Is it worth paying for missed NI years on my state pension ?

molerat

squirrelpie wrote: »

As others have said, it's worth calling the future pension centre first if you do decide to buy any of those years, to check that they will actually increase your pension. The mere fact that they're listed on your record as being available to top up does not mean that doing so will help you necessarily.

As has been mentioned previously as OP only has 24 pre 2016 years those 4 cannot fail to increase the value.

metrobus

What I do not understand is they say I can top up 10/11 11/12 12/13 at the rate the stamp was than (£12.05 £12.60 &13.25) but 06/07 to 09/10 is at today’s rate £15.00.
I have until 2023 to pay these but will the cheaper rate for the later years last or will it change to the current rate before 2023.
I’ve written to ask but not received a reply.

Clare43

molerat wrote: »

You can buy what you need any time up to your state retirement age so you will have plenty of time after you leave work. There is little financial advantage to buying them now and you may get run over by a bus before then

True, was just thinking about getting them before I retire at 55 as will have more available money to pay for them than if I left till after retirement that’s why I was thinking 9 years.
Will keep an eye on those buses
Also after looking at the Royal London guide that was suggested I found this

“You can top up your NI record for years from 2006/07 onwards. You need to do this by 5 April 2023. After this date, missing years have to be topped up within six years.”

I’ll be 50 in 2023. Unless I’m reading this wrong after 2023 I won’t be able to top up any of my missing years as they won’t be within the 6 years allowed ?

Linton

Clare43 wrote: »

...
I’ll be 50 in 2023. Unless I’m reading this wrong after 2023 I won’t be able to top up any of my missing years as they won’t be within the 6 years allowed ?

You will be able to pay voluntary NI for the years after you stop working until your State Pension Age.

molerat

metrobus wrote: »

What I do not understand is they say I can top up 10/11 11/12 12/13 at the rate the stamp was than (£12.05 £12.60 &13.25) but 06/07 to 09/10 is at today’s rate £15.00.
I have until 2023 to pay these but will the cheaper rate for the later years last or will it change to the current rate before 2023.
I’ve written to ask but not received a reply.

According to the .gov site those rates last until April 2020. After then they increase to the current rate and after April 2023 they can no longer be purchased. https://www.gov.uk/voluntary-national-insurance-contributions/rates

Previously all 2006 - 2016 years were treated timeline wise as 2016-17 and the cut off date was April 2019 at the old rate and April 2023 for the full rate. My SP forecast now only gives the new rates for all the pre 2016 gaps so there is something amiss with the .gov site.

Esox

I know you said you were going to retire at 55 but, as another strategy, if you were to get a part time job earning between the Lower Earnings Limit (presently £118/wk) and the Primary Threshold* (£166/wk) that would enable you to maintain your NICs contributions with respect to the new state pension.

*staying below this threshold is efficient as there is no actual employee's NICs to pay up to this limit (above and it's 12% up to £962/wk)

That's as things stand at the mo anyway. I am in a similar position to you but I try to organise my work-life such that my earnings from one day a week efficiently satisfy my NIC contribution requirements (i.e. by being between the above limits).

Any shortfall I make up with voluntary Class 3 NICs, after the tax year has ended. HMRC do the calculation but there never seems too much to pay.

jamesd

Clare43 wrote: »

The years I have available to top up if wanted according to my record are

2010 - 2011 voluntary contribution of £705 by 5th April 2023
2011 - 2012. Voluntary contribution of £780 by 5th April 2023
2012 - 2013. Voluntary contribution of £780 by 5th April 2023
2013 - 2014. Voluntary contribution of £690 by 5th April 2023

Here's how much it costs per Pound of extra weekly income from those years:

2010-2011: 705 / 4.19 = 168.25
2011-2012: 780 / 4.19 = 186.15
2012-2013: 780 / 4.19 = 186.15
2013-2014: 690 / 4.19 = 164.67

Years after 2016 are 780 / 4.69 = 166.31

Only 2013-2014 is cheaper than waiting, and not by much.

Dazed and confused wrote that the final year would only add 0.52 a week based on buying post 2016 years. Buying 2013-2014 would increase that to 1.02 a week because it's worth 50p less. Still wouldn't be worth buying that year, so buying 2013-2014 has the unfortunate side effect of leaving a lower state pension.

Unless you think that the required number of years is going to increase to the point where you can't get to the maximum I suggest not buying the past years but instead buying almost as late as you can, just on value for money grounds. It's not as late as possible but you could call and say you want to set up a direct debit to pay class 3 voluntary NI at the start of the April after you finish work. You have the money now so you could invest some specifically for this use.

Londonlisa12

Molerat, I can not find where it states the old rates will only apply to April 2020 could you please guide me?
Thank you.

molerat

Londonlisa12 wrote: »

Molerat, I can not find where it states the old rates will only apply to April 2020 could you please guide me?
Thank you.

It is all in the page linked in my post.

Londonlisa12

So assuming you have never been contracted out each year of NI credits pre April 2016 is worth 1/30th of £125.70 and this gives your 2016 starting point,but the £125.70 does go up with inflation?

And each years credit post 2016 gives you 1/35th of £168.20.