SP question for mum - paying voluntary NI.

liviboy

Hi there,

Hoping someone can help me.

My mum has lived abroad since 2004 and is now around 8 years away from SP age. She's looking to return to live in the UK in the next few years but likely not to work.

Looking at ways of boosting her state pension she was asking about paying voluntary NI but there is confusion about whether or not it's worthwhile paying for pre-2016 gaps or only for 2016-17 onwards.

Her figures at the moment are:

30 full years of NI
12 gap years
8 years to pay

State pension forecast:

£164.35 per week IF ANOTHER 6 YEARS OF NI ARE CONTRIBUTED

Current forecast based on contributions to date:

£137.47 per week.

COPE amount:

£9.29 per week

NI Voluntary Contributions required to make to full year:

2017-18 - UNKNOWN AS YET
2016-17 - £733.20
2015-16 - £733.20
2014-15 - £722.80
2013-14 - £704.60
2012-13 - £689
2011-12 - £655.20
2010-11 - £626.60
2009-10 - £689
2008-09 - £689
2007-08 - £689
2006-07 - £689

I know that years after 2016 will definitely increase her SP amount...but will any of the pre-2016 years?

Any help gratefully received.

GunJack

the pre-2016 years probably won't if she's got 30 yrs contributions already, but ask the future pensions centre to confirm this..

molerat

My back of a fag packet calculation makes it 5 pre 2016 years + 2 post 2016 to bring the pension to just below the max or 6 post 2016 years to give the max. If she was eligible to pay class 2 for those pre 2016 years then that would make it worthwhile.

GunJack

molerat wrote: »

My back of a fag packet calculation makes it 5 pre 2016 years + 2 post 2016 to bring the pension to just below the max or 6 post 2016 years to give the max. If she was eligible to pay class 2 for those pre 2016 years then that would make it worthwhile.

Is that because the COPE is so low that the pre-2016 years may help? Ah, no, only 30 yrs, so the extra 5 pre-16 would increase the starting amount calculation via the new rules...

molerat

Yes. Due to the relatively small COPE amount buying the pre 2016 years would swing the starting amount to the new calculation then add a further 2 post 2016 but that would cost more than topping up with the full 6 post 2016 years but if the option of class 2 is available then those 5 years at give or take £130 per year makes it an attractive proposition.

liviboy

Thanks all for your replies.

How would mum find out if Class 2 is avsilable to her? Just ckntact HMRC?

molerat

Some useful info in this article. Although UAE expat oriented the points and contacts are the same. https://www.thenational.ae/business/money/your-money-blog-how-to-top-up-your-british-state-pension-while-living-as-an-expat-in-the-uae-1.37659

GunJack

It is because OP's MIL can do it with y post-2016 years, or 5 pre- and 2 post 2016, based on the starting amount given. As she can benefit from pre-2016 years, it may work out cheaper to do it that way, especially if the Class 2 NI is available to her as Molerat pointed out.

Either way, she can get to the full flat rate. Not everyone will benefit from filling pre-2016 years, so you have to look on it on a case-by-case basis

liviboy

Thanks everyone.

Mum has contacted HMRC to ask about paying Class 2 instead of Class 3 contributions so fingers crossed that's an option as it's a substantial saving!

Thanks for all of your replies and input - they've been really helpful!

liviboy

Hi everyone,

My mum finally got a response from HMRC.

She CAN pay Class 2 NI and below are the figures for available years to purchase.

I wondered if you could take another look for me and possibly suggest a good course of action for making up these years.

There isn't any formal instruction for how to make payment - I know the website gives the bank details, etc. but how do you tell HMRC which years you are paying?

Thanks in advance,

molerat

Buying the cheapest 5, 06-07, 07-08, 09-10, 10-11, 11-12 for £681.20 gives her £154.52 (155.65 - 9.29 = 146.36 x 1.025 x 1.03) leaving £9.82 to make up with post 2016, 2 years will leave her 42p short of the max. I don't understand those amounts for 16-17 and 17-18 though.



The simplest way IMO would be a letter and cheque in the post https://www.gov.uk/pay-class-2-national-insurance/by-post