I am recently retired (in Germany) and gather from my UK National Insurance record (on tax.service.gov.uk) that I have 11 full years1 and a number of gaps which I may2 be able to close with voluntary contributions. I see also that each extra year of contributions is worth ~ £4.56 extra pension per week, i.e. ~ £237 per year. Since the amounts I would have to pay for the various years fall in the range £625–£700, a contribution appears to pay for itself within three years, i.e. to give a return between ~ 34% and 38%. Even if I have to pay tax on my pension, this seems an extremely good deal, but I read on tax.service.gov.uk … Voluntary Contributions:
2. Seek guidance or financial advice
Paying voluntary contributions may not be your best option when planning for your retirement.
There may be some doubt2 whether I am eligible to make these contributions, but if I am, is there any way it could be against my personal interest to make them?
- Making up National Insurance shortfall when working abroad — Asks if it is worth making up a shortfall, but this questioner is apparently quite some way from retirement, making the benefits less clear.
- National insurance shortfall after living in Germany — Asks if contributions to German state pensions can count towards NI.
1 At the time of asking my NI record actually showed more, but did not take account of my living in Germany since 1986, so it showed credits from 2012 onwards to which I was not actually entitled, according to gov.uk … Eligibility; it also omitted a year for which I have a P60 showing I made contributions. Both these errors have been corrected as of 2018-04-10.
2 The record says “You can make up the shortfall” but I have not yet determined if my living in Germany affects my eligibility to make voluntary contributions. The record shows me eligible to make up the shortfall for the 10 years from 2006-07 to 2015-16 inclusive although the accepted answer by Michael D says one can normally only pay the last 6 years.
2018-04-18 NI record has been corrected. Shown as eligible to pay last 10 years shortfall.