NI/Pension advice please....

accountnurse

Hello,
Following advice already given in the forum I got my state pension forecast. (things have seriously improved-it took my Mum over a year to get this info a few years ago)
I am 41, female, single, self employed and paying class 2 NI. My forecast shows 23 qualifying years giving me 53% of the basic pension, if my circumstances don't change I will achieve the full pension by 65. I have one year in the last 10 that I can pay class 3 totalling £260.15 for to gain another qualifying year (I have until April 2009 to pay)
My questions are......
1) If it's right that I'll pay about 5 extra years worth of NI after I've achieved enough qualifying years for the full pension, is it worth paying up for the year detailed above? If I've understood correctly, I would need to be not working at all (and have surrendered my self employed status) to be able to have any years where I pay no NI at all.
2) I have an additional pension of 2p a week (!) presumably from a part time PAYE job I had a few years ago? Am I right in thinking I can no longer add to this? I am just about to start another part time job on PAYE-it's only £100 net a week but I'm wondering if the NI I'll pay through PAYE will contribute to my state pension. I am not surrendering my self employed status and I'll continue to pay class 2 (I still have mostly self employed income)
I know I need to make additional arrangements for a 2nd pension-I have a very old Century Life pension on hold that I haven't paid into for about 15 years, I don't know how to work out if it's better to restart this pension or start a new one....I realise that is a big question, but any advice on where/how to start working it out would be appreciated.
I am hoping that 2006 will be the year I finally understand pensions(!)
Thanks

CIS

1)f you work your entire life, then you pay 49yrs - you only need 44 for a full pension. You can probably achieve at most 48yrs without paying this yr, leaving you with a buffer of 4 years. Pay the 1 yr and you have a 5 yr buffer.
Whether you pay or not is a gamble as to whether you will miss 4 yrs future years of conts or not.

2)Additional Pension (AP) is only accrued by the employed and from some benefits, if yours is from pre2002, it was SERPS (1 of the two types of AP) and only accrued from employment. In any case you can only accrue AP if you returned to paid employmentor claimed certain state benefits, it cant be accrued by anyother means.

The #100 per week will accrue some S2P , I would estimate around #2.20 per week in S2P for every full year that you work and earn #100 p/w.

To find ou more about state pensions, have a read through this:
http://www.thepensionservice.gov.uk/pdf/np46/np46apr05.pdf
(I used it when I worked for the pensions service as a reference book)

EdInvestor

I have a very old Century Life pension on hold that I haven't paid into for about 15 years, I don't know how to work out if it's better to restart this pension or start a new one....

It is probably better to move this money into a modern pension with lower charges and good quality funds where it can work harder.Asking for a transfer value is the first step.

If you are basic rate taxpayer you may however be better to put any additional new savings into an ISA, which is a much more flexible tax wrapper than a pension in which to accumulate a retirement pot.