New State Pension Guide

Andando

My State Pension is due in November 2024 my estimate from the website is as follows:

Estimate based on your National Insurance record up to 5 April 2019

£121.62 a week
Forecast if you contribute until 5 April 2024

£145.71 a week
You can improve your forecast
You have shortfalls in your National Insurance record that you can fill and make count towards your State Pension. The most you can increase your forecast to is

£168.60 a week

My current forecast is based on 28 full years (- COPE £73.31) and I have lived abroad in Spain since Jan 2004 and not paid any NI payments since that date. Based on a yearly equivalent of 4.818 (168.6 / 35) It appears that I am over nine years short of the maximum with 5 yearly payments still available before my pension (April 2020 – April 2024 inclusive). Currently years 2007-2016 are showing as available to pay by voluntary contribution of £780 before 5 April 2023 (is this a fixed date solely for the transitional period?)

2006-07 Year is not full You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £780 by 5 April 2023. This shortfall may increase after 5 April 2020.

2005-06 Year is not full You did not make any contributions this year

It’s too late to pay for this year. You can usually only pay for the last 6 years.

If the above is correct?

1. Can I buy 5 years that I am currently short AND pay 5 future payments annually before 5th April 2020 until before 5th April 2024 to maximise at £168.60?

2. Can I purchase the shortfall years at any time before 5th April 2023 (notwithstanding the annual cost rise) or is there a time limit?

3. Can I purchase the shortfall years each year until 2024 alongside the annual payment for that year?

4. I am currently working 6 months a year in a seasonal job (fijo discontinuo in spanish) would I be entitled to buy any shortfall/current years at a lower rate?

5. Is it better to pay the oldest years first or the most recent 2 (which are cheaper until April 2020)?

6. If I wish to pay by bank transfer do I just need a reference number from the Future Pensions Centre?

xylophone

Have a look at this
https://www.royallondon.com/media/good-with-your-money-guides/topping-up-your-state-pension/

molerat

Pre 2016 years are only available until April 2023.

Due to your 28 years and large COPE only 2 pre 2016 years are available to you, any more will not add value.

The best plan will be to buy the cheapest first whilst ensuring any pre 2016 years are paid before April 2023.

You can pay by letter and cheque if you wish  https://www.gov.uk/pay-voluntary-class-3-national-insurance

Have you looked into class2 ?  Were you employed when you left UK and been employed since - class 2 may be available for the periods you were working.

fred_karno

My wife reaches state pension age on 6 February 2021. She has been told that she can increase her pension by paying voluntary class contributions and all years after April 2016 will count. So 16/17, 17/18, 18/19, 19/20 are all fine. (She has now paid 17/18, in order to qualify for the rate in force then and will shortly pay for 19/20.)
However, does anyone know about 20/21? As she reaches pension age within this tax year, what happens? Could she pay a full year and get benefit, or will she get no benefit from any money paid? If she can pay, would it have to be a full years payment or or can she pay the monthly rate for the 10 months and still get benefit? I have searched all the gov.uk pages and cannot find any guidance and dread trying to get through to HMRC on phone again!

molerat

She can not / will not benefit from any NI contributions - voluntary, credits or earnings based - for the tax year in which she reaches SPA.

fred_karno

molerat said:

She can not / will not benefit from any NI contributions - voluntary, credits or earnings based - for the tax year in which she reaches SPA.

Thanks. I suspected that. It’s a pity such a basic point isn’t explained on the gov.uk web.

JaveaSteve

I was born 16/04/1952 so entitled to the New State Pension, however the Govt have given me the Old Pension.  Looking at friends who are in receipt of the New Pension they are receiving £50+ per month more than myself.  I have written and emailed the Pensions service several times since November 2019 and they have failed to respond.  Anyone in similar position? Anyone able to understand the complexities of the 2 pension schemes? The BBC winners and losers page states in the first 15 years the New Pension scheme will benefit 3/4 of retirees, so I'm beginning to think the Govt are saving money with me and possibly others, even though I have over 35 years of National Insurance contributions.  I was also contracted out.

Dazed_and_C0nfused

Do you literally mean they are paying you the wrong type of pension?  

Or are you just unhappy that the amount of your "new" State Pension is less than you had hoped.

Some figures would help but I suspect that you are in the unfortunate position of having got away with paying less National Insurance for many years without the opportunity to add additional years after the new rules came info force.  Resulting in a new State Pension less than the standard maximum.

molerat

JaveaSteve said:

I was born 16/04/1952 so entitled to the New State Pension, however the Govt have given me the Old Pension.  Looking at friends who are in receipt of the New Pension they are receiving £50+ per month more than myself.  I have written and emailed the Pensions service several times since November 2019 and they have failed to respond.  Anyone in similar position? Anyone able to understand the complexities of the 2 pension schemes? The BBC winners and losers page states in the first 15 years the New Pension scheme will benefit 3/4 of retirees, so I'm beginning to think the Govt are saving money with me and possibly others, even though I have over 35 years of National Insurance contributions.  I was also contracted out.

That will be the reason.  At April 2016 you were given a starting amount of the higher of the new scheme or old scheme calculations.  The new scheme calculation would have a COPE amount deducted for your contracted out period so the old scheme calculation was likely higher.  Retiring early on in the post 2016 scheme meant there would be little opportunity to make up  the shortfall from the maximum amount. 

You are obviously male and reached SRA on your 65th birthday in 2017, was 2016 a full year ?

xylophone

See https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf
At 6/4/16, two calculations were done
NI years [up to 30] /£119.30 [full BSP 2016-17] + (Additional State Pension - Deduction for Contracting Out)

(NI years [up to 35]/£155.65 [full NSP 2016-17]) - Contracted Out Pension Equivalent.
Your "starting amount" was the higher of the two.
If your SA was less than £155.65, provided that you had a full NI year 2016-17, you would have been able to improve the forecast by approx £4.44.