New State Pension Guide

clpxm39

I was puzzled by the "extra years" that seemed to have been added, but the youth credits explains it. I didn't know there had been such a thing. Thanks xylophone.

mark55man

Buying the extra years, if that's what you choose to do, and you can afford the lump sum (about £750 a year), is regarded as excellent value so don't be put off doing it by a feeling you shouldn't have too.  Just check what the timeline is as you can only go back so far. 

For my OH we have until 2022 to fill a couple of extra years so are waiting until then as if you buy them and then pop your clogs (or get another job earning credits) its not refundable

ChrisEd

clpxm39 said:

I was puzzled by the "extra years" that seemed to have been added, but the youth credits explains it. I didn't know there had been such a thing. Thanks xylophone.

You can see s lidt of all the years you have paid for. Get State pension estimates and theres a link you can click on the see all years. And which years you can make a voluntary payment for-Its worth making the payment particularly if you have any partial years - only full years count towards the pension. Should also show up any youth credits.

jem16

ChrisEd said:

clpxm39 said:

I was puzzled by the "extra years" that seemed to have been added, but the youth credits explains it. I didn't know there had been such a thing. Thanks xylophone.

You can see s lidt of all the years you have paid for. Get State pension estimates and theres a link you can click on the see all years. And which years you can make a voluntary payment for-Its worth making the payment particularly if you have any partial years - only full years count towards the pension. Should also show up any youth credits.

As clpxm39 hasn't worked since 2008, there is going to be a lot of years where voluntary payments could be made. However with 37 years already only years 2016 onwards will make any difference to his/her state pension. Anything before this would be a waste of money.

ChrisEd

Think you can only make payments for the last 5 or 6 years.

jem16

ChrisEd said:

Think you can only make payments for the last 5 or 6 years.

At the moment if you're man born after 5th April 1951 or a woman born after 5th April 53, you have until 5th April to make up for gaps between 2006 and 2016. However this will not help clpxm39.

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

falcon4us

xylophone said:

At 6/4/16
£119.30 + ( Additional State Pension - deduction for contracting out). Old Rules
This seems to have given a figure of £121.31.

(30/35 x £155.65) -  £30.66. New Rules  This would have given only £102.75.
Your starting amount was the higher of the two.

If you had not made any voluntary contributions, the figure of £131.40 in 2019 would have been correct (increase 2.5%,    3%,    2.6% ).

However, you did make voluntary contributions for 16/17, 17/18. and 18/19 - (three years)
This increased the £131.40 by  £14.45 to £145.85.

I posted 3 months ago (page 62) regarding a discrepancy in my state pension.
molerat and xylophone kindly responded with their expertise.

Futures Group stated the maximum figure attainable was £149.84.
DWP confirmed I would receive this amount if I paid 3 years as above (i.e. 16/17,17/18 and 18/19).

As it turned out DWP were incorrect and I ended up receiving £145.85 as shown above.
Futures Group stand by the figure of £149.84 and suggested I look at my pre 2016 NI record which shows 10 unpaid years (2006-7 to 2015-16)

I can pay £795.60 per year and have till 05/04/2023 to do so.
It would seem 5 years payment may "trigger" a re-calculation which would make the New Rules calculation higher?

If so, (35/35 x  £155.65) - £30.66 = £124.99. Adding the indexation of 2.5%, 3% and 2.6% gives the new 2019 figure of £135.39
Adding the 3 years I've paid which is £14.45 to £135.39 gives £149.84

Of academic interest as why would anyone pay £3978 for a gain of £3.99/week with a payback of 19 years.
Could this be a result of the infamous forecast software? 

GunJack

@falcon4us The hybrid system was always going to produce winners and losers (but the "losers" were never going to be any worse off than if the old rules had stayed).... you just hit SPA before you could take full advantage of the new system so couldn't get enough post-2016 years to take it up to the full new SP....you still "won" by being able to get 3 post-2016 years  

xylophone

Have a look at  the chart on Page 6 here
https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

Your "starting amount" was based on the old system.
You had 30 qualifying years.
Therefore you could only improve your position by purchasing post 6/4/2016 years up to your SPA.

jem16

GunJack said:

@falcon4us The hybrid system was always going to produce winners and losers (but the "losers" were never going to be any worse off than if the old rules had stayed).... you just hit SPA before you could take full advantage of the new system so couldn't get enough post-2016 years to take it up to the full new SP....you still "won" by being able to get 3 post-2016 years  

Some of the losers will be worse off but it's usually those who weren't contracted out. Those who weren't contracted out could have got more under the old system as they continued to build up SERPS/S2P but basically what they had at 6/4/16 wouldn't grow any further even though they were still working and contributing.

They also lost out because their spouse could no longer inherit half (or more depending on DOB) of their additional pension. Now they can only inherit half of the Protected Amount.

Biggest winners are self employed people and those who were contracted out who do have the chance to increase their state pension.