Only an additional £50 to buy 1 extra year's qualifying year - should I?

guli

Hi all,

I have around 35 years more to reach retirement age, I've already acrrued 13 qualifying years. Did a quick pension forecast online, seems that I have until Friday to send a cheque in of just £50 to make one of my shortfall in NI contribution year (2000/2001) to become a full qualifying year.

I'm not worried about reaching full basic state pension (30 qualifying years), just wondering if it's worth sending the £50 cheque clas 3 NI contribution for that shortfall year? Is it worth it, i.e will I get more in S2P entitlement calculation?

Thanks

NAR

It's a tough call because who knows what will happen you or the rules over the next 35 years.
Personally for the sake of £50 I would buy the year.

patricia1066

Hi guli

the s2p wont be increased by paying up a voluntary contribution, on current rules. Its intended to make up the 30 years needed for the basic pension. But who knows how s2p will be calculated in 35 years time.

The National Pensions guide does give some detail of how s2p is calculated at the moment, and an indicator of whom the changes affect most.

The choice is between s2p and a private pension. The choice seems to be one of preference.

Either the State Second pension which appears to be more generous than the current 5% stock market forecasts, or for having your own lump sum to deal with as you wish at retirement.

But you cant just spend it as you like, you have to purchase an annuity.

Sorry if it seems offtopic, but me an my husband are on opposite sides of this debate. Or maybe we are spreading our risk...

EdInvestor

patricia1066 wrote: »

But you cant just spend it as you like, you have to purchase an annuity.

.

Not any more.

McKneff

EdInvestor wrote: »

Not any more.

why 'not any more'

bendix

oh god . here we go again . ;-)

You can do an income drawdown arrangement whereby you invest the cash yourself in whatever investment class you like, and you're allowed to drawdown anything from 0-120% of an average annuity level per annum. You can do this until you're 75.

The advantage, of course, is that if you snuff it before you're 75, the cash goes to your estate (subject to tax issues), unlike an annuity where you're left with nothing.

After 75 there is another more restricted option for avoiding by an annuity, but it is possible to avoid.

Just don't live too long.

Robert_Sterling_3

Take a chance. Pay the money.

DiggerUK

@ guli,

I'm with NAR on this one.

I still think it's a bit of a scare tactic.
Got the same sort letter in 2004 and bought 5 weeks shortfall for 30 pound.
Couldn't be @rseoled bothering for such a small amount.

guli

Thanks to all for your reply. I have just written the cheque and will send it by first class post in the morning.

Called HMRC earlier, confirmed that as long as the postmark on the letter is on or before 5th of April, they would honour it.

So for everyone who's uhm-ing and aah-ing on the 96/97 to 02/03 dateline, you still have time to post it today, 3rd, or tomorrow 4th.

wakeupalarm

For state pension it's 30 years atm for those retiring after 2010 but what happens if they decide to change it in the future back upto to around 40 years? We could all miss out if we don't top up now. It's difficult to know what to do. They should just give you the option to buy any missing years at any time.