Voluntary ni contributions, pay previous years or both?

seashore22

My husband and I have been looking at our possible retirement income and ways to increase what I can bring to the pot. The situation is as follows:


I'm 50 years old.
Have 27 years of NI contributions, including time while in receipt of child benefit.
For various reasons I'm not working at the moment.
Not in receipt of any state benefits.


As far as I can see I have three options:


Top up NI contributions using previous years. Would this have to be via a lump sum?


Start paying voluntary NI contributions. I assume that I could pay for the next 15/16 years and that would give me more than enough to get a full state pension.


A bit of both.


Any suggestions?

greenglide

You need 35 years for a full pension after 5/4/2016. If you truly have 27 years to date (have you obtained a pensions forecast from DWP and a contributions statement from HMRC?) you only require a further 8 years.

Have you ever been contracted out? If so your STP may be subject to a "contracted out deduction" because of this. You can get the extra years to offset this if you work additional years but it is my understanding that you can't use voluntary contributions to do this once you reach the 35 years.

If your pensions forecast already shows more than £144 (due to significant AP from SERPS / S2P) then this will be your foundation amount from 6/4/2016 and you will get the full pension. This is based on the current rules which requires only 30 years contributions before 6/4/2016 so you should be able to manage this by starting voluntary contributions now.

seashore22

I received a State Pension Statement in February and it confirmed the 27 years.


I did know about the new 35 years necessary for a full pension. I just want to make sure that I have the 35 years plus a bit to allow for any future changes that the Government might make.


I've never been contracted out.

greenglide

So what was the forecast value? Crucially was it for £144 or more to give you the full STP pension (provided you reach 30 years by 6/4/2016)?

little_monkey

Can you not sign on and get national insurance "credits only"

seashore22

Forecast pension was in the region of £107 a week.


I couldn't sign on because I'm not actively looking for work at the moment and our household income is far too much to claim.

Mojisola

Have you read Martin's guide?
https://www.moneysavingexpert.com/savings/state-pensions

seashore22

No I haven't Mojisola, but I will now.


Thank you everyone.

greenglide

Forecast pension was in the region of £107 a week.

Hmm. Looks as though voluntary contributions will be needed then. You do have enough slack to wait until 2016 to see what your foundation amount is for STP and to see how many additional years you need. Eight additional years is needed so there is time.

seashore22

The 30/35 years needed to qualify for a full state pension is based on when you retire isn't it? If you retire before 6/4/2016 then you need 30 years and if you retire after this date then you need 35 years. Is that correct?

greenglide

seashore22 wrote: »

The 30/35 years needed to qualify for a full state pension is based on when you retire isn't it? If you retire before 6/4/2016 then you need 30 years and if you retire after this date then you need 35 years. Is that correct?

The 30 / 35 year change depends on when you reach SPA. You said that you are 50 years old so your SPA is 66 - in 2030 or so?

So you will definitely need 35 years (and things could change again by then)