Help. Doubts on paying voluntary payments for NI

molerat

The paying back to 2006 was a concession with the introduction of the 2016 scheme so that at 2016 everybody had the opportunity of getting the 10 years needed to receive a pension. All post 2016 years are back to the 2 & 6 year rule.

DairyQueen

thinfatwhiteduke wrote: »

Thanks for your answer.
Isn't 65 the oldest you can work before you retire? So when you say 'when you are 62...and have to carry on working for further 5 years'....so it should be 3 more years, right?

I thought that you could receive your pension as soon as you completed your 35 years. So what is the minimum age to start receiving it?

I'm 32, and it says that I need 32 years, so I should retire at 64. But If I'm able to pay for those 5 years, I should be fine at 59/60. You say that I would be too young to retire and receive the pension? (Unless I have my own savings). So I will have to work until the age of 65/66 for that?

Thanks

You were born after 1978 so the current age from which you will receive SP is 68. This may rise in the future.

You need at least 10 years of NI contributions to receive any SP.

You need 35 years of NI to receive a full SP. However, those who were contracted-out of the state second pension at any point in the past may need more than 35 years.

It seems that you were not contracted out so your calculation is straightforward.

The government allows you around 50-odd years (from ages 16 through SP age) to meet the max 35-year target. Don't assume that you will be paying NI for every tax year until you reach SP age. I did not pay NI whilst living abroad. I did not pay NI whilst self-employed. I did not receive NI credits for the first few years of caring for a disabled relative. I could go on.

I am 60 this year and will achieve the 35 year max at the end of this tax year. That has required a few voluntary payments. Any future NI I pay will no longer benefit my SP but NI is also used for other funding (such as the NHS).

For the last decade the SP age has been increasing. You need to educate yourself on the reasons why. If the system worked as you believed then plenty of people would receive their SP in their 50s, and even if in their 40s (before the number of years increased from 30 to 35).

It is generally appreciated that it is difficult to live without any income other than the SP. Especially so for those who do not own a mortgage-free home by retirement age. However, you do not have to earn a massive income in order to achieve the extra pension you will need. You also don't need to be a high-earner to save sufficient to 'bridge the gap' between the age at which you want to retire (say 60) and when SP begins paying (68). It simply requires you to think ahead and save sufficient every month into a pension (helped by your employer's contributions) to achieve that goal.

barnstar2077

I am 41 and have never earned more than 20k a year and if all goes to plan I will retire at 55 (58 at the latest.) So it can be done, you are young and have plenty of time to educate yourself and make some plans.

There is a forum on this site for everything to do with money, mortgages, savings, pensions etc, read everything that you can, and formulate your own plans instead of following the herd.

Don't be disheartened, be empowered and make it happen!

smjxm09

From memory only complete years count so if you have say 5 part years the money you have paid in NI will be lost. Also you can only go back so many years to top up. ( think it is around 5 years).. If you can buy 3 years for around £1000 that is a bargain as those 3 years will give you a pension of around £690 per year at today's pension for life.

thinfatwhiteduke

I'm a European national and my NI record starts from 2010 when I entered this country. At the time I was 24/25.

DairyQueen

thinfatwhiteduke wrote: »

I'm a European national and my NI record starts from 2010 when I entered this country. At the time I was 24/25.

It's therefore possible that you have also earned entitlement to state pension in your country of origin.

mark55man

The only thiing I would say is you may feel entirely differently about work later in life, so whilst if you do have a full working career the payment now would prove to be wasted, but there are scenarios when you don't want to work and aren't on any qualifying benefits. The benefit of 3 full years is about £10 a week so your finanical decision is £1000 now worth £500 p.a. when you retire. The complexity is there are scenarios when it will prove to be wasted, but in the sense of life insurance and you dont die (within the period)

If you have £1K that you would be using to save for later, its not a bad punt and buying some flexibility is a good idea. Only you can know how likely it is that you would fail to qualify in your later years