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Last Updated: Wednesday, 17 January 2007, 13:07 GMT
Refund hope over pension top-ups
By Rachel Spring
Social affairs analyst, BBC News

Hands and money
Hundreds of thousands of people make voluntary top-up payments
People who have made unnecessary top-up National Insurance payments may be able to get a refund under pension reform proposals, the government has said.

The government hopes to cut the number of years needed to qualify for a full basic state pension, making many of the extra payments a waste.

Voluntary top-up payments are used to make up gaps in contribution records.

A year of contributions costs 392.60, but any made before 25 May 2006 will not be eligible for a refund.

Reforms

The plans to shake up the UK pension system received their second reading in the House of Commons on Tuesday.

If passed they will reduce the number of qualifying years needed to receive a full basic state pension to 30 for those reaching state pension age on or after 6 April 2010.

At present, men require 44 full years of contributions and women 39.

The reforms are being introduced to eliminate inequalities in the state system which often leave women and carers heavily reliant for income in retirement on their partners or means-tested benefits.

As a result the government expects the reforms will lead to around three-quarters of women being entitled to a full basic state pension by 2010, compared with only 30% now.

"Where individuals have continued to make voluntary National Insurance contributions since 25 May 2006, but would have chosen not to do so had they been aware of the Government's intention to reduce the number of qualifying years required for a full basic State Pension to 30, they may be entitled to a refund," said Paymaster General Dawn Primarolo.

Alert

The date of 25 May 2006 is significant because it marks the date that the government published its White Paper announcing the reforms.

Since then, 31m of contributions have been made.

In September 2006, Her Majesty's Revenue & Customs (HMRC) began alerting people with gaps in their record about the proposed reforms.

No refunds will be offered for any voluntary contributions paid before 25 May 2006. The government says that these contributions were paid properly at the time, in accordance with the law and in line with government policy.

It is not yet clear when payments will be made or whether some people will have to wait until they retire before they receive a refund.

Further details on the exact conditions of eligibility and the process for making claims will be published by HMRC in due course.

More information can be obtained from HMRC on 0845 915 5996 or from their website.


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