Voluntary National Insurance Contributions

Usually when you are working and earning, you will pay National Insurance contributions automatically from your pay check. If you are over sixteen and no longer at school or sixth form college, you will need to pay National Insurance contributions each year to qualify for certain state benefits, including a State Pension. If you study at university, go travelling or are temporarily unemployed, you will not be making contributions and your eligibility for these state benefits will be affected. You can choose to make voluntary National Insurance contributions, known as Class Three contributions.

By making voluntary contributions you will ensure that your National Insurance record is complete and protect your entitlement to certain state benefits. Class Three contributions currently cost £7.80 a week, roughly £400 for a year. These voluntary contributions work out on average much less expensive than the Class One contributions you would pay as an employee, and thus voluntary contributions do not build up entitlement to every state benefit, but do protect your entitlement to a State Pension on retirement. By ensuring you have as few gaps as possible on your National Insurance record, you will ensure you are able to receive a full State Pension when you retire.

Making voluntary contributions may be especially worthwhile when you have decided to retire abroad before reaching State Pension Age. If you retire before you have enough qualifying years on your National Insurance record to entitle you to a full basic State Pension, making Class Three contributions at £7.80 a week would entitle you to a State Pension of £87.30 a week, at the current rate, on retirement. For an investment of roughly £400 a year now, you could see returns of over £4,500 a year, at the current rates, when you reach State Pension Age in the future. For more information on voluntary contributions, contact the Pension Service on 0845 606 0265. For details see The Basic State Pension.