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    • valio247
    • By valio247 8th Feb 18, 3:32 PM
    • 24Posts
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    valio247
    Retirement & State Pension
    • #1
    • 8th Feb 18, 3:32 PM
    Retirement & State Pension 8th Feb 18 at 3:32 PM


    Good afternoon, I wonder if anyone can clarify a State Pension question. The GOV.UK website summary shows to date the following for my NI contributions:


    43 years of full NI contributions
    2 years when I did not contribute enough
    5 years to contribute up to April 2022

    My current forecast shows a State Pension estimate of £137.74 per week and the maximum of £159.55 per week if I continue contributing until April 2022.

    I am considering early retirement (likely to be within the next 6 months) and assuming I go ahead and retire, my questions are:

    1. When I reach State Pension age will I get the maximum £159.55 based on the fact that currently I have 43 full years of contributions which is more than the 35 years required for the maximum - or does it not work like that?

    2. In which case, will I get the lesser £137.74 amount if I make no further contributions from April 2018 to April 2022?

    I realise that you can ‘buy years’ to gain extra State Pension but I want to clarify the situation just based on scenarios above.


    Thanks in advance for any advice.
Page 1
    • pip895
    • By pip895 8th Feb 18, 4:22 PM
    • 530 Posts
    • 299 Thanks
    pip895
    • #2
    • 8th Feb 18, 4:22 PM
    • #2
    • 8th Feb 18, 4:22 PM
    I believe you will need to contribute more to get to the maximum.

    The most cost effective way is to pay up any partial years and to look into going "self employed" for a few years. The self employed rout can be just getting paid as little as few hundred via ebay or for odd jobs etc. but it allows you to pay up missing years NI at a very advantageous rate.
    • winspiration
    • By winspiration 8th Feb 18, 5:08 PM
    • 192 Posts
    • 294 Thanks
    winspiration
    • #3
    • 8th Feb 18, 5:08 PM
    • #3
    • 8th Feb 18, 5:08 PM
    There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.

    Be careful about making contributions for years pre-2016 as some people have done this and it has made no difference to their pension calculation - by the sound of it, you already have plenty of years pre-2016 anyway.

    To get the full amount, I think you would need to buy extra years, but as you can do this for up to six past years, you may as well wait until shortly before state pension age to do so.
    • xylophone
    • By xylophone 8th Feb 18, 5:16 PM
    • 24,478 Posts
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    xylophone
    • #4
    • 8th Feb 18, 5:16 PM
    • #4
    • 8th Feb 18, 5:16 PM
    The most cost effective way is to pay up any partial years
    In some cases this would provide no benefit.

    The OP has four DB pensions payable at age 60 and his state pension forecast has taken account of the fact that for a number of years he contracted out of SERPS/S2P.

    At 6/4/16 this calculation was done and his starting amount was the higher of the two.

    £119.30 + (SERPS/S2P - Deduction for Contracting Out)

    £155.65 - Contracted Out Pension Equivalent.

    Only post 2016 contributions will have increased the starting amount.

    If he ceases to contribute, the only increases on the amount achieved as at 5/4/18 will be those for inflation.
    • xylophone
    • By xylophone 8th Feb 18, 5:18 PM
    • 24,478 Posts
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    xylophone
    • #5
    • 8th Feb 18, 5:18 PM
    • #5
    • 8th Feb 18, 5:18 PM
    OP, have you seen

    https://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf
    • drumtochty
    • By drumtochty 9th Feb 18, 7:13 PM
    • 88 Posts
    • 39 Thanks
    drumtochty
    • #6
    • 9th Feb 18, 7:13 PM
    • #6
    • 9th Feb 18, 7:13 PM
    There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.

    While this is factually correct, the Treasury Secretary has said the Government are looking at the Class 2 NI route as they have realised that the greyish vote, those say over 50 are doing small self employed works, say ebay trading or tutoring and they are worried about losing this voting age group. They are large user's of Class 2 NI for protecting their state pension.

    It appears from his comment that there may be a last minute reprieve that will not be called Class 2 NI but may well be similar with a new name. I would look out for something being announced in November 2018.
    • ProDave
    • By ProDave 9th Feb 18, 7:48 PM
    • 633 Posts
    • 676 Thanks
    ProDave
    • #7
    • 9th Feb 18, 7:48 PM
    • #7
    • 9th Feb 18, 7:48 PM
    There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.
    Originally posted by winspiration
    Can you explain that.

    I am self employed so that is the only NI I pay. Up to now I have got a full years NI credit each year.

    So what exactly is going to happen after April 2019 and how will I pay the remaining 7 years I need to get he full state pension?
    • noh
    • By noh 9th Feb 18, 7:53 PM
    • 5,175 Posts
    • 3,482 Thanks
    noh
    • #8
    • 9th Feb 18, 7:53 PM
    • #8
    • 9th Feb 18, 7:53 PM
    Can you explain that.

    I am self employed so that is the only NI I pay. Up to now I have got a full years NI credit each year.

    So what exactly is going to happen after April 2019 and how will I pay the remaining 7 years I need to get he full state pension?
    Originally posted by ProDave
    This should explain:
    https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions
    • marlot
    • By marlot 9th Feb 18, 7:57 PM
    • 3,268 Posts
    • 2,378 Thanks
    marlot
    • #9
    • 9th Feb 18, 7:57 PM
    • #9
    • 9th Feb 18, 7:57 PM

    I am considering early retirement (likely to be within the next 6 months)...
    Originally posted by valio247
    Depending on your salary, you may have paid enough NI in April and May to get a full year of NI credit for 2018-19.

    One of the reasons I'm staying until at least the end of May :-)
    • ProDave
    • By ProDave 9th Feb 18, 7:59 PM
    • 633 Posts
    • 676 Thanks
    ProDave
    So I have to "make sure" (cough) that I earn enough to pay class 4 NI to continue building up my state pension entitlement?
    • noh
    • By noh 9th Feb 18, 8:04 PM
    • 5,175 Posts
    • 3,482 Thanks
    noh
    Yes either that or pay voluntary class 3 contributions.
    • valio247
    • By valio247 10th Feb 18, 7:57 PM
    • 24 Posts
    • 4 Thanks
    valio247
    Thanks to all for the comments & advice. In response to some of the advice:


    pip895 - To buy the 2 partial years would cost a total of £988.60 which seems a lot just for a few extra £'s per week (although I realise in the long term it may pay for itself but personally not worth it).


    xylophone - thanks for the link to the guide, very useful.



    Currently I am semi-retired but still work part-time and will have contributed enough for year 2017-18.


    But to return to my original post, if I fully retired and made no further NI contributions of any description before Apr 2022, would I be correct in saying that my current figure of £137.74 will not decrease in any way? (currently I assume small increases due to this years contributions and inflation).


    Many thanks again to everyone.
    • molerat
    • By molerat 10th Feb 18, 9:04 PM
    • 17,913 Posts
    • 12,195 Thanks
    molerat
    pip895 - To buy the 2 partial years would cost a total of £988.60 which seems a lot just for a few extra £'s per week (although I realise in the long term it may pay for itself but personally not worth it).
    Originally posted by valio247
    In all likelihood paying up those partial years would give you nothing at all as I assume they are pre 2016.
    www.helpforheroes.org.uk/donations.html
    • xylophone
    • By xylophone 10th Feb 18, 9:26 PM
    • 24,478 Posts
    • 14,330 Thanks
    xylophone
    The amount does not decrease - for annual increase see

    https://www.gov.uk/new-state-pension/how-its-calculated
    • valio247
    • By valio247 11th Feb 18, 11:05 AM
    • 24 Posts
    • 4 Thanks
    valio247
    The partial years are for 2012/13 and 2013/14 so no point whatsoever in paying them up. Thanks again to everyone for all comments, all is a bit clearer now.
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