National Insurance voluntary contributions

Fluffyqueen34

I’m 57 retired from NHS.I checked my ni record.It says i have 40 years contributions.Year 16/17 no contributions.I can make up the shortfall by paying £733.20 by 5th April 2023 this may increase after 5th April 2019.My State pension forecast is £129.15.Need advise.Have reposted to this forum.

BoxerfanUK

New state pension is currently £159.55 pw so atm you are £30.40 short of maximum weekly amount. 35 qualifying years are required for full new state pension which equates to £4.56 weekly state pension for each additional qualifying year so you need to pay class 3 voluntary contributions for approx' 6.66 years starting from 2016/17 tax year until sometime in late 2022.

I know you state you have 40 qualifying years but as ex NHS you would, I imagine, have been contracted out of SERPS thus paying reduced NI, hence why a deduction would have been made to your SP amount to reflect this. Contracting out ended in April 2016 when the new state pension came in.

I am in a similar position and if I stop working (and paying NI) this year I too will have to pay class 3 until sometime in 2022.

Hope this helps

xylophone

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

marlot

xylophone wrote: »

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

That;s a really good guide.

dunroving

That is a very informative guide, but I couldn't find something I was looking for. For some odd reason I have never understood, people living and working overseas have been eligible to pay the cheaper Class 2 NICs. If someone wanted to make up for missing years when living and working overseas, would they be able to make them up with Class 2 NICs?

Johnnyboy11

dunroving wrote: »

That is a very informative guide, but I couldn't find something I was looking for. For some odd reason I have never understood, people living and working overseas have been eligible to pay the cheaper Class 2 NICs. If someone wanted to make up for missing years when living and working overseas, would they be able to make them up with Class 2 NICs?

Yes, an expat can pay 6 years' backdated NIC2s, costs about £750 and is a fantastic investment. There are a few rules about eligibility, but the main criteria is that you were working and paying NI in the UK immediately before you left the UK and started working overseas (immediately = no more than a weeks' gap). See HMRC NI38, and form CF83 at the back of it. I did this, with little effort.

dunroving

Johnnyboy11 wrote: »

Yes, an expat can pay 6 years' backdated NIC2s, costs about £750 and is a fantastic investment. There are a few rules about eligibility, but the main criteria is that you were working and paying NI in the UK immediately before you left the UK and started working overseas (immediately = no more than a weeks' gap). See HMRC NI38, and form CF83 at the back of it. I did this, with little effort.

Thank you, I was actually asking on behalf of someone else, but am wondering if I should contact HMRC to ask about appealing incorrect information that was given to me in the past. I was overseas 1983-2006, working and paying NI before I left and working as soon as I came back (so qualified to pay Class 2 NICs as far as I can tell from the information you pointed me towards). Back when I left, there was no internet and I only became aware of the whole Class 2 thing in mid-2005, just before I came back.

When I returned in 2006 I enquired about paying for missed years while overseas and was told I would have to pay Class 3, which I could barely afford at the time. If I'd been told I could pay Class 2, I'd have begged, stolen or borrowed the money.

I've always thought it was a rather bizarrely lenient opportunity but if those are the rules I can understand why people would do it.

JezR

Until around 2001 Class 2 and Class 3 cost almost the same.

dunroving

Being recently retired at 60, I need 6 more years at NI to earn about 65% of a full state pension. I see my options as follows:

(1) Register as unemployed. I likely won't get JSA because I will have a £14k pension, and cash in the bank, so to speak. I'd happily take a part-time job if one came up, but I understand from family who are long-term JSA-claimers that you have to go in and sign on regularly and sit at a computer looking through the list of available jobs.

(2) Start my own sole trader business. I already get sporadic consultancy work, which in any given year can be as low as £800 or as high as ca. £5,000. If I manage to get self-employed work but it is at a low level, am I correct in thinking I can pay Class 2 NICs?

(3) Pay Class 3 NICs and then have the freedom to work as much or as little as I want.

Does anyone have any experience of Option (1)?

Sorry, meant to also ask: I have retired halfway through the tax year. I have paid over £2k in NI already this year and am assuming that is enough to get a full credit towards pension for 2017-2018. Is that correct?

woolly_wombat

dunroving wrote: »

Being recently retired at 60, I need 6 more years at NI to earn about 65% of a full state pension. I see my options as follows:

(1) Register as unemployed. I likely won't get JSA because I will have a £14k pension, and cash in the bank, so to speak. I'd happily take a part-time job if one came up, but I understand from family who are long-term JSA-claimers that you have to go in and sign on regularly and sit at a computer looking through the list of available jobs.

Not something I have experience of but this link suggests that you could claim Class 1 NI credits from your local Jobcentre if you are "unemployed and looking for work, but not on Jobseeker’s Allowance":

https://www.gov.uk/national-insurance-credits/eligibility

(2) Start my own sole trader business. I already get sporadic consultancy work, which in any given year can be as low as £800 or as high as ca. £5,000. If I manage to get self-employed work but it is at a low level, am I correct in thinking I can pay Class 2 NICs?

I was going to point out that Class 2 NICs were being abolished on 6 April 2018 but this recently updated link states that "The government has delayed the abolition of Class 2 NICs by a year until 6 April 2019":

https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions

(3) Pay Class 3 NICs and then have the freedom to work as much or as little as I want.

The option that many of us have chosen.

dunroving

woolly_wombat wrote: »

Not something I have experience of but this link suggests that you could claim Class 1 NI credits from your local Jobcentre if you are "unemployed and looking for work, but not on Jobseeker’s Allowance":

https://www.gov.uk/national-insurance-credits/eligibility


I was going to point out that Class 2 NICs were being abolished on 6 April 2018 but this recently updated link states that "The government has delayed the abolition of Class 2 NICs by a year until 6 April 2019":

https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions


The option that many of us have chosen.

Excellent advice, thank you. If the other options end up being too much hassle, I'll just go this route. It's still way batter than any annuity you can buy.