Should I top up NICs?

seriouslyunsurprising

I have just been on my self assessment profile on HMRC, to apply for marriage allowance. Whilst on my account I noticed I could view my state pension projections and NI history. I have 10 full years of credits, but 5 incomplete years to date. I am 30 years old, turning 31 soon.

Is it worth topping up those years that are currently incomplete? For context, I have two young children, I am self employed running a business with employees, but earn less than my personal allowance currently and my income is likely to remain the same for 3-5 years. I suffer from chronic health problems which may reduce my ability to work in some years' time. In terms of our general family financial planning (mortgage, private pensions, savings etc) I am trying to plan for me not earning from approx age 50 but this may change as my health is obviously unpredictable.

I was just wondering if anyone could advise whether it's worth making those back payments at my age, or if I'm better off not bothering?

Thanks in advance :beer:

Dox

It's a sensible question to ask, but close to impossible to give any sensible answer. If you think you'll get to state pension age without enough full years of NI to give you the maximum state pension, and getting the full state pension is important to you, and you can afford to top up the missing years, then yes; otherwise probably not.

One other thought: if you are self employed but running a business with employees, have you considered setting up a limited company? Would give you certain protections and flexibilities, so worth having a chat with your accountant if you've not yet done so.

p00hsticks

How 'incomplete' are the incomplete years ?
If they cover the period when you were self employed, and therefore paying Class 2 NI, then it's probably going to be far cheaper to fill these now than to buy voluntary Class 3 contributions later on.

However as Dox says, it's almost impossible to predict how things will pan out. Bear in mind that if your health is such that you have to give up work you may later become eligible for ESA, this currently comes with Class 1 Credits.

Also you say you have two young children - who is claiming the Child Benefit for these ,as they also entitle you to NI credits until the youngest reaches the age of 12 ?.

seriouslyunsurprising

Dox wrote: »

It's a sensible question to ask, but close to impossible to give any sensible answer. If you think you'll get to state pension age without enough full years of NI to give you the maximum state pension, and getting the full state pension is important to you, and you can afford to top up the missing years, then yes; otherwise probably not.

One other thought: if you are self employed but running a business with employees, have you considered setting up a limited company? Would give you certain protections and flexibilities, so worth having a chat with your accountant if you've not yet done so.

Thank you. Yes we are a ltd company, but thanks for the advice.

seriouslyunsurprising

p00hsticks

They are from my years as a student. A couple of years I've got <£100 of contributions (from part time work) and the rest no contributions at all. I think it said the payments to fill those years were £600-700 per year?

I claim CB for my children, so there's another 10 years of credits until the youngest is 12. I know it's an impossible question really as the future state pension is unpredictable due to political forces and who knows what we will actually get in another 30-40 years time!

Dazed_and_confused

For future reference you will find you get much better suggestions if you tell people the correct information from the beginning

I am self employed

Yes we are a ltd company,

So you either have two businesses or you aren't self employed. It makes a big difference with National Insurance and pensions in general.

molerat

Unless the years are very cheap I wouldn't bother. You currently have 10 plus another 10 going forward from CB. That leaves 15 needed with 28 to get them. If you remain employed by your ltd co pay yourself just over £118 (19-20 rate) per week for free class 1s. If you do go onto disability in future then you will likely get credits anyway.