Where on Earth do I begin? Pensions and Voluntary Contributions etc etc

Debt_free_by_2020

I'm currently in the process of finally organising and sorting my life and that includes clearing debt as well as looking at how to be financially secure in the future. I've finally logged into my NEST account last month and can see a very measly little amount in there from two of my previous jobs. I then ended up checking what sort of pension I am looking at based on the State Pension and noticed that during 2007-2008 and 2008-2009 was not a full NI contribution year. This seems strange to me as I was a student at that time and 2006-2007 (my first year of studies) was a full year even though there was no significant change in my circumstances.

Should I consider paying voluntary contributions for these years or not? Currently I have only contributed 9 years according to the website and as I understand it, you need a minimum of 10 years to even qualify (please correct me if I'm completely misunderstanding this, not only am I horrible with numbers but all this pension stuff just feels alien and confusing at my 'young' age haha).

I have been living abroad for three years (EU country) meaning that I am also missing contributions from 2015-present. Does anyone have any ideas on what I need to do regarding these? The NI statement also suggests that I am able to make voluntary payments for those years but at the moment, with my current debt repayments etc going on, these payments are far too much for me to be able to contribute.

I'm currently studying (MA) but once I graduate, I plan to get back to full time work as soon as possible and am looking to return to the UK. Obviously I have (hopefully) many more working years ahead of me in which to save up a nice enough pension etc but where on Earth do I start? Paying the voluntary contributions (yay or nay?), paying off debts (number one priority atm), and then what?

Sorry if these are silly questions but I've been burying my head in the sand for the past 12 years regarding personal finances and feel like I'm not being very responsible and careful in terms of my future financial security. Having turned 30 this year has prompted me to start looking at these things a little more seriously (small and insignificant thought they are at the moment).

Thanks in advance! Any advice and guidance about how to be a proper financially secure adult much appreciated

Rodders53

Full pension needs 35 years of NI.

You are 30 now and 65 is 35 years away. You won't be eligible for state pension before 67? You already have 9 years of contributions.

So NI for the rest of your working life will give you many more than enough years under current rules.

Rules can change tho.

Debt_free_by_2020

Thanks for the advice.

I actually think I won't be eligible for it til 68 which I guess will keep creeping up in the future. So, as long as I contribute NI for at least another 26 years in the future, then it wouldn't be necessary/worth my while to pay the voluntary contributions for those earlier years now?

Also, is it normal for your NI contributions to not be full when you are a full-time student? Just curious about those 2007-2009 years as I don't really understand how I am short of the contributions when I actually appear to have contributed more than in the 2006-2007 year. Should I speak to HMRC/NI about that or does that seem normal?

xylophone

I then ended up checking what sort of pension I am looking at based on the State Pension and noticed that during 2007-2008 and 2008-2009 was not a full NI contribution year. This seems strange to me as I was a student at that time and 2006-2007 (my first year of studies) was a full year even though there was no significant change in my circumstances.

Until 2010, NI contributions were credited to people for the tax year in which they reached age 16 and the following two tax years in order to protect their future basic State Pension entitlement and Bereavement Benefits for a spouse or civil partner . The policy intention behind the credits was to ensure that young people staying on in education beyond the minimum school leaving age did not lose future benefit entitlement as a result.

https://www.gov.uk/new-state-pension

https://europa.eu/youreurope/citizens/work/retire-abroad/state-pensions-abroad/index_en.htm

https://www.royallondon.com/global/documents/goodwithyourmoney/topping-up-your-state-pension-guide.pdf

Once you start work, a pension scheme should be available to you.

bostonerimus

Do a detailed budget so you can see where you are spending.

Save 6 months spending to a bank saving account

Adjust your spending to meet your financial goals.......so make sure you can save at least 10% to a pension and try to save something to an ISA too.

I wouldn't worry about making NI catch up payments (unless you can pay Class 2 for the time you were living outside the UK) as you have plenty of work years left to get to 35 years of contributions.

Debt_free_by_2020

Thank you for the explanation Xylophone! So that is correct then for 2007-2009 as I would have turned 18 during 2006-2007 and that was still within the 2 years

Debt_free_by_2020

Thanks Bostonerimus!

Yeah, I think I'll leave the voluntary contributions for now as it looks like they aren't going to be essential in the long run

I'm gonna start concentrating on that 10% into a pension malarkey as soon as I graduate.

bostonerimus

Do a budget first!

For at least 3 months record every penny you spend and how you spend it. Note daily spending on your phone or in a note book and transfer it to a spreadsheet at night. Then look for areas to save and put that money into your pension.