Should I pay a contibution to make up NI gaps? 29 July 2018 at 1:09PM edited 30 November -1 at 1:00AM in Pensions, Annuities & Retirement Planning 9 replies 1.3K views

Oasis1

Hi everyone - some advice needed please. Is it worth paying voluntary contributions to make up full years of NI contributions?

I am 26 and have four years where I didn't contribute enough. They've summarised this below:

• 7 years of full contributions
• 41 years to contribute before 5 April 2059
• 4 years when I did not contribute enough

The costs of making up the shortfall are:

Year 1 - £400
Year 2 - £650
Year 3 - £680
Year 4 - £380

Apparently I have until 5 April 2023 to pay these. However, they may increase after 5 April 2019 - so I wanted to make the decision this year.

My pension forecast is that I'll get the maximum £164.35/week, assuming that I'll contribute another 28 years - which is almost a given.

So any worth in making these contributions? Or should I just keep my money to contribute to a house deposit/savings?

Thanks in advance.

molerat

You have 41 years to fill the required 28 ( ? depending on your 2016 starting amount ) years, 13 years "spare" so not really worth doing.

kidmugsy

It's a gamble. I'd say the odds favour your not paying the contribution. There are almost certainly better ways for you to use that £2k.

Oasis1

Thanks both. I'm definitely leaning towards leaving it now.

I suppose it would only really matter if I were in the blissful scenario of being able to retire at 55, but had taken a few years out within that time so would then be short of the full 35. But my generation is going to be working for much longer than previous... so (sadly) this scenario probably won't happen.

Savvy_Sue

Are you male or female?

If you are female and likely to be self-employed and pregnant, then it's worth paying them, but you can afford to wait until that's the situation IYSWIM. You need the 'right' years paid up in order to claim Maternity Allowance.

Oasis1

Thanks for the consideration, Sue, but I'm male!

Paul_Herring

This doesn't make sense...

I am 26 and have[...]

7 years of full contributions
[...]
4 years when I did not contribute enough

You don't normally get an NI number to contribute until you're 16. Those numbers indicate you've been paying NI since you were 15...

Regardless, you appear (at the moment - no idea what will happen in the next 3 decades) have sufficient 'slack; years to catch up on those 4 years - I'd not bother revisiting until at least a decade before you can claim a personal pension (currently 2 decades before a state pension.)

But well don'e for actually noticing the potential problem and seeing if something needs to be done.

badmemory

Of course being a man does not exclude you from gaining your last couple of years of credits from grandchild minding! Something to look forward to in that dim & distant future.

Alexland

Oasis1 wrote: »

Thanks both. I'm definitely leaning towards leaving it now.

I suppose it would only really matter if I were in the blissful scenario of being able to retire at 55, but had taken a few years out within that time so would then be short of the full 35. But my generation is going to be working for much longer than previous... so (sadly) this scenario probably won't happen.

Yeah from what you say it doesn't seem worthwhile for your situation. Probably better uses for the money in your 20s.

Alex

Oasis1

Thanks everyone - I've decided against paying them.