Martin Lewis has revealed how some workers can turn £800 into £5,500 for their retirement.
The MoneySavingExpert said that people aged between 45 and 70 can buy extra National Insurance (NI) years to bump up their state pension.
Currently, the full new state pension, claimed by anyone who reached state pension age before April 6, 2016, is worth £185.15 a week.
The financial guru said that to get this full amount, people will normally need to have 35 years’ worth of qualifying NI contributions.
NI credits are built during working years, however any time out of work could lead to gaps in people’s record.
At the moment, people can buy years to plug NI gaps back to 2006 - but the rules are changing from April 5, 2023.
After this date, people will only be able to go back and buy back six years’ worth of NI contributions.
What did Martin Lewis say?
Writing in the latest MoneySavingExpert newsletter, Martin said: “When the transitional arrangements end, the number of extra years purchasable drops, so checking now is key.
“Those at or near state pension age will find it relatively easy to see if topping up may help.”
Martin then explained how a full voluntary NI year costs roughly £800 but could add up to an extra £275 each year to your state pension.
He said: “If a man who's reached age 66 lives the typical 19 more years, a woman 21 more years, then for each £800 spent, a man can expect to get £5,300 extra pension, a woman £5,800.
“Plus the state pension currently (usually) has a triple lock, meaning it rises with the highest of inflation, 2.5% or average earnings (though the average earnings figure is suspended this year).
“Therefore for many, unless you have a chronic condition likely to substantially impact life expectancy, if this works for you it's virtually unbeatable.”
According to Martin, these figures are a rough calculation, as the state pension rules are hugely complex and depend on individual circumstances.
How to check if you're eligible for NI credits?
First, you should check first if you can plug your NI gaps for free without purchasing any NI credits.
These situations arise when you may be entitled to NI credits if you were claiming statutory sick pay and were not earning enough for a qualifying year.
There are more examples of ways you may be eligible for NI credits on the Gov.UK website.
There are also some people who wouldn’t benefit from purchasing extra NI credits.
You can check how much state pension you’re on target to get by using the Gov.UK state pension forecast calculator.
Anyone already at state pension age can check their national insurance record.
If the Future Pension Centre has confirmed buying NI credits would benefit you, you need to contact HMRC to get a reference number, and pay your NI credits into an HMRC bank account.