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  • FIRST POST
    • NE5
    • By NE5 3rd Dec 17, 8:14 PM
    • 9Posts
    • 0Thanks
    NE5
    Pension Forecast
    • #1
    • 3rd Dec 17, 8:14 PM
    Pension Forecast 3rd Dec 17 at 8:14 PM
    Hello....I've just been on the Government Gateway and had a pension forecast and it says I am 3 years short, and I have 6 incomplete years.

    Does this mean I can pay any 3 of these years and as I've done 41 qualified years, isn't 44 years an odd number to qualify ???

    Also how does COPE affect this ?

    Thank you.
Page 2
    • Tom99
    • By Tom99 5th Dec 17, 1:06 PM
    • 665 Posts
    • 399 Thanks
    Tom99
    Thank you to everybody.

    Tom99 I don't quite understand your last post, but what I think I get so far is :

    I am currently paying tax on my govt pension.....so I will pay tax at 20% on my state pension be it 135.14, 148.82 or 153.38. I should have realised that but never really thought about it. But as has been pointed out, its still an increase on £119 and is more than I'm getting for my part time job for doing nothing !

    So I will get 135.18 - 20% = 108.11
    148.82 - 20% = 119.05
    153.38 - 20% = 122.70

    If I start to pay class 3 conts....and I pay the full 3 years ie this year in arrears of 741, year 2018-19 of 741 from my pension, and 2019-20 from my pension that is a total of 2223.

    I will then receive a pension increase at 66 of the difference between 153.38 and 135.14 (14.59 a week after 20% tax) and to pay back 2223 would take 152 weeks. Therefore for 152 weeks after the age of 66 I am only recovering what I have paid in ? If I live much longer than that it is well worth it, if I live less, then less so.

    I am not really sure when I have been contracted out though, only the last 6 years when I have worked part time ?

    If my basic gist as above is correct, should I pay this year in arrears and arrange to pay monthly from April 2018 for the last 2 years or just pay the last 2 years and be happy with a slightly smaller pension, or just do nothing and take the current forecast of 135.18 ?
    Originally posted by NE5
    Improving your forecast pension from £135.14 to £153.38 will mean paying 4 yrs not 3 yrs contributions.

    The cheapest way to do that would be to pay the missing £580.10 for 2016/17 then pay £741 for the three years 2017/18 to 2019/20 at total cost of £2803.10.

    Your extra £14.59 pw then works out at 192 weeks which is slightly shorter then my 3.9 years purchase because you have already made a partial 2016/17 contribution via employment I expect.

    Very good value for money if you expect to live until you are 70.
    • Linton
    • By Linton 5th Dec 17, 1:06 PM
    • 8,620 Posts
    • 8,583 Thanks
    Linton
    152 weeks is say 3 years. At 66 , assuming you are of average health you can expect to live for another 20 years or so. So buying all the NI you need to get a full pension is a no-brainer really, it's an astonishingly good deal.
    • GunJack
    • By GunJack 5th Dec 17, 2:42 PM
    • 9,880 Posts
    • 7,358 Thanks
    GunJack
    Thank you to everybody.

    Tom99 I don't quite understand your last post, but what I think I get so far is :

    I am currently paying tax on my govt pension.....so I will pay tax at 20% on my state pension be it 135.14, 148.82 or 153.38. I should have realised that but never really thought about it. But as has been pointed out, its still an increase on £119 and is more than I'm getting then my part time job for doing nothing !

    So I will get 135.18 - 20% = 108.11
    148.82 - 20% = 119.05
    153.38 - 20% = 122.70

    If I start to pay class 3 conts....and I pay the full 3 years ie this year in arrears of 741, year 2018-19 of 741 from my pension, and 2019-20 from my pension that is a total of 2223.

    I will then receive a pension increase at 66 of the difference between 153.38 and 135.14 (14.59 a week after 20% tax) and to pay back 2223 would take 152 weeks. Therefore for 152 weeks after the age of 66 I am only recovering what I have paid in ? If I live much longer than that it is well worth it, if I live less, then less so.

    I am not really sure when I have been contracted out though, only the last 6 years when I have worked part time ?

    If my basic gist as above is correct, should I pay this year in arrears and arrange to pay monthly from April 2018 for the last 2 years or just pay the last 2 years and be happy with a slightly smaller pension, or just do nothing and take the current forecast of 135.18 ?
    Originally posted by NE5
    If you have a "government" pension, i.e Civil Service, Police, Fire Service, etc., etc., then you were contracted out for that time you worked for whichever part of govt you did... whilst that took you out of SERPS/S2P it meant you were building up the "private" govt pension you are currently getting

    Also, when you get your state pension, you pay no tax on it, but HMRC send an altered tax code to your occupational pension payer so they deduct the tax due from the sum of both pensions from the occupational scheme only. So you'll see the State Pension with no deductions, and more tax taken (so a lower nett payment per month) from your "government" pension.
    ......Gettin' There, Wherever There is......
    • redux
    • By redux 5th Dec 17, 3:41 PM
    • 17,640 Posts
    • 22,636 Thanks
    redux
    This part-time work, is it employed or freelance?

    Class 2 contributions for self-employed persons are a bit lower than Class 3 voluntary.

    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.

    Is it because enough years have been paid before that date, out of 30 or 38, or whatever the thresholds were?
    • p00hsticks
    • By p00hsticks 5th Dec 17, 3:56 PM
    • 5,779 Posts
    • 5,560 Thanks
    p00hsticks
    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.
    Originally posted by redux
    The OP has 41 full years NI.

    When the new state pension was introduced in April 2016, an amount was calculated for everyone under both old and new rules and the higher of the two became the persons 'starting amount'.

    Old rules; ( (NI years up to max of 30) / 30 ) x £119.65 plus any accumulated 'additional pension' (SERPS/S2P)

    New rules; ( (NI years up to max of 35) / 35 ) x £155.35 minus any 'COPE' amount (an adjustment figure for any years contracted out)

    Therefore, for anyone with more than 35 NI years as at April 2016, buying additional NI years PRIOR TO 2016 cannot improve these starting amount figures.

    However, if your starting amount is less than the new maximum, then any whole additional NI years AFTER April 2016 will increase that starting amount by 1/35th of the NSP maximum - currently around £4.50 a week - until the maximum is reached or the year the person reaches state pension age, whichever is the sooner.
    • Linton
    • By Linton 5th Dec 17, 4:03 PM
    • 8,620 Posts
    • 8,583 Thanks
    Linton
    This part-time work, is it employed or freelance?

    Class 2 contributions for self-employed persons are a bit lower than Class 3 voluntary.

    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.

    Is it because enough years have been paid before that date, out of 30 or 38, or whatever the thresholds were?
    Originally posted by redux
    In April 2016 a calculation was made of how much you would have got/week under the old pension scheme and how much under the new pension scheme minus COPE. The higher value was taken as the "Foundation amount" which formed the basis for subsequent years.

    If in April 2016 you had already paid 35 years NI, further years prior to 2016 would not change the calculation. So there is no point in paying for them. Even if you hadnt got 35 years NI, further years added to the total may not make any difference if the SP under the old rules was still higher than that under the new.

    From Apil 2016 newSP/35 is added to your State Pension for each further NI year until the new SP value is reached. So if your Foundation amount is less than a full new SP for any reason buying extra years is of benefit.
    • atush
    • By atush 5th Dec 17, 9:36 PM
    • 16,374 Posts
    • 10,132 Thanks
    atush
    Contracted out is when you are a member of a DB/Final salary scheme or early private/company DC pensions where you could be contracted out of the State second pension.

    in this case, you got your contributions paid into a separate pension (for DC pensions) or your DB/FS pension.
    • NE5
    • By NE5 6th Dec 17, 1:12 PM
    • 9 Posts
    • 0 Thanks
    NE5
    This part-time work, is it employed or freelance?

    Class 2 contributions for self-employed persons are a bit lower than Class 3 voluntary.

    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.

    Is it because enough years have been paid before that date, out of 30 or 38, or whatever the thresholds were?
    Originally posted by redux
    its a zero contract job in a call centre on a shift by shift basis, and I'm only working about 10 hours a week max.

    I've actually got 41 years paid in before 2016.
    Last edited by NE5; 06-12-2017 at 3:11 PM.
    • xylophone
    • By xylophone 6th Dec 17, 1:37 PM
    • 23,635 Posts
    • 13,769 Thanks
    xylophone
    RE NI credits

    http://taxaid.org.uk/guides/information/an-introduction-to-income-tax-national-insurance-and-tax-credits/national-insurance/national-insurance-for-employees-and-employers/national-insurance-thresholds
    • molerat
    • By molerat 6th Dec 17, 1:55 PM
    • 17,473 Posts
    • 11,700 Thanks
    molerat
    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.
    Originally posted by redux
    Yep, a major flaw in the system. They will quite happily take 7 pre 2016 years worth of VCs off me, the best part of £4k, for no gain.
    www.helpforheroes.org.uk/donations.html
    • NE5
    • By NE5 6th Dec 17, 2:15 PM
    • 9 Posts
    • 0 Thanks
    NE5
    Yep, a major flaw in the system. They will quite happily take 7 pre 2016 years worth of VCs off me, the best part of £4k, for no gain.
    Originally posted by molerat
    which is disgusting for a Govt website.
    • redux
    • By redux 6th Dec 17, 2:34 PM
    • 17,640 Posts
    • 22,636 Thanks
    redux
    Yep, a major flaw in the system. They will quite happily take 7 pre 2016 years worth of VCs off me, the best part of £4k, for no gain.
    Originally posted by molerat
    Not the only flaw.

    Prompted by occasionally reading some threads about this, and eventually this one, and despite having a postal forecast about 3 years ago ...

    I signed up for a Government Gateway account

    There is no section to select for pension forecasts

    Going via a gov pensions forecast couple of web pages, I could sign in with a Government Gateway account.

    Errrmm, no I can't.

    Wrong log-in details. If I select for forgotten ID or password, I eventually fill in enough personal details for it to tell me ...

    There is no account with those details

    So I can be in the paradoxical position of signed in to an account, and simultaneously unable to sign in as the account does not exist.

    After musing on this for a while, reading a couple of reviews, I used something called Verify instead

    Last night I couldn't sign in to that either, as about 5 or 6 text messages were out of phase
    • GunJack
    • By GunJack 7th Dec 17, 8:39 AM
    • 9,880 Posts
    • 7,358 Thanks
    GunJack
    Not the only flaw.

    Prompted by occasionally reading some threads about this, and eventually this one, and despite having a postal forecast about 3 years ago ...

    I signed up for a Government Gateway account

    There is no section to select for pension forecasts

    Going via a gov pensions forecast couple of web pages, I could sign in with a Government Gateway account.

    Errrmm, no I can't.

    Wrong log-in details. If I select for forgotten ID or password, I eventually fill in enough personal details for it to tell me ...

    There is no account with those details

    So I can be in the paradoxical position of signed in to an account, and simultaneously unable to sign in as the account does not exist.

    After musing on this for a while, reading a couple of reviews, I used something called Verify instead

    Last night I couldn't sign in to that either, as about 5 or 6 text messages were out of phase
    Originally posted by redux
    The system isn't perfect unfortunately, but would persevere with verify - it took me several attempts to get the "selfie" within the specific area they wanted, but once done (with Post Office) it's been flawless for me
    ......Gettin' There, Wherever There is......
    • Linton
    • By Linton 7th Dec 17, 9:18 AM
    • 8,620 Posts
    • 8,583 Thanks
    Linton
    ......

    A question to the others - I don't understand the comments about no point in paying for before 2016, especially given that the website suggests how much to pay, and another gov website says it's possible for some people to go back to cover 10 years or so.
    Originally posted by redux
    My wife recently rang the HMRC helpline to find out how to pay a volumtary contribution. She was asked to talk to the pensions helpline first to get confirmation that what she was wanting to do was of benefit before HMRC would send her the request for payment.
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