Shortfall in National Insurance Contributions

jancee_2

donaldtramp wrote: »

Edinvest, just off the phone to my mum, she quoted this article at me from thisismoney.co.uk

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=456043&in_page_id=6



and



What do you think??

Yes, that's correct, except the current basic state pension is £90.70 per week.

When it says 'prior' to today's announcement it means that now, the woman retiring between 6 April 2008 and 5 April 2015 who meets the new criteria will be among those able to revisit years from 1975 onwards and buy up another six shortfall years. The woman who is 60 on April 6 2010 has to wait until she is 60 years and one month old before she can claim her pension, and that age increases until equalised at 65 for women born 1955.

It's important to point out that if she's paid the 'small stamp' those years are still irretrievable.

donaldtramp

Thanks Jancee!

When it says 'prior' to today's announcement it means that now, the woman retiring between 6 April 2008 and 5 April 2015 who meets the new criteria will be among those able to revisit years from 1975 onwards and buy up another six shortfall years. The woman who is 60 on April 6 2010 has to wait until she is 60 years and one month old before she can claim her pension, and that age increases until equalised at 65 for women born 1955.

My mum does meet the new criteria and has 21 or 22 years NI. She is able to buy back 6 years.

I suppose my key question regarding this is article, is that, it reads as if she now only has to build up 30 years NI payments to get a full pension rather than the 39 years NI payments before this amendment. Is this correct?

seven-day-weekend

If her State Retirement age is on or after 6th April 2010, she will only need to build up 30 years NI payments.

donaldtramp

Thanks folks for all your input.

My mum is just off the phone to TPAS and she is unfortuanately one of the ones who lose out. She does indeed need 39 years NI credits because she is retiring before April 2010.
So the 6 years she has bought back will earn her £23.81 aweek. She will receive the money back that she paid for the 6 years credits in about a year and a half.

She has still financially scored due to buying them back it's just a shame she wasn't a few months younger and retired after April 2010. She would've only needed 30 years.

But never mind, she is still better off.

The guy at TPAS told us to keep an eye on legislation coming out early next year. There are more changes to pensions coming through apparently. She has to get back in touch then to see if they can do anything else.

Thanks for all the advice.

Cheers
DT

seven-day-weekend

Your mum is in a similar position to me - I reach state Retirement age in January 2010, so need 39 years.

I will pay my final year's contributions January 2009 an will receive my full pension in Juanuary 2010.

jancee_2

donaldtramp wrote: »

Thanks folks for all your input.

My mum is just off the phone to TPAS and she is unfortuanately one of the ones who lose out. She does indeed need 39 years NI credits because she is retiring before April 2010.
So the 6 years she has bought back will earn her £23.81 aweek. She will receive the money back that she paid for the 6 years credits in about a year and a half.

She has still financially scored due to buying them back it's just a shame she wasn't a few months younger and retired after April 2010. She would've only needed 30 years.

But never mind, she is still better off.

The guy at TPAS told us to keep an eye on legislation coming out early next year. There are more changes to pensions coming through apparently. She has to get back in touch then to see if they can do anything else.

Thanks for all the advice.

Cheers
DT

The emboldened part is what I was referring to in my post. From April 2009 an extra six years [from April 75 onwards rather than 96 onwards which is current] can be bought by those who meet the criteria I listed. It's not known yet how much those years will cost.

donaldtramp

According to this article jancee it's gonna be £627. If I am thinking correctly!

http://www.timesonline.co.uk/tol/mon...cle5257098.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.

jancee_2

donaldtramp wrote: »

According to this article jancee it's gonna be £627. If I am thinking correctly!

http://www.timesonline.co.uk/tol/mon...cle5257098.ece

It does seem likely they'll set the cost at about this rate. Still likely to be worth it for many.

For those whom it affects - this is how you work out whether it's worth buying back these shortfalls:

Add up the cost of buying back extra years. When the cost is announced, find out how much extra pension per week that will get you from the state pension forecasting team 0845 3000168. Divide the second figure into the first and that will tell you the number of weeks in which you'll get your money back. If you have no health issues compare it with the average life expectancy. I believe that's about 81 for a woman, 78 for a man. And rising by one year every four years. It's a gamble but even at this hinted at higher rate it will be worth the money for lots of people.

DBH719K

Hi

I have 28 years NI but have been 'resting' for three years. I will be of retirement age after 2010 so if the last five years NI is credited free as mentioned in an earlier post am I correct in thinking that I will be entitled to a full pension without having to make any further contributions?

seven-day-weekend

I'm not sure that this applies under the new rules which are the ones that will apply to you.

Hopefully, someone will be along shortly who does know for certain!