Voluntary NI contributions to boost state pension

Daisyone

First time poster. Forgive me if this sounds a bit naive or has already been dealt with elsewhere - have had a look but can't spot anything.

I am currently receiving an occupational pension and my SPA is Sept 2019. I have had a statement under the new rules and as I have been contracted out for all of my working life, will receive the 'old rules calculation'. I have something like 41 years contributions (seem to have credit for part time jobs as a teenager!)

What I am wondering about is whether it is possible to make voluntary contributions for the years since I finished paid work (and the years to come until SPA) and, most importantly, whether it would be worth it in terms of receiving some pension under the new rules.

Thanks for any info on this.

Linton

Daisyone wrote: »

First time poster. Forgive me if this sounds a bit naive or has already been dealt with elsewhere - have had a look but can't spot anything.

I am currently receiving an occupational pension and my SPA is Sept 2019. I have had a statement under the new rules and as I have been contracted out for all of my working life, will receive the 'old rules calculation'. I have something like 41 years contributions (seem to have credit for part time jobs as a teenager!)

What I am wondering about is whether it is possible to make voluntary contributions for the years since I finished paid work (and the years to come until SPA) and, most importantly, whether it would be worth it in terms of receiving some pension under the new rules.

Thanks for any info on this.

Although you already have 41 years of NI, 35 being the requirement for a full pension completely under the new scheme, you are allowed after April 2016 to make further NI payments which will give you NewRate/35 extra per year until your State Pension has risen to the New Rate.

So it would be worthwhile to get the extra NI years. I will leave the question on how you best do that to others.

jamesd

It's pretty much certain that your old rules calculation for what you are entitled to will be higher at the start of 2016 and hence that this will become your foundation amount.

It is not worth buying past years or making self-employed NI payments before the flat rate comes in because all this will do is increase the number of years counting towards the basic state pension and you already have the maximum possible entitlement to that.

It will be worth your while to buy years or make self-employed NI payments after the flat rate comes in. These will increase your state pension entitlement by 1/35th of the flat rate per year, increasing your entitlement from around the current basic state pension level to closer to the flat rate. The maximum it can increase to is the full flat rate.

There was a system providing for three years of juvenile credits when you started your part time work. Each of those years was counted towards the basic state pension.

Assuming you use self-employed NI payments for the maximum possible time after the flat rate comes in it appears that you could increase your likely state pension from the current basic state pension level to the basic state pension plus 2.5/35th of the flat rate.

Daisyone

Thank you both very much for your very helpful replies.

James D, just wanted to clarify your suggestion (both to my question and on another thread) that I could pay self-employed NI contributions once the new system is in place and gain 2.5 years of the flat rate pension. Would it be self employed (£2.75p/wk) if you are not actually doing any paid work OR is it voluntary contributions which are £13.90/wk?

I did the calculation on 13.90 and have to say that it still looked like really good value....assuming that I don't snuff-it too soon of course!

molerat

There is someone on here who is a self employed sage, they do not earn anything as they are not very good at the job but they still pay their class 2

jamesd

Self-employment doesn't have to be very profitable or involve any minimum amount of work.