Can I increase my state pension?

Camster

I'm looking for some advice on the possibility of increasing my state pension.

I received a pension quote in March last year which said that for the 2014/15 tax year, I had 36 qualifying years and that my state pension at my normal retirement date of 2024 would be £115.95 per week.

It went on to say that because I was contracted out for a number of years, they had estimated that my COPE amount was £73.61 per week, so that my State Pension and COPE amount together was £189.56 a week.

I'm not sure if it's possible or even makes sense to make additional NI payments to increase the State Pension element above £115.95 a week? I'm 58 at the moment and would like to retire between 59 and 60.

molerat

From the information posted yes you can. Each "NI year" accrued post April 2016 will add £4.45 to your current amount until you reach the max £155.65. Years can be added by employment, self employment, voluntary contributions or credits from some benefits. Class 3 voluntary contributions will cost you around £730 per year purchased but will give you £231 (increased with inflation) per year for the rest of your life !

Best get a new forecast to see exactly what your April 2016 starting amount is, the COPE figure can be safely ignored as it is pretty meaningless and is only used in the calculation of the starting amount. https://www.gov.uk/check-state-pension

xylophone

Obtain a statement showing your starting amount at 6 4 2016.

https://www.gov.uk/yourstatepension?utm_source=Mail-Online&utm_medium=Partnership&utm_campaign=GTKY

http://www.thisismoney.co.uk/money/pensions/article-3535618/STEVE-WEBB-Buying-ups-paying-missing-NI-boost-state-pension.html


http://www.royallondon.com/Global/documents/GoodWithYourMoney/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

Camster

xylophone, thanks for the link. I just logged into my Government Gateway account which gave me the following figures:

State pension as at 5/4/16 is £119.89 and the forecast if I continue to contribute until 5/4/24 is £155.47, which I believe is the current maximum.

Of course if I retire early, I won't be contributing every year until 2024, so any advice on the best way to achieve an increase in my state pension if I retire early would be appreciated.

molerat, I can't quite believe that a payment of £730 per year will give an increased pension of £231 per year for the rest of your life. It sound like a no brainer to take this up. Where do I sign up for it?

molerat

https://www.gov.uk/pay-voluntary-class-3-national-insurance/overview

As you are currently working and paying NI ? you will get 16-17 and probably 17-18 added to that figure so another £9.90, if you don't manage a full year the extra weeks can be purchased. The cost increases with cpi each year, this year is £733.20.

and yes, a no brainer

and "looking after a grandchild under 12 for part of a week whilst the parent is at work and paying NI" has given MrsM just under £3K in class 3 credits

Camster

As well as working full time, I have a small part time internet business.

I had been previously advised by the DWP that I didn't have to pay any NI for the self employment because I was already making contributions through my full time job.

Am I correct in thinking that one route I could take if I retired early would be to continue as self employed with the internet business, and pay the relevant NI contributions until I reached my normal retirement age, and this would go towards increasing the state pension amount?

molerat

The one problem there being class 2 contributions are set to end in April 18. https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions