Voluntary NI Contributions, And Which Stakeholder Pension

Strike_Team

I'm 32 years old, and my current pension provision is rather limited as I've spent a lot of time at university, and had a number of years off sick due to a recurring health problem. I've only paid sufficient NI for 3 years worth of state pension, this comes to a projected state pension of £58.24/year (£1.12/week in current money. I've also contributed to an employer's final salary scheme, which is projected to give me £356.92/year (£6.86/week). This gives me a projected pension of £7.98/week in today's money.

I've only made sufficient NI contributions for pension purposes for 3 years, my pension forecast tells me that I can put in Class 3 NI contributions for a further 5 years in which I haven't paid enough NI, to improve my state pension.

my first question is, is it still worth paying class 3 NI contributions now the government is talking about giving everyone a state pension regardless of what they've put in?

Seccondly, I'm not working just now, but I have some savings, and I plan to start a stakeholder pension, and put in the maximum £3600 including tax rebate before April 5th. Which is the best stakeholder, and which are the best funds, or spread of funds to choose?

dunstonh

Which is the best stakeholder, and which are the best funds, or spread of funds to choose?

Most of the stakeholder pensions are much the same. Service, options and fund availability will depend on which provider is most suitable for you. So can't really answer your question there.

Best funds? let you know when you retire. Asset allocation is more important and a decent spread of funds. The percentage you should spread over the areas depends on your personal view of investment risk and the time to go until retirement.

Debt_Free_Chick

Re voluntary NI contributions.

Provided there are no changes to the State Pension, then they are actually very good value. Compare what you have to put in with the extra State Pension you'll get. Remember, that you only put in the extra NI for 5 years, but you get the extra State Pension for life.

Difficulty is ... how long will you live? And will the State Pension change between now and when you receive it.

Unfortunately, no-one can answer those questions so you'll have to weigh it up for yourself.

HTH

Strike_Team

Thanks for the helpful replies. It's a bit clearer now. I think I'll go with the NI contributions in due course, I've got till 2008 to decide anyway.

CIS

Unless you have HRP,you will need 11yrs minimum for a state pension .Thus the minimum basic state pension payable is 25% (11/44ys=25% ).

If you have HRP it reduces the 44yrs needed by 1yr per yr of HRP,but if you only have 3yrs in you will not get any basic state pension regardless.

The £1.12 p/w sounds like Additional pension or graduated retirement benefit which once earned is payableregardless of basic state pension

Beween 60 and 65,you can get automatic credits ,so ignoring HRP and you could have 8yrs of contributions,That would still leave a shortfall of 3yrs,if you dont pay anymore contributions.


These yrs could be paid for but you can only back pay to a max of 6yrs back and if you pay for a yr where you would have entitlement to automatic credits ,it would only count for one yr towards your pension (ie you cant have auto credits for that yr if you pay enough contributions).NOTE,this also applies to HRP