Benefit bulletin - issued March 2006.
In 1995 the Inland Revenue stopped reminding people to pay gaps in their National Insurance contributions. But a lot of people missed out. They are now allowing people to make late payments.
Up to 1995/96
From 2002/03
Pay or don’t pay?
Up to 1995/96
Prior to 1995-96 tax year, the Contributions Agency used to run an annual scan which identified people who had not paid, or been credited with, enough National Insurance contributions to make the tax year count towards their basic state Retirement Pension. Those people were then issued with a Defiency Notice inviting them to pay voluntary Class 3 National Insurance contributions to protect their pension rights.
This exercise was scrapped after the 1995-96 tax year, resulting in hundreds of thousands of people retiring in the last nine years on a lower pension, as they were never given the opportunity to make up their National Insurance contributions.
From 2002/03
The exercise was brought back in October 2004, for the tax year 2002-03, with the then Inland Revenue (now HM Revenue and Customs) also agreeing to undertake a one-off scan to cover all tax years from 1996-97 to 2001-02, and extending their normal six year time limit for paying Class 3 National Insurance contributions. The Department for Work and Pensions and HM Revenue and Customs have contacted customers to inform them of gaps in their National Insurance contributions. They are telling people if they have any missing contributions in those years, and what they can do to fill the gaps in their contribution records. Everyone will be given until 5 April 2010 to pay (irrespective of the year that gap occurs).
Pay or don't pay?
Should people fill the gaps in their National Insurance contributions? Apart from whether the person can afford the financial outlay, any additional pension payments received following additional National Insurance contributions may affect Pension Credit, Housing Benefit and Council Tax Benefit entitlements, even though councils have been advised by the Department for Work and Pensions not to retrospectively recalculate Housing Benefit for the years that arrears are paid nor take the pension arrears into account as capital.
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