Please advise me?! Help my partner with NI class 3 payments or a private pension, instead?

steveyme

Hi all! I would be so grateful if anyone could give me some advice on what is best to do? My partner is 30 and self employed with a low income, I want to help her build up some pension credits. Would the best thing to do buy a class 3 contribution for her once a year, on years I can afford to? Is that a good baseline, or should I pay into a private pension and skip the NI one? I might not always be able to make payments regularly as I am also self employed, and I assume you need to make that commitment with a private pension, so the state scheme sounds better on a pay-when-I-can basis. Does that sound about right to anyone? Thank you! Steve

drumtochty

In years when she does not have a declared income of £6,136, this year or at a guess £6,240 in 2020 2021 then yes look at paying Class 2 NI voluntary contributions for the lady.

Mrbeethoven

steveyme said:

Hi all! I would be so grateful if anyone could give me some advice on what is best to do? My partner is 30 and self employed with a low income, I want to help her build up some pension credits. Would the best thing to do buy a class 3 contribution for her once a year, on years I can afford to? Is that a good baseline, or should I pay into a private pension and skip the NI one? I might not always be able to make payments regularly as I am also self employed, and I assume you need to make that commitment with a private pension, so the state scheme sounds better on a pay-when-I-can basis. Does that sound about right to anyone? Thank you! Steve

Don't forego making voluntary NI contributions in order to pay into a private pension!

I looked into the costs and benefits of spending less than £800 to buy each year of NI pension credits for my non-working wife, in order to fill in the gaps in her NI record, 3 or 4 years ago just before she reached stage pension age.

If I remember correctly, it turned out that the payback period for her, as a non-taxpayer, would be under 3 years. Even if she had to pay tax on on her pension the payback period would have been less than 4 years. It would be even better for your partner if they qualify for class 2 rather than class 3 costing £3 per week vs £15.

It seems unbelievably generous of the government and far in excess of any return that could be expected from a private pension. Check how much extra state pension per year your partner would receive for each year of voluntary contributions purchased. Divide the latter by the former to get the payback period and prepare to be astonished!