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  • FIRST POST
    • tigerspill
    • By tigerspill 1st Jan 18, 3:03 PM
    • 261Posts
    • 84Thanks
    tigerspill
    SP Question
    • #1
    • 1st Jan 18, 3:03 PM
    SP Question 1st Jan 18 at 3:03 PM
    I was wondering how much of the year you need to work to qualify for a full year of State Pension?

    Also If I retire before getting the full 35 years, am I able to buy remaining years - I am in normal employment if that makes any difference?

    Thanks
Page 1
    • LHW99
    • By LHW99 1st Jan 18, 3:53 PM
    • 1,062 Posts
    • 909 Thanks
    LHW99
    • #2
    • 1st Jan 18, 3:53 PM
    • #2
    • 1st Jan 18, 3:53 PM
    A qualifying year is, I think, based on paying an amount of NI equal to 52 x the Lower Earnings Limit.
    http://www.rights4seniors.net/content/qualifying-years
    You can usually buy extra years if needed, but I think they are only available for a certain time after the end of that tax year.
    https://www.gov.uk/new-state-pension
    Worth checking your entitlement.
    • Linton
    • By Linton 1st Jan 18, 4:52 PM
    • 8,863 Posts
    • 8,900 Thanks
    Linton
    • #3
    • 1st Jan 18, 4:52 PM
    • #3
    • 1st Jan 18, 4:52 PM
    A qualifying year is, I think, based on paying an amount of NI equal to 52 x the Lower Earnings Limit.
    http://www.rights4seniors.net/content/qualifying-years
    You can usually buy extra years if needed, but I think they are only available for a certain time after the end of that tax year.
    https://www.gov.uk/new-state-pension
    Worth checking your entitlement.
    Originally posted by LHW99
    You can pay a voluntary contribution for any year after April 2016 between when you stop getting NI years from employment and when you reach State Pension Age. Each year will give you 1/35 of the full SP until you reach the full amount. It is a spectacularly good deal reaching break even in about 3 years.

    It may or may not have the desired affect if you pay for years before April 2016.
    • tigerspill
    • By tigerspill 1st Jan 18, 5:05 PM
    • 261 Posts
    • 84 Thanks
    tigerspill
    • #4
    • 1st Jan 18, 5:05 PM
    • #4
    • 1st Jan 18, 5:05 PM
    Thanks folks.
    So on our retirement plans, it looks like I will have 34 years so will need to buy one year; and my wife will have 32 years so will have to buy three years.

    From this page - https://www.gov.uk/voluntary-national-insurance-contributions/rates
    it looks like I would be paying for Class 3 at £14.25/week. So that would be £741 for the year.
    Does that sound about right?
    • Linton
    • By Linton 1st Jan 18, 5:10 PM
    • 8,863 Posts
    • 8,900 Thanks
    Linton
    • #5
    • 1st Jan 18, 5:10 PM
    • #5
    • 1st Jan 18, 5:10 PM
    Thanks folks.
    So on our retirement plans, it looks like I will have 34 years so will need to buy one year; and my wife will have 32 years so will have to buy three years.

    From this page - https://www.gov.uk/voluntary-national-insurance-contributions/rates
    it looks like I would be paying for Class 3 at £14.25/week. So that would be £741 for the year.
    Does that sound about right?
    Originally posted by tigerspill
    Yes. You should check your SP forecast - you could lose SP if you have been contracted out during parts of your 34 years. Paying voluntary contributions will also recover this money..
    Last edited by Linton; 01-01-2018 at 5:13 PM.
    • 33q
    • By 33q 1st Jan 18, 5:55 PM
    • 15 Posts
    • 2 Thanks
    33q
    • #6
    • 1st Jan 18, 5:55 PM
    • #6
    • 1st Jan 18, 5:55 PM
    I find the Government website is not straightforward to understand with regards to how may state pension is calculated and importantly how I may boost it.

    My Pension statement says that I will get £143.46 per week if I continue to contribute NI and £125.23 if I don’t contribute.

    My Maximum is £148.02

    I took early retirement 7 years ago aged 55 and receive a DB pension. Worked from 18, same company, no NI Gaps. But no NI paid or credited since.

    I’d like to consider increasing my SP to its maximum. An increase of £22.75…Approx. £4.56 * 5 years.

    Meaning I’d pay in £14.25 (Class 3) * 52 * 5….Approx £3705, to get £22.24 per week (£1157 per Annum). And I can delay payment until just before my retirement age of 66. (OK the Class 3 contrib. may change a little depending on year)

    Could someone check my thinking as it seems a pretty good deal for me to pay-out about £3750 to get £1200 for my entire retirement. Payback a little over 3 years.

    Many thanks in advance
    Last edited by 33q; 02-01-2018 at 3:59 PM. Reason: My arithmetic was a bit wrong....principle remains the same
    • Linton
    • By Linton 1st Jan 18, 6:04 PM
    • 8,863 Posts
    • 8,900 Thanks
    Linton
    • #7
    • 1st Jan 18, 6:04 PM
    • #7
    • 1st Jan 18, 6:04 PM
    Your thinking is good. Go for it.
    • tigerspill
    • By tigerspill 1st Jan 18, 6:18 PM
    • 261 Posts
    • 84 Thanks
    tigerspill
    • #8
    • 1st Jan 18, 6:18 PM
    • #8
    • 1st Jan 18, 6:18 PM
    Yes. You should check your SP forecast - you could lose SP if you have been contracted out during parts of your 34 years. Paying voluntary contributions will also recover this money..
    Originally posted by Linton
    I was contracted out for a long time, but when the pension was baselined in April 2016 it was basically 30 years at the "old" basic SP which I think was around £119.
    When I log in - at 5/4/17 mine is £147.03 - so with this year and next, I will have the full £159.55 or maybe need one more year to work or buy. My wife's says £127.62 and needs another 8 years. She plans to work 5 years - hence the need to potentially buy three years.
    • 33q
    • By 33q 1st Jan 18, 6:20 PM
    • 15 Posts
    • 2 Thanks
    33q
    • #9
    • 1st Jan 18, 6:20 PM
    Brilliant
    • #9
    • 1st Jan 18, 6:20 PM
    I now need to extend the thinking to my wife....happy days

    Thank you
    • 33q
    • By 33q 2nd Jan 18, 11:08 AM
    • 15 Posts
    • 2 Thanks
    33q
    Another thought to consider how truly worthwhile this is is to consider the tax situation. The £1200 extra per year would be taxed, in my case at 20%, bringing the value down to £960.

    Does anyone know if the voluntary class 3 payments are tax deductable? Did a quick search and I'm not sure.

    I have edited my previous figures as my arithmetic was a bit out! Principle remains though
    • Tom99
    • By Tom99 2nd Jan 18, 12:05 PM
    • 1,016 Posts
    • 620 Thanks
    Tom99
    The payback period after 20% tax is 3.9 years so still very good value. The £741 cost is not tax deductable
    • Crabby
    • By Crabby 2nd Jan 18, 3:42 PM
    • 736 Posts
    • 178 Thanks
    Crabby
    I took early retirement 7 years ago aged 55. But no NI paid or credited since.

    I’d like to consider increasing my SP to its maximum. An increase of £22.75…Approx. £4.56 * 5 years.

    Meaning I’d pay in £14.25 (Class 3) * 52 * 5….Approx £3705, to get £22.24 per week (£1157 per Anum). And I can delay payment until just before my retirement age of 67.
    If you are 62 now, your State Pension age is 66.
    Winner winner, Chicken dinner.
    • xylophone
    • By xylophone 2nd Jan 18, 4:35 PM
    • 24,042 Posts
    • 14,048 Thanks
    xylophone
    (£1157 per Anum)
    Going in for currency smuggling?
    • 33q
    • By 33q 12th Jan 18, 4:04 PM
    • 15 Posts
    • 2 Thanks
    33q
    Well things have taken an interesting turn for me. Spoke to DWP and they confirmed I could make up my pension by making Class 3 voluntary NICs and 4 years seemed a good return. However I've now become aware that I can cut my costs further by making Class 2 payments. I have some BTLs and this seems to count as self employment so I can pay the much reduced £2.90 per week rate. This cuts my payback to about 6 months.....happy days indeed.
    • noh
    • By noh 12th Jan 18, 4:40 PM
    • 5,127 Posts
    • 3,465 Thanks
    noh
    Landlords who just let properties, are property investors, and therefore the income is classed as investment income, not self employment.

    https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim23800
    Last edited by noh; 12-01-2018 at 4:45 PM.
    • 33q
    • By 33q 12th Jan 18, 4:53 PM
    • 15 Posts
    • 2 Thanks
    33q
    The Lady from DWP assured me this was completely legitimate to pay class 2

    I do manage the properties personally, doing repairs and maintenance and I have refurbished them personally.

    ..... but DWP did not mention or refer to your link
    Last edited by 33q; 12-01-2018 at 4:57 PM. Reason: added detail
    • xylophone
    • By xylophone 12th Jan 18, 5:10 PM
    • 24,042 Posts
    • 14,048 Thanks
    xylophone
    https://ion.icaew.com/taxfaculty/b/weblog/posts/propertylettingandnationalinsurance
    • 33q
    • By 33q 12th Jan 18, 5:18 PM
    • 15 Posts
    • 2 Thanks
    33q
    OK....need to discuss with HMRC....we have 3 properties and we are 'active' .... and over a 7 or 8 year period

    Maybe it is too good to be true

    Just for once I thought I may actually just get something from the system!!! Rather than just paying in!!
    • Dazed and confused
    • By Dazed and confused 12th Jan 18, 5:28 PM
    • 2,092 Posts
    • 944 Thanks
    Dazed and confused
    If you have been declaring the income as a business you have presumably been completing the self employment page on your tax return not the land and property page and being paying class 4 National Insurance?
    • 33q
    • By 33q 12th Jan 18, 6:41 PM
    • 15 Posts
    • 2 Thanks
    33q
    Today's situation came about with a phone interview from DWP to my wife to discuss topping up her pension. At the very end of the conversation she asked how to pay her class 3 and simply mentioned paying her self assessment and paying via the Government Gateway. The lady then said wife wife could pay Class 2 by ticking a box on her tax form.

    In no way was any of this initially prompted by my wife. She and I were simply really pleased that we may be able to reduce to cost of topping up our pensions.

    Looking at the responses to my 'gleeful' post I am now somewhat deflated.
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