Another state pension query

ericonabike

I've posted before about making up SP entitlement by voluntary NICs. However, have just had reply from HMRC stating I had 40 years of full contributions, but inviting me to make a payment for a non qualifying year of £649. Checked the State Pension site, which also shows 40 full years. States 'estimate based on your National Insurance record up to 5 April 2015
£121.25 a week' but 'forecast if you continue to contribute until 5 April 2022
£149.70 a week'. I am not working so paying no NI contributions. But I have already got 40 full years.

Confused - is it worth paying the £649 for additional year?

molerat

Having in excess of 35 years pre April 2016 means it is pointless purchasing any missing years - it will add nothing. Purchasing post April 2016 years does provide good value - equivalent to purchasing a 30% lifetime annuity.

p00hsticks

ericonabike wrote: »

Confused - is it worth paying the £649 for additional year?

Not for the year quoted, no - it'll be a pre-2016 year and as you already have 40 years NI it isn't going to improve your 'starting amount' of around £121.25 going into the new State Pension transition.

(I'm assuming the amount isn't gong to change significantly from april 2015 to 16 - it wil be worth getting another forecast later in the year to check the figure as at 6/4/16.

However (assuming you are not working or getting NI credits~) it may well be worth buying you buying additional years from 2016-17 onwards, as each one will increase that weekly starting amount by around £4.35 until you reach the £155.65 maximum.

xylophone

https://forums.moneysavingexpert.com/discussion/comment/70535022#Comment_70535022

post 456/457.

ericonabike

Thanks all - I remembered the previous post Xylophone, but was spooked by the letter from HMRC. I had gone as far as writing a cheque for £649 before coming back here for advice. Will stop thinking now, tear up that cheque, and pay 2016/17 voluntary NICs onwards. Much obliged.

molerat

My on line forecast shows me what I can pay for 6 missing years. Luckily I am aware of what paying will (or will not) give me but others could be fooled into paying. There is supposed to be new service coming out this autumn to give the real information on how payments will affect your pension.

ericonabike

Thought I'd resurrect and update this as it may help others. I sent a direct debit form to HMRC requesting to pay voluntary Class 3 contributions. It took six weeks for a reply, but came back asking for £56.40 a month for 2017-18 and to pay a lump sum for 2016-17. Agreed to all this on the basis that each year will give me around an extra £5 a week from pension date in 2022. All fairly painless - doing voluntary work now and have no desire to get paid work so voluntary NICs was the only way to go. Just have to ensure I live for a few years after turning 66 now....