Trying to get maximum state pension

penwise

I was contracted out all my working life and wish to retire at 60
(2023) from the civil service.

Under the current state pension system By April 2016 I will hopefully just about have the necessary 30 years ( which equates to basic pension of 113 ) and can build from that.

Unfortunately I would need to work 9 more years to get the maximum new state pension and I only have 7 years left until 60 (2013) ie 2 years short.

Does anyone know If I can buy NI contributions to sort this?

E.g. Can you buy additional state pension contributions to bring this up or something else.

Thanks

kidmugsy

penwise wrote: »

I was contracted out all my working life ...
Under the current state pension system By April 2016 I will hopefully just about have the necessary 30 years (which equates to basic pension of 113 ) and can build from that.

Unfortunately I would need to work 9 more years to get the maximum new state pension and I only have 7 years left until 60 (2013) ie 2 years short.

You won't be short of the necessary 35 years. Does your worry stem from your having been contracted out?

Cyberman60

You won't get the maximum and neither will anybody that was contracted out in any of those qualifying 35 years. I've accepted that as I have a small private pension anyway. In the future the rules may change again as the country is so much in debt (nearly 2 trillion!!) so even if you plan under the new rules it may not be enough.

xylophone

See the following re single tier state pension - the legislation has now been passed https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

hugheskevi

Under the current state pension system By April 2016 I will hopefully just about have the necessary 30 years ( which equates to basic pension of 113 ) and can build from that.

Have you confirmed you have zero Additional Pension eligibility? Don't just assume you have zero without checking.

Does anyone know If I can buy NI contributions to sort this?

You can make voluntary National Insurance contributions to obtain extra qualifying years, but that only applies to years where you made insufficient National Insurance payments to gain a qualifying year. You won't have any years where you fail to make sufficient National Insurance payments until around 2024.

You may as well wait to see what your foundation amount in the single-tier pension is, and then consider your options. For example, you may wish to be self-employed and make class 2 National Insurance contributions when you retire.

You won't get the maximum and neither will anybody that was contracted out in any of those qualifying 35 years.

You will receive the maximum if you can accrue sufficient single-tier pension post 2016 to overcome the contracted-out deduction, which is about 8 or 9 years of accrual under the new system.

penwise

Cyberman60 wrote: »

You won't get the maximum and neither will anybody that was contracted out in any of those qualifying 35 years. I've accepted that as I have a small private pension anyway. In the future the rules may change again as the country is so much in debt (nearly 2 trillion!!) so even if you plan under the new rules it may not be enough.

I had read earlier on this forum that for example if you had got 30 years service by April 2016 then calculating your foundation amount under the curent scheme you would about 113 then if you work for the @ the next 9 years you should get the maximum new state pension - had this changed?

Cyberman60

penwise wrote: »

I had read earlier on this forum that for example if you had got 30 years service by April 2016 then calculating your foundation amount under the current scheme you would about 113 then if you work for the @ the next 9 years you should get the maximum new state pension - had this changed?

The foundation amount is the lowest you qualify for as I understand it if you've done the full 35 years. I don't see where your 9 years comes in unless that is the number that you're going to add that will not be contracted out. The fewer years you are contracted out then the more near to the maximum you will get.

I retired early at 52 thinking pension would be based on 30 years as it stood at the time but unfortunately I will now only get 30 x 35ths, less also amounts for contracted out years, as I understand it. I feel I've been conned but no way am I going back to work. Life is too good to work it IMO !!!!!

penwise

hugheskevi wrote: »

Have you confirmed you have zero Additional Pension eligibility? Don't just assume you have zero without checking.



You can make voluntary National Insurance contributions to obtain extra qualifying years, but that only applies to years where you made insufficient National Insurance payments to gain a qualifying year. You won't have any years where you fail to make sufficient National Insurance payments until around 2024.

You may as well wait to see what your foundation amount in the single-tier pension is, and then consider your options. For example, you may wish to be self-employed and make class 2 National Insurance contributions when you retire.



You will receive the maximum if you can accrue sufficient single-tier pension post 2016 to overcome the contracted-out deduction, which is about 8 or 9 years of accrual under the new system.

Thanks for that.

My concern is that if I retire at 60 I will be 1-2 years short of this. The self employed and make class 2 national insurance contributions option looks interesting how does this work?

Thanks

hugheskevi

The self employed and make class 2 national insurance contributions option looks interesting how does this work?

You simply decide to become self-employed and pay Class 2 National Insurance contributions of £2.75 per week (compared to £13.90 p/w to make voluntary class 3 contributions).

Of course, being retired it is quite likely your self-employed earnings will be very low. Fortunately HMRC allow:

If you earn less than £5,885 per year you can apply for a Certificate of Small Earnings Exception and not pay Class 2 National Insurance contributions. However, you might decide to carry on paying them voluntarily to keep your entitlement to the State Pension and other benefits.

penwise

kidmugsy wrote: »

You won't be short of the necessary 35 years. Does your worry stem from your having been contracted out?

Yes that's right.

I have being calculating my foundation amount based on the current scheme and using this I would need @8-9 more years working post 2016 to get the new full state pension but I only have 7 years from 2016 until I want to retire .

I don't know how to calculate foundation amount using the new scheme as I was contracted out it looks really complicated and I think it would be less anyway.

penwise

hugheskevi wrote: »

You simply decide to become self-employed and pay Class 2 National Insurance contributions of £2.75 per week (compared to £13.90 p/w to make voluntary class 3 contributions).

Of course, being retired it is quite likely your self-employed earnings will be very low. Fortunately HMRC allow:

Thanks for that - that could be my solution!