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

p00hsticks

Londonlisa12 wrote: »

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.

Not necessarily with inflation - the annual increase is currently based on the 'triple lock' - whichever is the highest of inflation, 2.5% or average earnings increase. In April 2016, when the 'starting amount' was calculated, the old basic pension amount was £119.30.

And that calculation of 1/30 x pre-2016 years applies whether you were contracted out or not - under the old rules, if you were contracted IN you potentially got extra on top - S2P or SERPS - to add to that figure.

Londonlisa12

It's very strange how on the gov.co website voluntary national insurance contributions- rates section it states for years 10/11 11/12 and 12/13 you can pay class 3 at the old rate until 5th April 2020 but if you go and check through government gateway it says you pay at the current rate of £15 per week for these years.
I looked on the government gateway about 4 weeks ago and it then stated the the old rate was applicable .
Just phoned them and they say it's £15 now so it's changed mid year without any warning although the website says there is no change.

molerat

Londonlisa12 wrote: »

It's very strange how on the gov.co website voluntary national insurance contributions- rates section it states for years 10/11 11/12 and 12/13 you can pay class 3 at the old rate until 5th April 2020 but if you go and check through government gateway it says you pay at the current rate of £15 per week for these years.
I looked on the government gateway about 4 weeks ago and it then stated the the old rate was applicable .
Just phoned them and they say it's £15 now so it's changed mid year without any warning although the website says there is no change.

I think there has been a !!!! up somewhere. All years 2006-07 to 2016-17 ended at the old rates in April 19. Gov Gateway continued moving the date along according to when you looked at it. I think they have sorted that one out and just the web site to correct now, probably different departments that have got to talk to each other, get things authorised and checked before they do anything about it as is usual in government circles.

Londonlisa12

But someone has actually entered on gov.uk pay by April 5th 2020 for years 10/11-16/17 at the old rate after the update to new rate for the prior years,so at some point that would have been correct .
Also my letter from June states the old rate and government gateway did also(now changed) ,what would happen if I had paid it at the time?

molerat

Londonlisa12 wrote: »

But someone has actually entered on gov.uk pay by April 5th 2020 for years 10/11-16/17 at the old rate after the update to new rate for the prior years,so at some point that would have been correct .
Also my letter from June states the old rate and government gateway did also(now changed) ,what would happen if I had paid it at the time?

A very good question The April 2019 cut off was a clearly stated policy decision in the original 2016 pension changes.

Londonlisa12

So now we know all years from 06/07 to 15/16 are payable at current rates(£15) and assuming they go up around 2% per year if you put the cash in a bond paying 2% there is no reason at all paying until April 2023.
Apart from the stamp weekly rate possibly going up more than the rate you can get in a bond can anyone see in any benefit in paying earler?

Clare43

Londonlisa12 wrote: »

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.

I have been contracted out as I’m in the NHS pension scheme

molerat

Londonlisa12 wrote: »

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.

Not as straightforward as that. Irrespective of your contracted out status each pre 2016 year was valued at 1/30th of £119.30 or 1/35th of £155.65. Any S2P was then added to the 30ths number and, if contracted out, COPE deducted from the 35ths number and you were given the higher of the two. Some may have been contracted out for a short period so the 35ths - COPE could still be greater than the 30ths + S2P. That number increases with the triple lock figure and can be added to at, currently, 1/35th of £168.60. If you have pre 2016 gaps filling them will force a recalculation of that 2016 figure using 2016 values and in some circumstances change which amount is used. Now all years cost the same and if you can make up your pension with years going forward you need to know which calculation is used for your starting amount as if you are on the 30ths a pre 2016 year will only add £3.98 whereas a 35ths year will add £4.45 so it may not be good value.

jamesd

Londonlisa12 wrote: »

Apart from the stamp weekly rate possibly going up more than the rate you can get in a bond can anyone see in any benefit in paying earler?

Another reason is the chance that the number of years needed might increase due o another change in the system. It's only possible for me to get to the single tier maximum because I bought more years than I strictly needed to when 30 years was enough.

Londonlisa12

Just got off the phone with them.

Your 2016 starting amount goes up each year, mine was £63.63 it is now £68.94 an increase of around 8.35% in 3 years that’s for 16 years so about £4.30 per year.I am relatively lucky and can buy 4 cheap pre 2016 years and pay voluntary for the next 11 and that gives me 35 years and also comes within pennies of the current £168.60.
And in fact it’s better under current rules to be pennies less since then you are entitled to pension credit and all the freebies that brings.