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    • Michael Osborne
    • By Michael Osborne 14th Mar 17, 5:50 PM
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    Michael Osborne
    Buying NI qualifying years for children
    • #1
    • 14th Mar 17, 5:50 PM
    Buying NI qualifying years for children 14th Mar 17 at 5:50 PM
    Our son is on his 3rd year of study at university. As he hasn't been earning he has missed out on NI contributing years for his eventual pension in 40 years time. Is it worth buying qualifying years for him now? Buying qualifying years at the end of his career will undoubtably be much more expensive. What do people think?
    Last edited by Michael Osborne; 14-03-2017 at 6:01 PM.
Page 1
    • Dazed and confused
    • By Dazed and confused 14th Mar 17, 5:56 PM
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    Dazed and confused
    • #2
    • 14th Mar 17, 5:56 PM
    • #2
    • 14th Mar 17, 5:56 PM
    Have you got him to check his personal tax account (gov.uk) to see what his existing pension details are. This will show any National Insurance and have an estimate of State Pension entitlement (amount and date payable).

    Once that has been done you would be in a better place to know if your proposal is worthwhile or not.
    • p00hsticks
    • By p00hsticks 14th Mar 17, 6:10 PM
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    p00hsticks
    • #3
    • 14th Mar 17, 6:10 PM
    • #3
    • 14th Mar 17, 6:10 PM
    You say 40 years time - but assuming he's only aged 20/21 at present, he's going to have getting on for 50 years before he reaches his state pension age, while at present only 35 years is required for a full state pension. I'd say there's plenty of leeway there without worrying about having to buy additional years as yet.
    • ermine
    • By ermine 14th Mar 17, 8:15 PM
    • 538 Posts
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    ermine
    • #4
    • 14th Mar 17, 8:15 PM
    • #4
    • 14th Mar 17, 8:15 PM
    Buying qualifying years at the end of his career will undoubtably be much more expensive.
    Originally posted by Michael Osborne
    But he will be that much richer, hopefully. and hopefully will have worked for 35 years somethime between getting to 21 and reaching 70, a space of 49 years...

    As an example, I left university in 1982, and am missing the same three years. I bought last year for £150 (Class 2 NI, soon to be abolished) and even if I had to buy Class 3 contributions for about £740 it isn't that bad. The rate is an absolute steal - if I am buying 1/35th of £156p.w I am buying an inflation-linked annuity from 67 (70+ in his case) of £230 for a cost of £740, a rate of 31%. There's nowhere on earth I could buy that privately.

    Save your money. If you have it burning a hole in your pocket to give to your son, give it to him as a deposit for his first rented accommodation/house deposit/graduation beer fund.
  • jamesd
    • #5
    • 14th Mar 17, 10:30 PM
    • #5
    • 14th Mar 17, 10:30 PM
    Neither buying qualifying years nor help with paying student loans is normally a good deal.

    Usually the most valuable substantial thing which can be provided is giving a child the money needed for a property deposit. That's because it takes quite a while to accumulate one and the child ends up paying rent instead, at worst cost than ownership. Also ensuring that the maximum is paid into a Lifetime ISA each year can help with this.

    If the housing can be taken care of and you want to do more, pension contributions are the next place to consider. More time for compounded investment growth helps greatly but students and new graduates normally have limited money available to do it.
    Last edited by jamesd; 16-03-2017 at 7:14 AM.
    • Michael Osborne
    • By Michael Osborne 15th Mar 17, 11:31 AM
    • 2 Posts
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    Michael Osborne
    • #6
    • 15th Mar 17, 11:31 AM
    • #6
    • 15th Mar 17, 11:31 AM
    Thank you for all your replies. Interesting to hear other people's viewpoints.
    He has no NI contributions because all work he has done was unpaid. He has never had a paid job so has not even partially contributed to a qualifying year in the past.
    Last edited by Michael Osborne; 15-03-2017 at 11:36 AM.
    • Mojisola
    • By Mojisola 15th Mar 17, 11:36 AM
    • 27,596 Posts
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    Mojisola
    • #7
    • 15th Mar 17, 11:36 AM
    • #7
    • 15th Mar 17, 11:36 AM
    Our son is on his 3rd year of study at university. As he hasn't been earning he has missed out on NI contributing years for his eventual pension in 40 years time.

    Is it worth buying qualifying years for him now?
    Originally posted by Michael Osborne
    He's got every chance of paying more than enough NI to get a full state pension over his working life.

    What will be most help to him as he starts off in life will be money towards a deposit if he's going to buy his own place.
    • edinburgher
    • By edinburgher 15th Mar 17, 12:23 PM
    • 10,611 Posts
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    edinburgher
    • #8
    • 15th Mar 17, 12:23 PM
    • #8
    • 15th Mar 17, 12:23 PM
    I agree with jamesd.

    We're investing a nest egg for our daughter and think that she's likely to spend it on either a deposit, or avoiding taking out student loans as required.

    That said, there's every chance we'll give it to her when she seems old enough to be responsible and she will blow it all on holidays!

    Edit: we received help with our first home deposit (roughly 50% of what was needed to buy a modest flat). It took 2.5 years off how long we had to save and we are eternally grateful. I think it was possibly the single most (financially) helpful thing that our parents have done for us.
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