Shortfall in National Insurance Contributions

seven-day-weekend

terry2008, you can get a pension forecast, see this link:
http://www.thepensionservice.gov.uk/state-pension/forecast/home.asp

loafofbread, afaik you do not get NI credits for full-time study. However, you only need to pay for 30 years to get your full State Retirement Pension (assuming your retirement date is after April 6th 2010), so it probably is not worth you making up the shortfall.

russula

Can someone please confirm that I have understood how HRP years are credited?
I assume that as a parent of one child, I'm entitled to a maximum of 16 HRP years? And that this number is then reduced for each year that NICs were paid during that 16 year period?
Thus my pension forecast allocation of 12 HRP years means that I paid NICs for 4 years out of the 16 years?

EdInvestor

terry2008 wrote: »

sorry, this may be a stupid question.

my wife has a HRP of 12 years which we understand means that the years for maximum pension are down to 27. however she only has 13 qualifying years and we haven't been able to find out what pension she is likely to get.

That will be 13/27ths of 90.70 = 43.67

EdInvestor

russula wrote: »

Can someone please confirm that I have understood how HRP years are credited?

Currently, HRP years reduce the amount of years you need to get a full state pension.So if you had 16 HRP years, this would mean you only needed 26 qualifying years ( 39-16) for the full amount. It is possible to convert a NIC year into a qualifying year by paying missing NI for that year - this might be useful if you had less than the minimum 10 qualifying years to get any pension at all.

Thus my pension forecast allocation of 12 HRP years means that I paid NICs for 4 years out of the 16 years?

Ask the Pension Service for a breakdown. The rules change after 2010, with HRP years being credited as full years, the minimum years for the full pension falling to 30 and the max no of HRP years also falling - IIRC to 12, but could be wrong about that.

russula

EdInvestor wrote: »

Currently, HRP years reduce the amount of years you need to get a full state pension.So if you had 16 HRP years, this would mean you only needed 26 qualifying years ( 39-16) for the full amount. It is possible to convert a NIC year into a qualifying year by paying missing NI for that year - this might be useful if you had less than the minimum 10 qualifying years to get any pension at all.

Thank you. I'm not due to retire until 2014, so I fall into the 30 qualifying year category, but only have 25 so far. I'm trying to decide whether I should take up the 'back payment' option to add years.

EdInvestor wrote: »

Ask the Pension Service for a breakdown.

Good idea. Can that be done via the online service?

EdInvestor wrote: »

The rules change after 2010, with HRP years being credited as full years, the minimum years for the full pension falling to 30 and the max no of HRP years also falling - IIRC to 12, but could be wrong about that.

Ahaha! i didn't know about the HRP falling to a max of 12. Maybe that's why I only have 12 allocated then. A breakdown will no doubt clarify things.
Thanks!

terry2008

EdInvestor wrote: »

That will be 13/27ths of 90.70 = 43.67

Thanks for the info.

babababor

Class 3 NI contributions are to go up by around 50% to £12.05 a week from April 2009. Is this what we will have to pay for the additional backdated 6 years NI contributions recently announced?

Additionally will the extra state pension that additional NI contributions will buy, apply only from the date NI contributions are made, or will the pension be backdated?

EdInvestor

babababor wrote: »

Class 3 NI contributions are to go up by around 50% to £12.05 a week from April 2009. Is this what we will have to pay for the additional backdated 6 years NI contributions recently announced?

I believe so.

Additionally will the extra state pension that additional NI contributions will buy, apply only from the date NI contributions are made, or will the pension be backdated?

Normally extra state pension is backdated, but you should check.

donaldtramp

Regarding pension top ups for women the question about the price for buying back a year for women is going up, it was in The Times today. I'm in the middle of helping my mum sort out her pension.
Pension prediction already applied for.

http://www.timesonline.co.uk/tol/money/tax/article5257098.ece

Doubling the cost of the pension buyback for women
Many women who gave up work to raise children miss out on the full pension — £90.70 a week, rising to £95.25 in April — as they have not paid enough Nics. They can buy extra years but the cost will rise from £421 to £627 from April — 49% more.
“The government has conned millions of older women by telling them they can buy back their lost pension, but failing to tell them exactly how much it is going to cost,” said Dot Gibson, vice-president of the National Pensioners Convention.

So it might be in your interest to get your fingers out.

donaldtramp

Well my mum has her prediction in and she has 21 years worth.
She spoke to http://www.pensionsadvisoryservice.org.uk/

It is well worth her buying the six years worth of NI stamps that she is entitled to do. The pensions advisory service was very useful and I'd thoroughly recommend calling them for any advice.

It's going to cost her about 2 grand to buy the contributions and she'll get that money back in around 2 years and then continue to get the extra money from then onwards.

For info for anyone else doing this she has been able to buy back the years ending 97 £309, 98 £314.60, 99 £325, 00 £335.40, 01 £340.60, 02 £351.

From 2003 onwards the cost is £421 but from April this year I think the cost is going to be £627!!

It's probably in your interest to buy back these earlier and cheaper years.

My mum is also entitled to some married womans contributions when my dad hits 65. Buying back the 6 years worth of NI contributions also enhances her pension when this happens. I'm not totally sure about this bit but the advisor at the Pensions advice centre reckoned it was all good!!!

It's fairly easy. The Pensions advisory service will talk you through it and provide the forms to buy back the years. They are really helpful.

Just posting up our experiences to encourage people to look into it. So if you are close, get your finger out;)!! My mum, her friends and all my aunts have recently become pension experts!! It's not hard!! Have a click at the link earlier in this post and give them a bell.

All the best
DT