Paying missing NICs reduced my pension

soft_toy

I am approaching my 65th birthday so I did some checking on the Government's pensions website.
I have been contracted out for some of my working life (I think 1978 to 1999)
The figures were as follows
NIC contributions
43 full years
5 years didn't pay enough
Pension based on latest NI record (5/4/15) £140.42
Pension estimate at 65 £142.19 (assuming further NI contributions)

I understood that only full years of NICs count towards your pension and because one of the years where I hadn't paid enough was short by only one week (I had 51 weeks contributions) I thought it would be a good idea to make up the shortfall. (I was offered the opportunity to do this for £12.60)
Just in case you are wondering, this was not part of a contracted out year.

My latest NI record confirms that the 'missing' week has been included now and is as follows
44 full years
4 years didn't pay enough
Pension based on latest NI record (5/4/15) £139.24
Pension estimate at 65 £141.01 (assuming further NI contributions)

The more observant viewer will note that adding this extra week's NIC to make another full year of contributions has reduced my pension at 65 by £1.18 per week.

I had been considering reducing the number of years where I did not contribute enough further until I saw the effect it was having.

Before I try getting hold of someone who might be able to explain what is going on I thought I would see if anyone could offer an explanation PLEASE!!

molerat

Paying any pre 2016 years when you have over 30 years is in 99% of cases fruitless adding £0 to your pension. Many here have commented on lower pension quotes post April 16 so later forecast may be based on actual uprated figures rather than estimates. There are lots of threads on here discussing various aspects of the new pension. When are you 65 ?

bigfreddiel

molerat wrote: »

Paying any pre 2016 years when you have over 30 years is in 99% of cases fruitless adding £0 to your pension. Many here have commented on lower pension quotes post April 16 so later forecast may be based on actual uprated figures rather than estimates. There are lots of threads on here discussing various aspects of the new pension. When are you 65 ?

I think the poster is 65 this year! Check out the original post where it says something like "I'm approaching my 65th birthday.....".

Easy enough to miss I guess

Cheers fj

molerat

bigfreddiel wrote: »

I think the poster is 65 this year! Check out the original post where it says something like "I'm approaching my 65th birthday.....".

Easy enough to miss I guess

Cheers fj

I saw that but you know what assume does

bigfreddiel

molerat wrote: »

I saw that but you know what assume does

Well I guess you could be right, assume nothing as my old boss told me!

So let's say he turns 65 anytime in the next five years, that may just about cover it.

Cheers fj

soft_toy

Thanks for your comments molerat.
In answer to your question I am 65 in September.

The estimates were provided online.
I was checking daily to see when the NI record was updated but I suppose it is possible that the data the pensions people use could have changed overnight.
Regarding your other comment that paying any pre 2016 years when you have over 30 years is in 99% of cases fruitless.
I would really appreciate an explanation as to why this is.
Doesn't increasing the number of years of NICs when I wasn't contracted out make any difference then?

molerat

The only way that you could increase the pre 2016 pension after 30 years had been accrued was with additional pension based on actual earnings, the basic stays the same. As you retire in 2016 the only change to your pension amount will be from additional pension earned in the 2015-16 tax year which will be calculated around September / October this year.

xylophone

https://forums.moneysavingexpert.com/discussion/5367287 post 208 is close to your situation.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

The higher of old and new scheme calculations gives you your "starting" or "foundation" amount.

Under old rules (30 years required) you had more than enough years for full basic state pension.

There was no point in buying "missing years" because you already had enough for a full BSP.

You had more than enough years for the full NSP amount of £155.35 to be used in the new scheme calculations.

Where the starting amount is less than a full NSP additional years can only be purchased up to state pension age.

bigfreddiel

molerat wrote: »

The only way that you could increase the pre 2016 pension after 30 years had been accrued was with additional pension based on actual earnings, the basic stays the same. As you retire in 2016 the only change to your pension amount will be from additional pension earned in the 2015-16 tax year which will be calculated around September / October this year.

I've mentioned this before, but here goes again

Pre 6 Apr 16 my forecast was £155.77 when my 2015/16 contributions were included. I'm contracted in btw

Post 6 Apr 16, there was no mention of including 2015/16 contributions, it just said I would get £153.66

I get this in July, so come Sep/October when it is calculated I could get a bit more or a bit less than £153.66.

I should have received a couple of payments at least by then, so how will it be backdated?

Cheers fj

greenglide

I should have received a couple of payments at least by then, so how will it be backdated?

They have a concept interim awards when the final relevant year (FRY) data is not yet available.

When HMRC have the data it is passed to DWP who will revise the award, change it from Initial to Final and pay any arrears.

This is "business as usual" for them, it happens all the time.

bigfreddiel

Cheers greenglide as usual great answer, very clear and easy to understand.

I had suspicions that you work for DWP or hmrc, but you write so clearly and in plain English I don't think you do!

Cheers fj