State pension top up

talexuser

I phoned DWP to see if a new pension forecast was available yet with the intro of flat rate, to be told not, my projection was the same as last August's written one. Advice - call back in September to maybe get an answer!

However was told I could top up for lump sum of £720 to get £4 a week extra on projection of £140/week. Since I am 3 years away from retirement is this right, since all the top ups I have read about are for people recently retiring for which am not eligible because of age? Would this be a different, existing top up scheme?

The interest or dividends on £720 seems trivial nowadays, and a break even of 3.5 years to get the money back seems a reasonable deal if you expect to reach the average of 85?

kidmugsy

The Class 3A NIC scheme is often referred to as a "top up", but it's restricted to people on the old-style State Retirement Pension.

Are they perhaps suggesting, in a clumsy way, that you buy more years of NIC? Do you expect to reach the full 35 years' worth?

xylophone

You reach state pension age in 2019?

You were contracted out?

Is this relevant to your situation?

http://citywire.co.uk/new-model-adviser/news/steve-webb-how-to-boost-new-state-pension-payments/a827032

The NSP will be £155.65.

Class 3 stays at £14.10 a week for 2016-17.

https://www.gov.uk/government/publications/tax-and-tax-credit-rates-and-thresholds-for-2016-17/tax-and-tax-credit-rates-and-thresholds-for-2016-17

talexuser

I've already got 40 years of NI but have deductions because of a final salary scheme opted out of the secondary state pension. Reading the 1st link it does seem I have a "rebate derived amount" and the top ups referred to on the phone must be available post Apr 2016?
The example is so close to the figures I was given it must be a yearly lump sum of Class 3 contributions.

Yes, state pension is in 2019.

armageden

Have noticed there seems to be some confusion between the less attractive Class 3A NIC Top up Scheme & the little mentioned Class 3 NIC Top ups,, which many close to State Pension retirement age can take advantage of if the new flat rate does not apply to them. Making annual £720 NIC top in return for appx £200 a year Pension uplift is a no brainer.
Break even on your investment is 3.5 years, but I am suspicious that the DWP is very quiet on the subject, I await a reply from the Pension Avisory Service that the Scheme is actually being rolled out. I see the top up as taking the edge off my exclusion from the new higher flat rate state pension because my Company arbitrarily opted me out of the full NI scheme.

greenglide

because my Company arbitrarily opted me out of the full NI scheme.

Your employer did not arbitrarily contract you out of the state second pension scheme.

Your employer gave you the option to join their pension scheme and that pension scheme offered you a certain level of pension which would be higher than the state second pension. It return the employer and the employee paid less NI as a result of contracting out.

You happily paid less NI during that period?

jamesd

talexuser wrote: »

However was told I could top up for lump sum of £720 to get £4 a week extra on projection of £140/week. Since I am 3 years away from retirement

Are you still working? If not they may have meant that you could pay voluntarily or each of the three years from now until you reach state pension age. That would produce an increase of 1/35th of the flat rate for each of those years. Doesn't apply if you're still working and paying NI because that gets you the contributions automatically.

Alternatively, are there any years in the last six that don't count towards your state pension that you could buy, perhaps because you weren't working or claiming benefits at the time, or were working outside the UK?

The online state pension statement system is in beta but pretty good for this, it'll tell you for your whole working life which years count or not and give some idea of why.

armageden

Greenglide,
With respect I was contracted out by my company 5 years after I joined the company pension scheme.This applied to the many Company scheme members at the time, many of us did not want this but the option to refuse was not on the table.
You may for some reason, consider yourself an expert on my Pension but those are the facts.

minty777

I have a company pension from the 70's and i had to join the scheme as a condition of employment.When 'contracting out' started i was'nt given the option to stay 'contracted in'.

[Deleted User]

minty777 wrote: »

I have a company pension from the 70's and i had to join the scheme as a condition of employment.When 'contracting out' started i was'nt given the option to stay 'contracted in'.

Ditto

It wasn't even a case of "take it or leave it", it was more like "take it".

greenglide

In the 70s employers could "require" all employees to be in the pension scheme. Of course that was also the time when non - contributory pensions were quite common as well.

Now the employer cannot force anyone to join or remain in the pension scheme.

A decision to convert a scheme to a contracted out scheme must be rare as the huge majority of schemes with benefits that allow them to contract have always been on tracked out.

Contracting the scheme out is a huge saving for the employer and may have been seen as the only way to keep it viable and could only have been done following consultation with the workforce. Would you rather it had been closed instead? I am assuming the scheme was a salary related one.