National Insurance Contributions

Janal

Before I was made redundant in May 2014 after more than 35 years in full-time employment I contacted HMRC and was told that I had more than the required 30 qualifying years and would therefore receive the maximum state pension in March 2025. I was eligible for 6 months' Job Seekers allowance until December 2014. Since then I have worked in part-time seasonal work (approximately 7 months a year). However, I was looking at my pension forecast recently and it says I have NI gaps for two of those years and that if I pay £300 voluntary contribution I can make up the shortfall and be eligible for my full state pension. Before I contact Gov.UK I would be grateful if someone could help with the right questions to ask? I keep methodical records and don't understand why this has happened. Thanks.

molerat

You had sufficient for a full "basic" pension before the rules changed in 2016.



The old pension was made up of 2 parts, basic which you accrued up to a maximum of £129.20 at today's value after 30 years and additional which was based on income and could add a maximum of another £176.41 to that basic. If you had hit that 30 years contributions you could not add any more to the basic but the additional could be increased in employment. In 2016 the system changed and you would need 35 years to reach the new maximum of £168.60. When the system changed you were given a starting amount which was the higher of what you had accrued under the old system or recalculated according to the new system rules. If that figure was less than the new maximum you could add to it and, depending on personal circumstances, fill any part years from before the change.



You, like me, are in a win situation. Your old pension amount is less than the new maximum so where previously you could not have increased that figure the new system is giving you a second bite at the cherry and you can make up the shortfall either by benefit credits, voluntary contributions or employment.



If you post the exact figures from your forecast someone here will be able to help.

Linton

The rules changed in April 2016. The effect was that the amount of pension you had accrued up to your redundancy remained in force, but a higher standard rate was implemented and the number of years required to achieve it was set at 35.So no one lost what they had alrady earned, but many people could earn more up to the new standard rate.



There are other complications which I need not go into, but the net result as far as you are concerned is that you have a choice of staying with the inflation adjusted level of pension you were given in 2014 or you can pay the extra to get it raised to the new level. If you work out the numbers I think you will find that this is an extraordinarily good deal which will pay for itself in less than 3 years.

Mike44

The Class 3 voluntary payment for Tax year 2017/18 is I believe £741(till 5/4/2019 when it will increase) which would at current rates add £4.70 a week to your pension. If you think you will live several years after reaching pension age it is, as stated above a very good investment.

p00hsticks

this is a great guide at taking you through it all


https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

Parking_Trouble

Hope it's OK to add my related question in this thread.

I have 45 years of contributions and no gaps.
My state pension forecast says I have another 5 years of contributions to get the maximum - £167.77
Estimate based on NI history to date is £143.68

I have 3 DB pensions, 2 deferred and 1 in payment - contracted out for most of that history.

The one in payment will be reduced by approx. £740 pa at SPA

Gov site says COPE estimate is £126

'This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.
In most cases the private pension scheme you were contracted out to:
- will include an amount equal to the COPE amount
- may not individually identify the COPE amount'

I was expecting to get full state pension and a minor reduction in the DB pension in payment.

How does this work - will my SP be reduced by £126pw and supposedly covered in one or both of the other deferred pensions?

That is surely not right? The deferred pension are relatively small and unlikely to be more than £5k combined.

I retire end of June and there is currently zero NI on my main pension (already in payment). I assume that when I stop taking a salary I stop paying NI?

Parking_Trouble

Ah, OK I think COPE only applies to 'Additional' state pension and doesn't affect the Basic state pension.

[Deleted User]

Parking_Trouble wrote: »

Ah, OK I think COPE only applies to 'Additional' state pension and doesn't affect the Basic state pension.

No - the COPE is the government telling you what you should be receiving from other non government pensions when you were contracted out
Don't deduct it from anything

molerat

COPE was only used in the 2016 starting amount calculation. It is now of no relevance to you and has no bearing on your pension forecast, what you see in the forecast is what you will get.

GibbsRule_No3.

Parking tr how old are you? If you still have 5 years to get to full SP if you pay for those years but are retiring in June are you under 65/66?

Janal

Thanks for all your replies and particularly for the guide p00hsticks which I will download and try to take time to read. I suspect it might help with my insomnia but thanks anyway!