Detailed guide to ensuring a full UK pension for expats

To ensure UK taxpayers receive the full state pension once reaching retirement age, they pay National Insurance contributions.

These are normally handled by their employer as part of their regular pay or settled up as part of their annual tax return to HM Revenue and Customs.

However, if you missed paying these contributions – for example you worked or lived abroad - it can result in receiving a smaller pension than you were expecting.

The UK government has recently confirmed an extension to its scheme allowing for voluntary contributions to be made to plug the gap.

Here’s everything you need to know:

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Who is eligible?

If you are a man born after April 5, 1951 or a woman born after April 5, 1953 you can take advantage of the window to top up your pension. Which means you can already be retired to pay top-up contributions. In order to receive a UK state pension, you need to have at least 10 qualifying years of NI contributions. To receive a full pension, you will need 35 years’ worth.

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Why should I take notice?

While many expats in Portugal will have other passive revenue streams – such as private pensions, dividends or rental income – to fund their lifestyle, if you have worked most of your life in the UK, you are entitled to the state pension. However, if you worked abroad for a period, took early retirement or were out of work and did not claim benefits, you may have missed making NI contributions. This will mean you do not get the full pension, regardless of how much you may have paid in over the years.

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What difference in pension payments will topping up make?

As of September 2023, the full UK state pension is £203.85 a week – or £10,600 a year. This is expected to rise in line with the government’s current triple-lock protection which sees it rise in line with inflation. However, if after April 2016 you have just 20 full qualifying years on your NI record, you divide £204.85 by 35 (the years needed to get the full amount) and then multiply by 20. Twenty years of NI contributions would mean you were eligible to a pension of £116.48 a week – or around £6,056 a year. Topping up any missed NI contributions can make a big difference to top up your other income.

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How much are the top-ups going to cost me?

Individual circumstances will determine whether you need to pay Class 2 or 3 contributions of NI. The UK government currently determines that Class 2 are £3.15 a week. Class 3 are £15.85.

What period does the extension period cover?

You can normally voluntarily top-up any missed NI contributions for the last six years. The UK government’s extension allows taxpayers to make up gaps between the tax years April 2006 to April 2016.

How can I tell if I need to top up my NI contributions?

The easiest way is to use the HMRC website. You will need your Government Gateway user ID and password to access your tax records. It will instantly tell you if you can pay, how much and the methods to take. Alternatively, if you are living in Portugal, you can request your NI contributions status by post. See the HMRC guide here.

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What happens if I don’t get around to it until after April 2025?

You’ll still be able to top-up your contributions for the past six years – but you’ll have missed out on ensuring you were paid up for 2006-2016. This may mean you do not have enough to qualify for a new state pension if you have fewer than four qualifying years on your NI record.

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Disclaimer: The guidance above should not be fully relied upon and does not constitute formal instructed professional advice. In relation to tax advice in Portugal, please engage and instruct a regulated professional for all tax advice and structured financial planning. Please contact Portugal Pathways if you would like an introduction to one of our professional advisors.

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