Voluntary contributions - confusion!

angel4xx

So sorry if this has been asked before - I did try a search before asking.
I reach retirement age this October and find to my horror that despite having paid NI for 48 years, 28 of those years are deemed incomplete and I won't be getting the full state pension. It looks like they didn't count any of the 28 years that I was purely self-employed. I paid what HMRC asked me to pay so I don't understand the "gaps".
My NI record on Government Gateway mentions voluntary contributions to make up the "gaps" but they don't say how how that works. I tried "MoneyAdviceService.org" and they said I should pay for 6 years. I don't understand this because only the two last gap years (2006/7 and 2007/8) will allow me to click on them to see a voluntary contribution figure. If I click on anything earlier it says I can't pay anything.  Hopelessly confused. I would just like to know how much IN TOTAL I would have to pay in voluntary contributions to get a full state pension, and whether I can afford it! All advice appreciated!

Marcon

Have you read https://www.gov.uk/voluntary-national-insurance-contributions/deadlines which should (with luck!) give you both the information you need, and the relevant links to take further if you wish to? 

molerat

The gaps will be because you did not pay what you were not required to pay, unfortunately that meant you did not contribute to the state pension.  You can currently pay back as far as 2006-07 under the 2016 scheme transitional arrangements.  How much is quoted as your current amount ?  How many years NI does it show you as having ?  Which years, from 2006-07 up to 2019-20,  does it show as not full ? When were you self employed during that period ?

angel4xx

Hi Molerat, thanks for your reply. The first year not full is 1982-83 and the last one is 2007-08. Between those dates I was purely self-employed.

I am shown as having 20 years NI.

molerat

So you are saying the only not full year from 2006-07 to now is 07-08 so I assume you were employed after then ?  If so that is the only one available to purchase.  If you were self employed that year you will be able to pay class 2 at £3.05 per week otherwise it will be class 3 at £15.00 per week as shown on the forecast.  Nothing you can do about it, unless you did make the necessary contributions - many SE people did not, apart from strangling your accountant !  The forecast should show the £ amount you have now, how much you can achieve going forward and the maximum you can get - what are those figures ?

angel4xx

molerat said:

So you are saying the only not full year from 2006-07 to now is 07-08 so I assume you were employed after then ? The forecast should show the £ amount you have now, how much you can achieve going forward and the maximum you can get - what are those figures ?

Yes, that's correct. I've been employed since 08/09. Current pension forecast is £122.28 a week. It says the most I can increase my forecast to is £131.23 a week.

On the NI Records page if I click on 06/07 or 07/08 each one displays "You can make up the shortfall. Pay a voluntary contribution of £795.60 by 5 April 2023." Are they saying I have to pay them nearly £1600 to get another £9 a week added to my pension? So confusing.

molerat

Yes, 2 x £795.60 will give you £8.95 per week and increased each year for the rest of your life - pretty good value really. 

What were you doing for those 2 years - if self employed the cheaper class 2 option should be available to you - 2 x £158.60  for £8.95 per week !

angel4xx

molerat said:

Yes, 2 x £795.60 will give you £8.95 per week and increased each year for the rest of your life - pretty good value really.  Does your forecast also show a COPE amount - were you in a contracted out works pension ?  It looks like you were as the additional 2 years are only at the "old pension rate" of £4.48 or maybe you were well paid and getting a high S2P amount.

What were you doing for those 2 years - if self employed the cheaper class 2 option should be available to you - £158.60 per year for £8.95 per week !

No, no COPE. And I was certainly not well paid - well below national average. Yes, I was self-employed for those two years.

£158 sounds a lot better but my records clearly show I was self-employed so it's fraudulent of them not to tell me the £895 is for Class 2 plus Class 3 and that I might not have to pay Class 3. Thanks for your advice, it's good to have some clarity before I get on the phone to the officials!

Linton

angel4xx said:

molerat said:

So you are saying the only not full year from 2006-07 to now is 07-08 so I assume you were employed after then ? The forecast should show the £ amount you have now, how much you can achieve going forward and the maximum you can get - what are those figures ?

Yes, that's correct. I've been employed since 08/09. Current pension forecast is £122.28 a week. It says the most I can increase my forecast to is £131.23 a week.

On the NI Records page if I click on 06/07 or 07/08 each one displays "You can make up the shortfall. Pay a voluntary contribution of £795.60 by 5 April 2023." Are they saying I have to pay them nearly £1600 to get another £9 a week added to my pension? So confusing.

Yes that is the extra amount you get for about £1600 and it is an amazingly good deal.  £9/week means about £470/year.  So after 3-4 years you will have received the cost of the voluntary NI back and if you live longer than that, which you very likely will, you then make £470 every year profit until you die.