National Insurance shortfall

bj3656

Hello, i took early retirement in 2013 aged 57. My National Insurance record states I have 42 yrs full contributions, 3yrs to contribute before April 2022 and 5yrs when I did not contribute enough. Those 5 yrs are the following full yrs after I retired and suggest that I could increase my pension forecast from £136 per to £151 per week , or even £161 per if i make at least 4 additional payments of £795  for the 4-5yrs of non contributions.
My question is, given that I have 42 yrs full contributions, can I make these payments now as a lump sum, and is the forecast accurate and extra payment necessary?

Dazed_and_C0nfused

You are under transitional rules not the standard New State Pension rules so the number of years isn't really relevant.

You had a starting amount at April 2016 and could add to that in two ways, pre and post 2016 years.  Post 2016 will always add to your forecast (until you reach £175.20).  Pre April 2016 is more complicated and may well not be of any benefit to you.

Google Royal London topping up State Pension for a comprehensive explanation.

So paying for post 2016 years is usually an excellent investment (exception being the final year if it only takes you from say £174.80 to £175.20).

Going forward you could consider starting a small business and paying voluntary Class 2 National Insurance as that is only c£160/year not c£750.

xylophone

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

You indicate that you have not contributed since 2013 but had 42 qualifying years at that point?
If so, at 6/4/16

30/30 (maximum) x £119.30 + (Additional State Pension - Deduction for Contracting Out)

(35/35 (maximum) x £155.65) - Contracted Out Pension Equivalent.

Your starting amount was the higher of the two.

See https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

You can purchase years from 6/4/2016. 

https://www.gov.uk/voluntary-national-insurance-contributions

jamesd

xylophone said:

30/30 (maximum) x £119.30 + (Additional State Pension - Deduction for Contracting Out)

Why have you included a deduction for contacting out in that one when there was already no earnings-related accrual during contracted out years (except a little under S2P)?

xylophone

See
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf