Retiring at 60 - can I increase state pension at 66?

Flugelhorn

Am taking work pension at 60 next year.

According to the pension website my pension up to April 17 would be £126.86 but could be £158.77 if I carried on paying NI to 2024.

Is it possible just to pay NI when not working and how much is it??

Silvertabby

Yes - you can pay voluntary Class 3 NI.

In round figures, that's £750 for 1 year's NI, which buys you an extra £4.50 of State pension per week.

That sounds a lot at first glance - but it's really a very good deal as you'll break even after just 4 years (assuming you will be a basic rate taxpayer in retirement).

Flugelhorn

Thanks - so is this right?

sum would be 4.50*52 = 234
at basic rate tax would be 187.20? so 4 years of getting this would break even.

And as higher rate taxpayer looks like it would take 5 and third years to break even.

Next q - would the NI contributions I pay be tax deductible?

xylophone

Yes, you can make voluntary contributions - see page 19

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

BoGoF

Flugelhorn wrote: »

Next q - would the NI contributions I pay be tax deductible?

No they wouldn't

Flugelhorn

Thanks v helpful - might get DH onto this too,

Flugelhorn

BoGoF wrote: »

No they wouldn't

hmm so quite a bit more expensive if higher rate tax payer more like £1250 a year. More like nine years to break even

xylophone

You say that you are retiring "next year". When next year?

You will have a qualifying year for 2017-18?

How about 2018-19? Will you be working and paying NI for part of that tax year?

See post 2

https://forums.moneysavingexpert.com/discussion/5495808

The contributions are not tax deductible.

LHW99

Make sure you only buy post 2016 years though, and there won't be 5 of those available yet.

Jerben

Flugelhorn wrote: »

hmm so quite a bit more expensive if higher rate tax payer more like £1250 a year. More like nine years to break even

No,... it costs about £750 for 1 years NI.
Obviously this, (like most things), comes from net income.
You don't go to the supermarket to buy a loaf of bread, which costs £1, and pay £1.60! It costs £1.

Flugelhorn

xylophone wrote: »

You say that you are retiring "next year". When next year?

You will have a qualifying year for 2017-18?

How about 2018-19? Will you be working and paying NI for part of that tax year?

See post 2

https://forums.moneysavingexpert.com/discussion/5495808

The contributions are not tax deductible.

yes will work for part of 18/19