Applying for 3 years NI contribution refund. Wise move?

butterfly72

I'm in a position to apply for a refund of 3 years of NI contributions (and 4 years tax) under the Widening Access scheme. For info: https://www.gov.uk/guidance/widening-access-training-scheme-refunds-for-nhs-trust-workers.

Whilst I'm going to ask my trust to apply for the tax element, I'm unsure about the NI situation. I'm assuming if I get a refund of my NI, that will be 3 years less towards my state pension. But..here's the bit that confuses me.. wasn't I 'opted out' anyway as a NHS employee?

Not entirely sure what 'opted out' means anyway, but I am assuming that years that I was 'opted out' don't count towards my 40 years NI contributions?

I think my question is should I request the 3 years NI refund or am I better off just going for the tax element, thereby keeping the 3 years contributions.
TIA

p00hsticks

butterfly72 wrote: »

wasn't I 'opted out' anyway as a NHS employee?

No. As a member of the NHS pension scheme you were 'contracted out' of what has been known as the addional state pension, SERPS or S2P. You were still paying a reduced rate of NI that counted to a basic state pension.

The New State Pension introduced in April 2016 has simplifies things going forward by doing away with the distinction between 'contracted in' and 'contracted out'.

Have you got a recent State Pension forecast ?
https://www.gov.uk/check-state-pension

What it says you are on track to get will influence whether you are best reclaiming the NI years back or not.

molerat

Contracted out not opted out.
You contracted out of the second / additional state pension not the basic pension so any refund will affect your state pension rights. How old are you, how many years to SP age ? Future years contributions may make up for the loss of these years - win win ! The number of years required is a bit of a red herring with the transitional arrangements post 2016, you need to know the 2016 starting figure and COPE amount.

butterfly72

p00hsticks wrote: »

Have you got a recent State Pension forecast ?
https://www.gov.uk/check-state-pension

What it says you are on track to get will influence whether you are best reclaiming the NI years back or not.

Thanks for your reply and clearing up that it was contracted out not opted out but still counts.

No, I haven't got a recent state pension forecast. I'm sure I looked a while ago on the above site tho but it didn't seem to give me much info. I'll take another look. Thank you.

butterfly72

molerat wrote: »

Contracted out not opted out.
You contracted out of the second / additional state pension not the basic pension so any refund will affect your state pension rights. How old are you, how many years to SP age ? Future years contributions may make up for the loss of these years - win win ! The number of years required is a bit of a red herring with the transitional arrangements post 2016, you need to know the 2016 starting figure and COPE amount.

I'm 44 so have another 23 to state pension age of 67. NHS pension starts 65. I probably do need the years, as I have the contracted out years plus I spent a few years travelling and some time sponging off my parents riding my horses and a couple of useless uni courses (ancient history!). I'll have a look tho and see if I can work out how many years I've built up. Thank you.

colsten

butterfly72 wrote: »

I'll have a look tho and see if I can work out how many years I've built up. Thank you.

It's all online and if you have a passport or a driving licence and a mobile phone, you can sign up to gov.uk Verify and look at your info within 5 minutes. The NI years are available via the state pension forecast service.
https://www.tax.service.gov.uk/check-your-state-pension

You are likely to need 35 years for the max state pension, and even if you currently have 23 years to go to your SPA, I would say it's a bad idea to cash in any entitlement that you may have built up. You never know what the future holds and whether you will be able, or want to, work for all the years that are needed for a maximum state pension.

Also, some working age benefits are only available if you have paid NI in the preceding 2 years.

butterfly72

Thank you Colsten, I've managed to get my forecast. Quite painless too!

Ok:
22 years full contributions
22 years to contribute
8 years - did not contribute enough.

Forecast to 5 April 16 based on NI record £96.98 a week.
Forecast £155.65 a week if I contribute another 14 years before 2038.

COPE estimate £20.67

If I was to get the NI refund for the 3 years it would amount to £3100 approx. Would be nice! However, I don't need it and like you say Colsten, who knows what the future holds and I've only got 22 years left of contribution time. I plan to take a sabbatical at some point and will avoid work were possible - I only work part time now!! I think I will leave it in.

Crikey, look at me, checking my pension on Christmas eve!!:rotfl:
Thank you all.

colsten

butterfly72 wrote: »

Crikey, look at me, checking my pension on Christmas eve!!:rotfl:

Better on Christmas eve than never! I'm glad you found it easy to check your details and you can now make your decision based on the facts you have.

BTW, I think it would be a good idea to print (if only to a .pdf) your NI and pensions records as they are at present, just in case HMRC/DWP ever lose all or some of your data for some reason. I am not suggesting they would, it's just you never know what the future holds.

butterfly72

colsten wrote: »

BTW, I think it would be a good idea to print (if only to a .pdf) your NI and pensions records as they are at present, just in case HMRC/DWP ever lose all or some of your data for some reason. I am not suggesting they would, it's just you never know what the future holds.

Great idea, I'll do just that. Thanks again and Merry Christmas :xmassmile

colsten

And a very merry Christmas to you and all :xmassmile