Voluntary NI contributions

floggit

My wife has had a number of years looking after children and is now working part time (3 days/week in a school). She has received a few letters over the last few years about making up her NI contributions to get full pension. Is it worth it? She has earnt a weekly pension of £29 so far by at age of 37.
Sorry if this type of question has been asked before but I searched and couldn't find anything similar.
She has a stakeholder pension and school pension.

EdInvestor

Is it worth it?

It certainly is, especially for female low earners The two state pensions are being reorganised to benefit exactly this group, and from 2010, she will only need to accumulate 30 years contributions to get the full basic pension, down from 39-44 depending on age (you would have to save 100k to buy this income as an annuity).

Pay up as many back contributions as possible and make sure home responsibilities entitlement is registered.

CIS

Your best is to have a god look at her pension forecast and run through a few figures, pm me if you need help ( I used to be a state pension forecast advisor

If you take a full year of class 3 voluntary in to account, it costs #392.60, in return for this you get (#84.25/44) = #1.91 p/w, = #100 p/y return, guaranteed for life and guranteed to rise each yr, takes around 3.5yrs to recoup the money.

The fact your wife has HRP actually means that she will get a better proportional return for any years of class 3 she pays.

eg 10yrs HRP, 10 qualifying yrs, needs 44 yrs for a full pension

she currently has 10 / ((100/44yrs)-10yrs HRP) = 30%.

she needs only 34yrs for a full pension, so 1 yr of Class 3 gives her (84.25/34) = #2.48 per week for 1 yr of paid class 3, or #130 p/a, takes around 3yrs to recoup.

If the 30yr rule goes through, for 1 yr of class 3 , it will give you a return of 2.80 p/w for each yr of conts you have, this means you recoup the class 3 outlay in around 2.5yrs.

Also, How much does she currently earn per week ?

floggit

excellent, need to think about all this technical numbers stuff, but it looks like we pay up. thanks