Warning for workers to check National Insurance for ‘missing years’ – seven reasons you could lose cash & how to fix it

WORKERS are being warned to check if they have gaps in their National Insurance record to avoid missing out on cash.

You might have holes in your record for various reasons, like if you took time out to raise children, but luckily there is a way to fix it.

If you don't fill in the gaps you could end up missing out on the full state pension when you retire, which at the moment is worth £203.85 a week or £10,608 a year .

It takes 35 "qualifying" years of  National Insurance (NI) contributions to get the full state pension.

But if you do have holes, you can pay for the gaps to be filled.

For a limited time you can backfill holes from 2006 to 2016 but this scheme is ending on July 31.

After that you'll only be able to top up for the previous six years.

Those who could benefit from the scheme are being urged to apply before the deadline - and doing so could get you £55,000 over a 20-year retirement.

But, many people who could do with topping up might not check because they don't realise they could have gaps in their record.

You can check how many years of NI payments you've made and see any missing years on the .

We spoke to pensions experts for all the reasons that someone might have missing years.

You took time out to care for children

There are several reasons why someone may have gaps in their national insurance record, one of them is if you took time out of the work force to look after children.

Helen Morrissey, pension expert at Hargreaves Lansdown, explained that if you didn't claim child benefit during that time, you'll be likely have some gaps.

She said: "If you claimed child benefit during time out caring for children then you will get a National Insurance credit but if you opted out of receiving child benefit due to the High Income Child Benefit Tax Charge then you could have gaps."

The finance pro pointed out that paying to plug these holes in your record may not be necessary in this case;

"Before paying for voluntary National Insurance credits it’s worth seeing if you can backdate a claim to receive the credits for free through these benefits," she said.

It's worth noting though that this is not a sure thing and child benefit payments are usually only backdated by up to three months.

That means you won't be able to fill gaps prior - such as between 2006 and 2016 before the July 31 deadline.

If you were unemployed

"The same goes for if you were unemployed and didn't claim benefits at the time", Helen said.

So, if you could have claimed Universal Credit and Jobseekers Allowance when you weren't working but didn't - you could fill the holes for that period.

Helen explained: "These benefits come with National Insurance credits so if you qualify then see if you can backdate a claim."

She also pointed out that these aren’t the only benefits that come with National Insurance credits, other benefits like Employment Support Allowance and Carers Allowance do too.

To find out if you can make a backdated claim you can head over to the government website.

You didn’t earn enough

Another reason you might find your have gaps in your NI record is because you you didn't earn enough for several years.

Helen said: "If you work and earn above the Primary Threshold - currently £242 a week - then you automatically start paying National Insurance and build qualifying years towards your state pension."

But, if you earn above the Lower Earnings Limit (LEL) - currently £123 per week - you would not pay NI and therefore wouldn't get a credit.

If you earned under the limit for an extended period of time then you may have holes in your record from that time.

"People who need to be wary are those with multiple part time jobs who may not hit the LEL with one employer or those with fluctuating income," Helen warned.

You only worked part of the year on a high wage

Former pensions minister and now partner at LCP, Steve Webb, also told The Sun that working part of a year on the LEL level but working the rest on a higher wage could cause problems too.

He said: "Just because you paid some NI in a given year, it doesn’t mean you paid enough NI to get a ‘qualifying year’ towards your state pension."

Steve explained that if you earned at the LEL through the year then you would get a qualifying year towards the state pension. 

He added: "But if you only worked part year, then it’s more complicated.  

"You can still get a ‘qualifying year’ towards your pension if you work part year but at a higher wage than the minimum LEL."

The issue of having a "part year" could arise if you had a gap between ending one job and starting another, or if you took six months in a to go travelling and didn’t pay NI. 

The best thing to do is to head over to the government website to check what how many contributions yo have wracked up over your working life.

It will tell you if each year you've worked counts as a qualifying year or not, plus it will tell you if you can voluntarily pay an NIC to make up for it.

Steve added: "The good news is that it’s usually cheaper to top up a ‘part year’ than to fill a blank year."

Again, the government website will give you the costs for topping up each year.

You were contracted out

Another key reason why you may have gaps is if you were contracted out of the state second pension (S2P) at any point, Helen explained.

This is the the Additional State Pension, which is an extra amount of money you could get on top of your basic State Pension if you’re a man born before 6 April 1951 or a woman born before 6 April 1953.

Helen said: "In exchange for giving up all or part of S2P you made lower NI contributions and received an extra boost to your workplace/personal pension instead.

"Paying less NI means many people have gaps in their record but the trade off is that they received an extra boost to their workplace/pension pension instead."