Should I Pay backdated NI Contributions ?

Shaps

Hi ,

Can anyone please advise me .

Requested a pension forecast which shows that I have 7 years qualifing NI contribution upto april 2015 .

According to PART A of the letter I received I am able to pay the backdated Class 3 Contributions
2006 - 2013 ( comes to around £4500 ) but not too sure what to do .
It also says in the third column " to be paid by 5/4/23 does this mean that the amount will remain the same up to this date.

I have the the money which I was going to put into a ISA for next year but coming up to 40 years old would it better to pay the NI contributions.

I am currently self employed and pay my NI yearly .

Any help would be much appreciated.
s

Triumph13

The obvious question is do you expect to keep working to your SPA which will probably be 68 or 69. If you do then that would get you to the 35 years under the new single tier pension and so buying more years now might be wasted - always assuming the rules don't change by then of course which is a pretty big assumption!

jamesd

It could turn out to be wasted money because at 35 years required you will get there at age 67 or 68 if you're 40 now. Just in time to get the maximum, with no safety margin.

What I did in a somewhat similar situation was buy seven years so that I could retire at 60 with nothing more to pay. Then the max requirement was increased from 30 to 35 years so it will be necessary for me to pay in after retirement if I'm to get to the maximum flat rate.

I suggest buying at least one or two years, more depending on just how much margin you want for sorting out early retirement or changes in the number of years requirement. I doubt that more than five years of safety margin is sensible if you do plan on working close to state pension age. I did more because I didn't plan on doing that.

jamesd

Shaps wrote: »

It also says in the third column " to be paid by 5/4/23 does this mean that the amount will remain the same up to this date.

It'll normally start to increase after a while. It does give you time to spread the cost or see how things change since you can buy earlier years now and later ones as their limit expires. Maybe do one or two a year as a plan unless there are some years in there that cost less than the more recent ones.

Shaps

Thanks for the advice , I will pay two years before the end of the tax year while I have the money so I should have 10 years .

Will O be able to pay the rest off anytime up to the 5/4/23 if my plans change ?

saver861

Shaps wrote: »

Thanks for the advice , I will pay two years before the end of the tax year while I have the money so I should have 10 years .

Will O be able to pay the rest off anytime up to the 5/4/23 if my plans change ?

As I understand it you can purchase the outstanding years anytime up until then. There would be no point really in buying them now if you can do so at a later point when your circumstances may or may not warrant the extra years.

However, the price will be at the time of purchase so it is likely they will have increased in price.

Incidentally, 7 years of contributions for a 40 year old would seem relatively low. I'm guessing you have reasons and this is not a miscalculation.

molerat

Shaps wrote: »

It also says in the third column " to be paid by 5/4/23 does this mean that the amount will remain the same up to this date.

The 2006 - 2016 rates will stay the same until April 2019 when they increase to the current in year price but are available to purchase until 2023. Any post 2016 years can be purchased at their historical rate for 2 years and then for a further 4 years at the current year rate.

https://www.gov.uk/voluntary-national-insurance-contributions/rates