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State pension advice

Hi all
58 Male and retired from main day job with a pension income of £21K Doing some p/t work as it comes for a bit extra. Was thinking of the state pension today and thinking 65 but with my 65th being May 2020 the odds are by then it will 66 so a bit longer to wait.

Fully paid up NI but I do have a little spare each month leading to a question of ''can I gain anything state pension wise by buying extra now'' ?
Thanks

Comments

  • jamesd
    jamesd Posts: 26,103 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 6 December 2013 at 4:35AM
    At present only a person who has fewer than 30 years of NI contributions or credits from things like receiving Child Benefit can gain by buying more years. Unless you have spent many years outside the UK or not working and not on benefits it is unlikely that you can gain by buying more years.

    What you could do to gain is make payments into a personal pension. Because you have at least £20,000 of income in payment to you already you'll be able to opt for Flexible Drawdown whenever you are done with making more pension contributions. That lets you take all of the money out whenever you like, no caps at all. Once you opt for this you can never make any more pension contributions, nor have any employer make them for you, without paying a tax penalty.

    Until you use Flexible Drawdown you can use Capped Drawdown. That has a cap called the GAD limit on how much can be taken out each year. You can continue to make more pension contributions after starting capped drawdown, just into a different pension pot, which could even be with the same pension company.

    With both forms of income drawdown you can take an initial 25% tax free lump sum. This is what provide the tax gain for you: tax relief on the way in, no tax on the way out. For both, any other money taken from the pension is subject to normal income tax in the years in which you take it out.
  • opinions4u
    opinions4u Posts: 19,411 Forumite
    Your state pension will be at 66.
  • sleepless_saver
    sleepless_saver Posts: 2,741 Forumite
    Part of the Furniture
    edited 6 December 2013 at 1:20PM
    Fully paid up NI but I do have a little spare each month leading to a question of ''can I gain anything state pension wise by buying extra now'' ?
    Thanks

    By the time you can claim state pension, it will be 35 years contributions not 30. According to Pensions Advisory Service the government hasn't decided yet how this will pan out in terms of voluntary contributions for people who meet the 30 year requirement before the rules change but retire after.

    So watch this space http://www.pensionsadvisoryservice.org.uk/state-pensions/voluntary-national-insurance-contributions
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