he could top up his pot by paying £596.70.
The retired HR consultant, from Devon, had gone online to check his pension record to see if there was any potential to top it up.
The website showed he had built up the full state pension, with 44 years of full contributions.
However, further down the same page it said there was a gap in his National Insurance record for 2020-21, and that he could ‘make up the shortfall’ by paying £596.70.
Misleading: Research shows information about gaps in contributions may still be displayed even when people have already built up a full state pension
David was confused, so he contacted Sir Steve, who told him there was no point in paying for this missing year.
‘The website is very misleading,’ says David. ‘It would be easy for someone to look at these figures and mistakenly believe that they could usefully pay this sum. I would have been very unhappy if I’d made the suggested payment, only to find out it had been a waste of money.’
Sir Steve says: ‘Mr Kemp was presented with a very precise figure to make up a “shortfall” in his NI record, yet it was utterly irrelevant to his situation and he could have wasted hundreds of pounds.
‘DWP should ensure that the site is amended as a matter of urgency so that those who cannot benefit by paying additional contributions do not get quoted figures for making such payments.’
A DWP spokesperson says: ‘Whether an individual should or should not make voluntary NI contributions depends on their circumstances and the Check your State Pension forecast service and the gov.uk page on Voluntary National Insurance make clear this may not always be the right option.
‘We always urge individuals to consult the Future Pensions Centre before making any payments.’
But Sir Steve adds that the DWP should not rely on people to ring up and check before they take action. Many will not do this and long call wait times mean that even those who do end up giving up.
‘Surely it would be better not to show the misleading information in the first place, rather than show useless information and then rely on people ringing up to be told that it’s useless,’ he says.
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