Voluntary contributions, worth it?

LolitaLove

I'm a full time student, in my 20's. I've only ever been in education so have made no contributions. I have almost fifty years left until I can retire. Should I pay voluntary contributions to cover this time or should I just wait until I finish training (will be working most likely for the NHS). When should I worry about this...I mean fifty years is an incredibly long time...should I just leave it until I'm working? Any advice appreciated thanks

Lokolo

I wouldn't neccessrily put into pension whilst student, but if you have spare money, save it, perhaps for a house deposit.

However, if it ends up you being a student for a lot longer than you originally planned then you shouldn't forget and start paying into one.

Non tax payers get limited tax relief on their pension contributions.

Iceweasel

You should already have 3 years contributions credited to you.

grey_gym_sock

i wouldn't suggest paying voluntary NI contributions when you're in your 20s.

the cost to buy a year of state pension entitlement is the same now for a 25-year-old or a 65-year-old, but you have a wait at least 40 years longer to get something back for it. it can make more sense to buy years if you're near to retirement and missing a few years.

it might make sense to buy years if you have a nearly complete year - which can happen if you work for only part of the tax year. for the purposes of the state pension, you either have a year, or don't. so e.g. if you had 45 weeks' worth, and only needed voluntary contributions for the other 7 weeks, it would cost much less to make it up.

you also only need 35 years (under proposed new rules) to get the full state pension. so you have plenty of time.

the rules keep on changing, so there's no certainly about exactly what you'll get for any contributions made now. especially when there's a long time to go.

there's nothing magic about the state pension. you probably wouldn't want to live off just a full state pension. and if you have enough other income (e.g. from other pensions), it wouldn't really matter if your state pension wasn't quite a full 1.

when starting to contribute to pensions, i wouldn't necessarily start with voluntary NI contributions.

Living_proof

I am at the other end of the scale and about five years ago when I was 55 the authorities wrote to me saying I could pay voluntary contributions for years missed but had to do so by a certain date. When I looked into this I phoned the contributions agency to be told I already had the required 30 years. In the light of new ideas (rather than legislation) I gather the new pensions will come into effect at the earliest in 2016. But the new pension requires 39 years of contributions, so will I get a chance to pay back those I missed, but didn't need at the time?

Jack_Griffin

It is 35 qualifying years not 39 and the earliest it comes in is April 2017.

jamesd

There's some plan to let people buy back years but the details haven't been announced. The earliest the flat rate reduction in state pensions for workers comes in is 2017 so you have time to either get more years by working or by buying years between now and then if you need to. Best to get a current State Pension Statement and see what it says about the number of years you have so far.