Is it worth paying voluntary NI for 22 year old ?

cisamcgu

Hi,

A 22 year old has no significant NI contributions (student), but can, for around £700 per year, pay voluntary ones for 5 years backdated - is it worth it ?

Any opinions ?

Thanks Andrew

hugheskevi

No.

The individual is very likely to accrue a full pension anyhow (35 years needed).

Paying now is also very risky from a policy change perspective - the system will change a number of times to retirement, which could lead to any payments being worthless.

A full pension can be accrued even without any contributions before age 33, so any voluntary contributions before then are unnecessarily risky. Also, as the payments are not related to age, a 22 year old pays the same as a 66 year old to purchase a year, despite the many years of compounded returns until State Pension age. All of which leads to voluntary contributions not being attractive for younger individuals.

Linton

It is not worthwhile - you have penty of time in the next 46 years before you get your State Pension to get to the required 35 and you are likely to be working for much of that period. If you still havent contributed any NI in 10 years time then you would need to consider it.

cisamcgu

Thank you both - that was my thought too but it is nice to have it confirmed - I will tell her to save her money for something more interesting

Paul_Herring

cisamcgu wrote: »

Thank you both - that was my thought too but it is nice to have it confirmed - I will tell her to save her money for something more interesting

... like putting it into a private pension? Just a thought, since she's prepared to wait to receive the benefit from it

xylophone

How about saving into a LISA?

https://www.moneysavingexpert.com/savings/lifetime-isas/