Voluntary NI Conts before State Pension Age

Suffolk_lass

Me - I have just finished work and I have an occupational pension. I will be 61 this month. I am exploring my State Pension Options.

I was opted out for a number of years until 2016 (and have an occupational pension that reflects this). My state pension shows accrued benefits to April 2018 as £136.08. I will have another year as an employee (current year 18-19) but my current plans probably do not include working for someone else again.

I could achieve £159.56 (not taking future increases into account) if I satisfy contribution years between now and my 66th birthday, in March 2024. I think I can make voluntary contributions. I am not a carer and do not meet the criteria for credits.

My questions are as follows:
I can see Class 2 and Class 3 voluntary contributions but my reading is that I can only pay for Class 3 as unemployed without benefits. This will be £15 a week in 2019-20. Is that right?

I am not self-employed and making a profit in the Class 2 range Is there another way to be eligible for Class 2 in 2019-20? I think exam invigilator was once listed - it is attractive in that £3 a week is preferable to £15

Is a full year still based on 50 weeks at the weekly rate (it was when I left school and briefly worked for the DHSS!)?

I believe the last 11 months before I reach SPA April 2023-Mar 2024 are beyond my contribution reach as I will be 66 before the end of the contribution year. Please tell me if that is wrong.

Beyond my SPA the only option I can see for an increase to my state pension would be to defer taking it, earning a 1% increase for each 9 weeks that I defer. I looked at doing this but the time to pay for itself vastly outweighed the benefits - example:

27 week deferral, my pension would benefit as follows:

£159.56 x 1.01 x 1.01 x 1.01 = £164.39 (£4.83 a week)

- but the cost of not taking my pension would be 27 (weeks) x £159.56
= £4,308.12 (which would take 892 weeks or over 17 years to pay for itself). Is that right?

I am guessing this is why some of my former colleagues are working part time, to top up their income and so their minimal Class 1 NI Conts give them the years without making voluntary contributions for them. This remains an option but not my preferred one.

I have read the guidance on Gov.UK so I am checking my understanding of what I have read. Of course if there is more, not accessed from the links I have followed, do say, but I have read everything I could find.

Dazed_and_confused

Starting a small business and voluntarily paying class 2 national insurance is one option.

Using the trading allowance (google it) would mean your business could being in £1,000/year and you would not have to pay any additional tax. The income could also be used to pay the national insurance.

The year you reach State Pension age cannot be a qualifying year.

And it is refreshing to see someone post an objective question about the new State Pension, most recent posts from people in your situation have been from the view point of missing out on something rather than having the chance to increase what you were always expecting.

Suffolk_lass

Dazed_and_confused wrote: »

Starting a small business and voluntarily paying class 2 national insurance is one option.

Using the trading allowance (google it) would mean your business could being in £1,000/year and you would not have to pay any additional tax. The income could also be used to pay the national insurance.

The year you reach State Pension age cannot be a qualifying year.

And it is refreshing to see someone post an objective question about the new State Pension, most recent posts from people in your situation have been from the view point of missing out on something rather than having the chance to increase what you were always expecting.

Thank you Dazed and confused, I will check out the trading allowance, that sounds like a good idea - my husband is retiring this year and was an industrial designer before he became a teacher. I have some lovely bespoke items he has made to my design brief - I could look at putting some on a selling platform to see who nibbles.

Thanks for the confirmation re the qualification year.

I have tried to be objective about this part of the State Pension but I do have a residual resentment about the state pension age.

Another time and place for that maybe.

mgdavid

Suffolk_lass wrote: »

.....
I have tried to be objective about this part of the State Pension but I do have a residual resentment about the state pension age.
........

Unfortunately from your POV equality is a two-way street....

Suffolk_lass

mgdavid wrote: »

Unfortunately from your POV equality is a two-way street....

Just to be clear that I fully support the equalisation of the pension age between men and women.

The timing and implementation windows are the problem, not the equalisation, and the one-way age uplift of the implementation that has impacted so heavily. All the original consultation was based on a premise of lowering the SPA for men and lifting it for women to 63. Then there was a global economic crisis and the budgeting choices of governments. So actually a one way street, not two way, as only the womens' SPA has been impacted.

I was mid-way into my 43 year working life when the legislation was passed in 1995, and +15 years on from that when the "what it means for you" letter was issued.

I am in the least impacted group; a six year extension to my working life from a SPA perspective, with eight years of my (originally) planned working life left to adjust to that. I am economically secure because I did the planning, worked later than planned and overpaid my pension. Other women are less well off and are suffering hardship as a direct result.

That is the source of my residual resentment.