Glossary · UK
What is Voluntary National Insurance Contributions?
Optional Class 2 or Class 3 payments made to fill gaps in a National Insurance record, protecting or increasing entitlement to the State Pension and certain benefits where a qualifying year would otherwise be missed.
Full Definition
Voluntary National Insurance contributions let someone fill a gap in their National Insurance record for a tax year in which they did not pay enough National Insurance through employment or self-employment to count as a full qualifying year -- for example because they were not working, were living abroad, had low self-employed profits, or took time out for caring responsibilities without receiving National Insurance credits. Since entitlement to the new State Pension depends on having 35 qualifying years for the full amount (and at least 10 for any State Pension at all), and certain contributory benefits such as Employment and Support Allowance also depend on the National Insurance record, filling gaps can directly increase retirement income or protect benefit eligibility. Two classes of voluntary contribution are available: Class 3, payable by most people, currently £18.40 a week, aimed at protecting State Pension entitlement; and Class 2, a much cheaper voluntary rate aimed at those who were self-employed abroad or otherwise eligible, at £3.65 a week, though most UK self-employed people below the small profits threshold are now treated as having Class 2 credited automatically rather than needing to pay voluntarily. HMRC and the Department for Work and Pensions generally allow voluntary contributions to be made for gaps going back six tax years, though transitional arrangements following the 2016 State Pension reforms have at times allowed a longer look-back period, and anyone considering paying voluntary contributions is strongly advised to first get a State Pension forecast, since paying for a gap year does not increase pension income at all once the maximum 35 qualifying years has already been reached. Worked example: someone with 30 qualifying years and five years left before State Pension age discovers, from their State Pension forecast, that three earlier years show as non-qualifying due to a period spent caring for a relative without claiming credits; paying Class 3 voluntary contributions for those three years, at £18.40 a week (roughly £957 per year), buys three additional qualifying years, moving them from 30 towards the 35 needed for the full new State Pension -- a cost that is typically recovered within a few years of extra pension income once in payment.