qualifying years for state pension.

Just_landed

Stompa wrote: »

In recent years I've used the online service to annually get a state pension forecast. Each of these shows the number of 'qualifying years'. However, once my number of 'qualifying years' reached 30, it stopped increasing in subsequent forecasts. Does anybody know if this is because they only show the number of years that actually 'qualify' you for anything under the current system (so it doesn't report any excess years), or have I got a problem?

Thanks

Been on the phone to them today, your thinking is correct by what they said to me.

gterr

This new 35 year rule came as a shock when I heard it on the car radio today. I have some missed years due to illness in my twenties when I was not receiving NI credits because I wasn't claiming sickness/invalidity benefits.

The news about lowering the qualifying years to 30 was good for me, because I can manage that. Indeed I obtained a pension forecast which said I already had the 30 years. FOR THIS REASON I made my plans to cease self-employment next year. Now if they raise the qualifying requirement to 35 I may be short. (I am in my late 50s, female, should reach state pension age in October 2021, but I'm unwell, and will be unable to work much longer.)

I can't believe that the government can mess with people's planning in this way. One day I get good news about the new flat rate pension, the next I get bad news about the qualifying years. I have tried to get a new pension forecast online but the website is giving errors. Really I just want to check on the number of qualifying years I have.

If I have to retire with too few years can I make voluntary contributions to buy them? Alternatively, maybe I should wind down the business but keep it in existence in order to make the NI contributions.

sleepless_saver

gterr wrote: »

If I have to retire with too few years can I make voluntary contributions to buy them? Alternatively, maybe I should wind down the business but keep it in existence in order to make the NI contributions.

When you are no longer self employed, you could make voluntary contributions. http://www.hmrc.gov.uk/ni/volcontr/basics.htm .

grey_gym_sock

it's cheaper to stay self-employed and keep paying class 2 contributions than to pay voluntary contributions. even if you're under the small earnings exemption for class 2, you can just not apply for exemption.

WISHIWASRICH_2

gterr wrote: »

This new 35 year rule came as a shock when I heard it on the car radio today. I have some missed years due to illness in my twenties when I was not receiving NI credits because I wasn't claiming sickness/invalidity benefits.

The news about lowering the qualifying years to 30 was good for me, because I can manage that. Indeed I obtained a pension forecast which said I already had the 30 years. FOR THIS REASON I made my plans to cease self-employment next year. Now if they raise the qualifying requirement to 35 I may be short. (I am in my late 50s, female, should reach state pension age in October 2021, but I'm unwell, and will be unable to work much longer.)

I can't believe that the government can mess with people's planning in this way. One day I get good news about the new flat rate pension, the next I get bad news about the qualifying years. I have tried to get a new pension forecast online but the website is giving errors. Really I just want to check on the number of qualifying years I have.

If I have to retire with too few years can I make voluntary contributions to buy them? Alternatively, maybe I should wind down the business but keep it in existence in order to make the NI contributions.

If you have 30 years you will get 86% of the flat rate pension - 30/35

dampsquib

It seems the concept of 'qualifying years' is becoming a lot more complicated. Many people, like me, who thought they might benefit from the new flat rate pension .... won't.
I was in various government and company pension schemes, and as such, I was 'contracted-out' and paid lower National Insurance contributions. I see in paragraph 85 of today's White Paper, my new State Pension will be calculated as follows:
(£144 x Number of pre-implementation qualifying years/35) less "rebate derived amount".
This "rebate derived amount" doesn't seem to be explained anywhere, so I guess it might be a while before we discover exactly how this adjustment will impact on the size of the new-system pension.
Whilst 'getting less for paying less' sounds reasonable, it does make working out what you've got to live on difficult.

SnowMan

dampsquib wrote: »

It seems the concept of 'qualifying years' is becoming a lot more complicated. Many people, like me, who thought they might benefit from the new flat rate pension .... won't.
I was in various government and company pension schemes, and as such, I was 'contracted-out' and paid lower National Insurance contributions. I see in paragraph 85 of today's White Paper, my new State Pension will be calculated as follows:
(£144 x Number of pre-implementation qualifying years/35) less "rebate derived amount".
This "rebate derived amount" doesn't seem to be explained anywhere, so I guess it might be a while before we discover exactly how this adjustment will impact on the size of the new-system pension.
Whilst 'getting less for paying less' sounds reasonable, it does make working out what you've got to live on difficult.

Don't forget that there is an extra protection in paragraph 86 that you won't get less than the current state pension calculation. So it is probably a case of getting 'at least as much'. If your 'current state pension entitlement' is less than £144 (which it may well be if you have a lot of contracted-out service and so limited SERPS) then you can accrue some more state pension post 2017.

Note both the 'current state pension scheme calculation' and the 'rebate derived amount' isn't explained so I agree it is hard to be precise until they have calculated your individual amounts and it does depend a bit on specific national insurance records.

But overall I suspect you will come out of the current proposals quite well.

buffman

Am I correct in assuming that under these proposals, individuals can continue to pay NIC Class 3 to top up their number of qualifying years? Somone who has topped up to 35 qualifying years by paying NIC Class 3 will receive the full flat state pension of £144?

SnowMan

buffman wrote: »

Am I correct in assuming that under these proposals, individuals can continue to pay NIC Class 3 to top up their number of qualifying years? Somone who has topped up to 35 qualifying years by paying NIC Class 3 will receive the full flat state pension of £144?

Yes class 3 contributions will still be payable.

But expect class 3 contribution rates to go up post 2017 because you will be buying credits for the £144 flat rate pension rather than just the current £107 basic state pension, which is only partially offset by the lower accrual of 1/35th rather than 1/30th.

From annex 3 of the white paper

Voluntary National Insurance contributions

21. Under the current system, those who have gaps in their National Insurance records, for example, as a result of time spent in full-time education, are able to ‘top up’ their records by paying voluntary National Insurance contributions. These do not count towards the additional State Pension.

22. The Government intends to retain voluntary National Insurance contributions. As is currently the case, the cost of those contributions will be kept under review.

buffman

Thanks, Snowman. How many years in arrears can one pay Class 3 NIC? From what you say, it probably makes sence to make contributions until 2017 and then review.