Pension/NI advice needed

vickk

I will be 63 in May and will be due my state pension in May 2018. I took early retirement at 61 and am in receipt of a company pension. I have never registered as unemployed since retirement as I was not looking for work. I reasoned that as I had 45 full years National Insurance and only 35 years is needed for the full state pension, there was no need for any additional years.

On checking my pension forecast on the new government website I am informed that my pension forecast based on present NI contributions is £129 per week and that this "MAY" rise to £141 if I continue to contribute until normal retirement age.

At present I have 1 year missing 2014/2015 (soon to be 2) but if I have already paid 10 years over the max required I fail to see how paying another few years can improve it?.

Despite asking questions on the website I get generic answers that use the phrase "MAY GET" all through and no concrete answer. Surely if I was to pay something like £700 per missing year I should be given a fixed answer that it would improve my pension and by how much.

Any advice or help would be welcome

molerat

There several threads here about this. Your company pension must have contracted you out of the second state pension. This means that you paid less NI than others and will have a contracted out deduction made from the new pension amount. The good news is that you will get the higher of the new or old style pension amounts. In your case the pension that you would have received under the old system is the higher amount. The second good news is that you can add to that amount by working or making voluntary class 3 contributions, in your case 2016/17 and 2017/18. Paying the 14/15 and 15/16 contributions will make no difference and would be a waste of money.

greenglide

You have the opportunity to pay voluntary contributions for 2016/17 and 2017/18 which should increase you State Pension by around £8.95 a week.

Or, of course, you can do nothing and get the pension of £129 which is what you would always have got.

Additional qualifying years pre 2016 will get nothing, I dont believe you can make them with over 30 years?

xylophone

The OP already has 45 years in the old system so that there is no benefit in paying for any missing years in the old system.

He can pay voluntary contributions for 16/17 and 17/18 which will increase the state pension payable in 2018.

https://forums.moneysavingexpert.com/discussion/comment/70534481#Comment_70534481

https://www.gov.uk/government/publications/national-insurance-application-to-pay-voluntary-national-insurance-contributions-ca5603

vickk

Thank you both,
So addition years pre 2016 gives no benefit and from 2016 would give approx £4.50 per week for each additional year. Well that clears that point up as the email I got from the gov website said that paying 2014/2015 would cost me around £720 and may improve my pension. There is that word MAY again.
One thing I am still unsure about molerat is that you say I would get a pension based on the old system as that would be higher yet I thought the figure of £129 was based on the new system and I didnt think the old system paid that much on a full state pension?

greenglide

I didnt think the old system paid that much on a full state pension?

Basic pension under the old system is £119 and £10 will be additional pension earned under the old system - GRAD, SERPS and S2P. Most people have at least some.

vickk

So, I could pay voluntary contributions for the next 2 years at a total approx cost of £1440 to improve my pension by £9 per week, and I can do this either monthly or quarterly in arrears.

Can i wait 2 years and pay them in one go at retirement age? or can i pay 2 years in advance?

xylophone

Have a look at this, bearing in mind that the figure used for NSP was an estimate - it is actually £155.65

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/204604/single-tier-pension-transition-technical-note.pdf

vickk

xylophone wrote: »

Have a look at this, bearing in mind that the figure used for NSP was an estimate - it is actually £155.65

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/204604/single-tier-pension-transition-technical-note.pdf

Thanks, I have read through that. Sadly not a lot has sunk in I am afraid.

xylophone

Can i wait 2 years and pay them in one go at retirement age? or can i pay 2 years in advance?

It is possible to pay voluntary NI for previous years but you can't pay in advance.

Thanks, I have read through that. Sadly not a lot has sunk in I am afraid.

Does this help at all? (The figures are a little out because of publication date).

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

vickk

Many thanks xylophone that was an excellent link