Voluntary ni contributions, pay previous years or both?

seashore22

Looks like I might as well fill in the form and start paying voluntary contributions then. I can's see any reason to delay.


Thanks for all the help.

little_monkey

seashore22 wrote: »

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.

I don't think getting "credits only" is means tested

Mojisola

seashore22 wrote: »

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.

little_monkey wrote: »

I don't think getting "credits only" is means tested

But seashore would have to be job seeking.

seashore22

Exactly Mojisola and it's not as if we can't afford the NI contributions.


I would rather job hunt in my own sweet time, than jump through hoops at the job centre.

little_monkey

Is it £722 a year at the moment voluntary contributions?

seashore22

Yes I think so. The monthly amounts vary from around £55 to £69, so that sounds about right. Money well spent I think.

SeekTruth

seashore22 wrote: »

Looks like I might as well fill in the form and start paying voluntary contributions then. I can's see any reason to delay.


...

Suggest you look at section headed 'Extended Time Limits for the tax years 2006 to 2007 to 2015 to 2016' in this link. Suggests to me that you should wait until you obtain and understand your Foundation Amount calculation for the Single Tier Pension (in about April 2016) and then know what effect paying voluntary contributions will have. As long as you pay by April 2019 the price won't have gone up.

gadgetmind

seashore22 wrote: »

As far as I can see I have three options:

I will throw in another, cover the pros and cons, and leave it to you to decide.

If you register as self employed (quick, easy, free) then you can voluntarily pay class 2 NI at about £2.75 a week (from memory)

If you do earn some income, then great, if not, then HMRC don't seem to care.

You will have do fill in a self-assessment tax return every year, but this isn't too difficult. My wife does show a few £1000 in income pa but not enough to pay any tax.

You may want to choose a profession that doesn't weight your car insurance too much. Anything to do with horticulture works well IME.

Over to you!

gterr

May I jump on this thread and ask another couple of NI questions?


I know the matter was discussed here some months ago, but perhaps some of the grey areas are clearer now.


I have 36 years of NI contributions and am currently self-employed, female age 58. My 36 years include about 15 years contracted out, and almost all the rest are Class 2s. I am winding down work and could decide to stop being self-employed now, or carry on a few more years.


My first question is: if I continue paying Class 2 contributions from this point will my additional years of Class 2s 'cancel out' some of the years when I was contracted out? So, for instance, if I obtained an extra 4 years' Class 2s, taking my total to 40 years, would my assessment be based on 15 years' contracted out, 20 years' self-employed, and 5 years 'surplus', or on 10 years' contracted out plus 25 years' self-employed, plus 5 years of 'surplus' contracted out years?


Second question: I've seen some figures suggested for the likely 'penalty' for being contracted out (rebate derived amount). Some suggest the loss would be approx. £4.11 per week for each year contracted out, others suggest £1.03 per week per year contracted out. Any comments?


I have read the government paper on the single-tier pension with worked examples, but I'm sorry to say I can't quite see a way of interpreting these to suit my circumstances.


Thanks for your time.

greenglide

It is my belief that further class 2 contributions would, indeed, "see off" some (or all) of the contracted out penalties.

I have also been told that class 3 contributions do not have this value as once you reached the 35 years you couldnt make any more even though some of the 35 years were contracted out.

Do you have a current pension forecast? If you have already reached £145 or so the rebate derived amount is irrelevant although it is unlikely that you will have reached this with a combination of contracting out and self employment.