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State pension shortfalls could put your early retirement at risk. Here’s what you need to know

LIBF-Chartered financial adviser Jenny Loftus discusses state pension shortfalls and the keys to avoiding them…

“Everyone dreams of a fulfilling retirement. For many, the date when they can step away from work to follow their own hobbies and pursuits can’t come soon enough.


That’s why it pays to double-check every piece of the retirement puzzle – before it’s too late.


In my day-to-day experience of retirement planning, nearly every one of my clients is at first quick to confirm he or she has the correct number of years to receive a full state pension.


However, when we come to examine their actual state pension forecast, we sometimes discover this isn’t the case.


In some instances, clients do have the correct minimum years, but not enough National Insurance (NI) “monitory” contributions.


How do state pension shortfalls happen and what impact do they have?


‘The amount of State Pension you’ll get depends on how many “qualifying” years of National Insurance payments you have. This includes National Insurance contributions that you pay when you are working and contributions that are credited to you when you are unable to work.’ (For this and more fundamental information on state pension payments click through to:


During some periods, a client may have been paid less, worked freelance or contract, stopped working because of redundancy or taking on a carer role, or spent time abroad; as a result, their national insurance contributions may have been affected.


State pension shortfall amounts can range from just a few pounds per week to hundreds per year, depending on the planned retirement date – and these amounts can quickly add up.


Unfortunately, the shortfall could put a client’s retirement timeline at risk. This happens because the shortfall must then be made up by drawing funds from private pension pots, which usually means these pots get depleted more rapidly.


Take, for example, a person in their mid-50s who wishes to retire later in the year and use their private pension and other sources of income to support their lifestyle in retirement.


They discover they do not have the correct number of years or NI contributions to receive the full state pension. Moving forward with their early retirement would mean their private pensions and other funds would be depleted too rapidly, affecting their lifestyle later on. They decide to put their plans on hold.


It’s easy to see here how having a guaranteed source of income in the form of the state pension really matters.


What happens next?


Because shortfalls happen in relative frequency, I recommend all my clients check their state pension forecast as part of their retirement planning.


This is done by logging into the HMRC Government gateway; here, they can both check their current forecast and their NI contributions to determine if any are missing.


In the case that there are missing years, the forecast will indicate the contribution (and deadline date) required to reach their maximum state pension.


As their financial adviser, I’ll use the data passed to me and quickly complete a few calculations to show how topping up their contributions will impact their overall retirement picture.


In the majority of cases, a client’s shortfall is caught in time and voluntary contributions can be

used to fill in any gaps. (Payments are arranged directly with HMRC.)


Clients will have until 5 April 2025 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if eligible. After 5 April 2025 the maximum window to make voluntary contributions will be the past six years.


After 5 April 2025, once the six-year window has passed, the chance to make up the gaps will be

missed forever. For this reason, it’s always worth checking your status with HMRC.




Taking a client’s circumstances comprehensively into account is a fundamental part of good financial planning. 


If your financial adviser or planner is not incorporating your HMRC state pension statement or forecast into your retirement plans, then you may not be receiving the in-depth approach you deserve.


Don’t leave a question mark over one essential piece of your retirement puzzle. Complete an early check of your state pension and, if possible, seek out high quality financial advice.


After all, no one wants to see their dreams of a satisfying retirement put on hold."



Financial adviser Jenny Loftus possesses more than 17 years' experience in financial planning and strategic wealth management. She acts as a key point of contact for high-net-worth clients as she spearheads our Family Office service.

Jenny attained the Level 4 Diploma and Certificate in Mortgage and Advice Practice in 2018. A member of our Board since 2021, she achieved Chartered status in 2023.

Want to discuss your individual financial circumstances and objectives with an expert financial adviser? Simply contact our team on 0161 764 9944 or email


Please note, the above blog and client scenarios are intended for illustrative purposes only. Not to be used as a substitute for personalised financial advice. It is always advisable to read the information on HMRC’s website and Government gateway before making any decisions regarding your state pension. Consult with a financial adviser before making any financial decisions which can impact your future financial health.




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