Do I have time to increase my nSp Nov 16

saver861

teralin wrote: »

Thanks to you all for your responses. It does seem that I can buy some extra NI contributions to boost my pension when it starts in November. I intend to start the process soon and I will report back if I encounter any issues/problems. I just hope that the Government doesn't decide to supplement NI contributions out of the goodness of their heart

Excellent. I seem to have misunderstood your original post. If the additional years do actual increase your pension then that's the way to go.

That said, there is no point in buying the extra years until the latest time you can do. As you are spa in November then thats pretty close in any case.

Break even point is around four years so its then down to the usual good health issues etc.

patanne

Before you spend any money, have you requested a pension statement? £127 seems about right for nSP for 30 years, but seems extremely low for the old state pension which was 30 years. To only have about £10 additional state pension after working for 30 years seems very little. You get the higher of the 2, so not necessarily the nSP.

saver861

patanne wrote: »

Before you spend any money, have you requested a pension statement? £127 seems about right for nSP for 30 years, but seems extremely low for the old state pension which was 30 years. To only have about £10 additional state pension after working for 30 years seems very little. You get the higher of the 2, so not necessarily the nSP.

That is the key thing in this situation. The £127 seems a bit odd and if it is even marginally higher than that then the op will lose out if he buys five years additional.

From what the op has said, it seems he is clear that the additional years will add to his pension. As I said earlier, personally I would double and treble check that first. Getting a refund might not be so easy if he has overpaid on voluntary NIC's.

xylophone

I am puzzled by the OP's figures and am wondering whether she has actually requested and received a NSP statement.

She says that she has the 30 years required under the current scheme (and therefore would qualify for full basic state pension under the current scheme) and was always contracted in - if this is the case, and assuming that she was not self employed, she would almost certainly have an amount (even if small) of Graduated Pension/SERPS/S2P

I am due to receive my state pension in November 2016 and I will receive £127 under the new rules (30/35).

30/35 of NSP would be £133.41.

Does she in fact mean that she has had a forecast showing that she would receive £127 under current rules, that is to say a full basic state pension plus a small amount of SERPS/S2P because she was never contracted out?

The NSP guidance https://www.gov.uk/new-state-pension/how-its-calculated

"Your National Insurance record before 6 April 2016 is used to calculate your ‘starting amount’. This is part of your new State Pension.

Your starting amount will be the higher of either:

the amount you would get under the current State Pension rules (which includes basic State Pension and Additional State Pension)

the amount you would get if the new State Pension had been in place at the start of your working life"

Her starting amount could then be the higher of £127 or 30/35 of NSP which would be £133.41.

This would mean that she would need to buy NI credits after 6 4 2016 to increase the NSP amount.

It seems to me that would be better for her to take no action until she has clarified her personal situation - she could telephone for guidance.

teralin

My state pension forecast dated February 2015 showed £118 under the old rules and £127 under the new rules. So my starting amount calculated last year was £127.

xylophone

My state pension forecast dated February 2015 showed £118 under the old rules

which was still a little higher than either 2014-15 or 2015-16 Basic State Pension showing that at some point you had qualified for a small amount of Grad/SERPS/S2P.

30/35 of NSP is higher than £127 so it seems to me that you should at least receive that amount.

In your situation I would check again with DWP and enquire about buying NI credits after 6 April to increase your NSP.

teralin

Xylophone, is there any reason that you would recommend buying NI contributions after 6 April rather than before?

saver861

teralin wrote: »

Xylophone, is there any reason that you would recommend buying NI contributions after 6 April rather than before?

Any years bought after 6 April 2016 will be the new flat pension years and thus currently £4.40 or so per week up to the max 35 years.

Pre 2016 depend on whether there are any deductions for contracting out etc. So, its possible some people could buy additional years pre 2016 but still not increase their pension.

That's why everyone thinking of buying pre 2016 years do need to be absolutely sure that it will actually increase their weekly pension.

teralin

Thank you for your advice.

SnowMan

teralin wrote: »

My state pension forecast dated February 2015 showed £118 under the old rules and £127 under the new rules. So my starting amount calculated last year was £127.

The quote in February 2015 will have been on 2014/2015 rates allowing for Qualifying Years up to and including 2013/2014. So the calculation would have been:

OLD BASIS: 30/30 x £113 (basic state pension) + £5 (additional pension from SERPS, S2P or GRB)

NEW BASIS: 30/35 x 148.17 = £127


It sounds like you won't have Qualifying Years for 2014/2015 or 2015/2016.

This will mean that your Starting Amount at 6th April 2016 will be (updating to 2016/2017 rates)

30/35 x 155.65 = 133.41

The years that you are in time to purchase if they are missing and the costs (assuming you have no partial credits for those years) are

2006/2007: £689
2007/2008: £689
2008/2009: £689
2009/2010: £689
2010/2011: £626.60
2011/2012: £655.20
2012/2013: £689
2013/2014: £704.60
2014/2015: £722.80
2015/2016: £733.20

You can increase your Starting Amount at 6th April 2016 by increasing your Qualifying Years by up to 5 years (given that the new basis is already higher than the old basis). The 5 cheapest years are, again assuming you have no partial credits towards these years, 2010/2011, 2011/2012, and any three out of 2006/2007, 2007/2008, 2008/2009, 2009/2010 and 2012/2013. So total cost is £3,348.80 (= 689 x 3 + 626.60 + 655.20)

If you purchase these 5 cheapest years your state pension will increase by a gross amount of £22.24pw (£1,156.48pa) from £133.41pw to £155.65pw.

Clearly it will only take around 3 or 4 years to recoup the £3,348.80 outlay depending on your tax status.