Should I pay Voluntray NI Contributions ?

ahll

Hi All,
I have recently recieved a letter from the Pension people (Inland Revenue) telling me that from 6th April 2003 - 5th April 2004 'they think you haven't paid enough for that year to count towards your State Pension'.

I didnt work in 2003-2004 or claimed any benefits, so I dont believe I paid any NI.

Is this a no brainer in that I should just pay the money they are asking for NOW £312.75 (45@ £6.95) or should I be taking other things into account ?

They say 'If you do decide to make any voluntary contributions, the deadline for payment is 5 April 2010. Doesnt apply to Class 2 contributions.However the voluntary contribution payment rate may change from 6 April 2006, so it could cost you more if you wait until then.If you wish to pay after that date you will need to get in touch with us to chack the amount'.

I am now 40 years old and really assumed by the time I got to pension age there wouldnt be any ! So is it worth paying in ?

Any advice welcome...thanks

I am going to get a Pension Forcast as recomended and take it from there.

CIS

There will still be a pension when you get there so its best to check it out.

Get a pensions forecasts , it'll tell you whether its worth paying or not

https://www.thepensionservice.gov.uk

nilocmac

This is pretty much the question I want to know the answer to, as I am in a similar situation. Except I have over 2 years missing..

Rogerb_2

Currently a woman has to have 39 full years contributions either paid or credited and a man 44 years years to get a full state pension. I believe there is a minimum number of years and in between pro rata levels
To bridge the current gender retirement age diff of 60 v 65 a non working male will get up to the whole of his last 5 years credited free instead of needing to pay about £7ish per week for a voluntary stamp.
If you don't pay missing contributions promptly the increase referred to after 2 years is only up to the current years rate and in recent times the voluntary stamp only goes up by about 10p per week for every year. It won't cost too much to delay paying it but after 6 years you are timed out.
A woman who has gaps in her working life whilst bringing up children and claiming child allowance will have had her contribution credited free starting from 1978, although I understand things have changed in recent times.
The mentioned personalized forecast will likely be needed as the basis of a decision.

[Deleted User]

I'm in the same boat, but I have 2 years missing as I had a baby (and since I didn't claim child benefit as I didn't know about it my contributions were not credited free grrrr!) and I would have to pay nearly £500 voluntary contributions to get an extra £4.50 a week when I retire. I'm 34. Im not sure what to do.

CIS

By the time that you raech pension age, you will have exactly the same retirement age as a man, 65 years of age.

This gives you a working life of 49 years (16 -65) and within this period you need 44 years, so you get 5 years lee-way in your working life.

If you have only lost 2 years to date, then you have 3 years left that you can miss in your working life, before it impacts on your pension.

If you are now claiming HRP, this will reduce the number of years you now need an dyou may find that the missing 2 year sdont make much of a difference.

Bogof_Babe

I hope no-one minds if I resuscitate this thread, which I found by searching on "forecast" as all the other words I tried produced no results .

I've got my forecast in front of me. I am 54 in a few days and worked from age 17 to 50, but they have calculated that I have 36 years contributions, not 33, so my first question is do they allow some automatically credited years, or how do they come to that figure?

Secondly, they give me a figure of £73.98 "up to April 2005", but "when you reach state pension age we expect it to be £83.83". So how does that work? Do they mean that if I keep my contributions up it will increase to £83.83, or will it do that anyway?

I am quite unlikely to work again (not through disability, just circumstances), so I'm reluctant to make annual payments of around £370 if there is no significant long term benefit.

HELP!!!!!!!!! Very confused :eek: .

CIS

The system for calculating qualifying years prior to 1975 was different to that now, thats proabably where your getting confused.

From 1975, a qualifying year was 50 X the LEL in contributions credits each year, and 52 x the LEL from 1978 onwards.

Piror to 1975, you got 1 weeks contributions noted for every week you paid NI or got credits, this could give you 52 contributions (53 in a leap year) in a year, but a qualifying year was defined as 50 weeks contributions.

But , being generous, they allowed allowed you still to benefit from those extra contributions that you have in each tax year over the 50 that you required for a qualifying year , they did it like this:

example , person 16 in 1970
1970 50 weeks contributions
1971 53 weeks contributions
1972 0 weeks contributions
1973 52 weeks contributions
1974 53 week scontributions

Total conts = 208
Numboer of year between age 16 and 1975 = 5 years

So, 208 / 50 = 4.16, rounded up to 5 years

So from 4 full years, you could actually get 5 qualifying years

Obviously, you had more than 5 working years before 1975, so the effect could easily be magnified , giving you teh extra years.

You would aslo have been credited with the first 2 tax years on your record, so even if you weren't working you would have been covered.

The figure given on your forecast is a projection based on your last recorded tax years details, if your details change, so will the projected pension amount.

If you need any more help, please feel free to send me a PM.

Bogof_Babe

That's excellent, thank you so much CIS. I just need to get it straight in my mind now, but I'm getting the impression that there isn't much point in making extra contributions just for an extra couple of £ a week.

Thanks for the offer of PM advice too. Don't leave the country!

CIS

I may do, Ive just come in to the odd £50 million or so ;-)

CIS

For 1 complete tax year of voluntary contributions its about £370, in return for this you get approx £2 per week return , or around £104per year.

It'll take you around 3 1/2 years to make back each year.

From your projected figure, the actual value is higher than the basic state pension, but you dont say whether your figure includes any additional pension.

If the predicted value , where its broken down on the first page, shows a basic state pension of £82.00, then you predicted to achieve the full basic pension on your current , projected, details.