State Pension

jamesd

Full next year will be £179.60. Each extra year is worth 1/35th of this, so £5.13 a week, £266.76 a year. Looks as though you'll be taxed at 20% on this, so £213.40 a year.

Costs to buy a year are a bit lower for the previous two years, else current year rate:
2016-17 £15.30 a week, for the year £795.60  . Better off after 3.7 years.
2017-18 £15.30 a week, for the year £795.60  . Better off after 3.7 years.
2018-19 £14.65 a week, for the year £761.80  . Better off after 3.6 years.
2019-20 £15.00 a week, for the year £780  . Better off after 3.7 years.

For all of them you'll have got back more than you spent after three years and nine months or less. And that's ignoring the extra value of the triple lock.

It's a great deal and I'm sure that you could make good use of an extra £20.60 a week, £853.60 a year, plus increases, for the rest of your life. If nothing else that'd pay for a decent holiday each year.

jem16

wkt54 said:

Thank you Jamesd
I was 18 in 1972 and retired in 2005.
After that I did not make any more contributions, so I was 2 years short of the 35 required.
A few years ago I looked up about making voluntary payments to make up to 35, but it was expensive.
But it didn't say if you don't you will receive 35 pounds a week less.
I think it said you will receive 5 pounds a week more, so I didn't bother.
Thanks

You have obviously been contracted out during some or all of your 33 years. If you had not been contracted out then having 33 years would have given you £165.19.

From the sound of it, your calculation under the old rules was higher than under the new rules so the calculation was done with 30 years anyway. Can't be completely sure without knowing your COPE amount.

As others have said making voluntary contributions post April 2016 would give you an extra £20pw which is excellent value.

nigelbb

jamesd said:

Full next year will be £179.60. Each extra year is worth 1/35th of this, so £5.13 a week, £266.76 a year. Looks as though you'll be taxed at 20% on this, so £213.40 a year.

Costs to buy a year are a bit lower for the previous two years, else current year rate:
2016-17 £15.30 a week, for the year £795.60  . Better off after 3.7 years.
2017-18 £15.30 a week, for the year £795.60  . Better off after 3.7 years.
2018-19 £14.65 a week, for the year £761.80  . Better off after 3.6 years.
2019-20 £15.00 a week, for the year £780  . Better off after 3.7 years.

For all of them you'll have got back more than you spent after three years and nine months or less. And that's ignoring the extra value of the triple lock.

It's a great deal and I'm sure that you could make good use of an extra £20.60 a week, £853.60 a year, plus increases, for the rest of your life. If nothing else that'd pay for a decent holiday each year.

Average life expectancy at pension age is over 20 years so that £20.60/week is worth over £20,000 in total.

wkt54

Thank you.
How do I go about paying the 3133 pounds?
Can I do it online?
I don't understand about the 20% tax.
With my 100 pounds a week work pensions, and now the state, I am receiving 241 pounds a week.
Will that be taxed?
Yes molerat, I didn't understand how the new pension works.
Thanks again

jem16

wkt54 said:

Thank you.
How do I go about paying the 3133 pounds?
Can I do it online?
I don't understand about the 20% tax.
With my 100 pounds a week work pensions, and now the state, I am receiving 241 pounds a week.
Will that be taxed?
Yes molerat, I didn't understand how the new pension works.
Thanks again

You can pay HMRC online but first you must contact the Future Pension Centre to confirm which years will be worth buying. They are likely to say post 2016 years but you must make sure. They will then give you the appropriate number to ring HMRC as you need a reference number to make the online payment. HMRC will ask if you have confirmed the years with the DWP.

Receiving £241pw just puts you into paying tax but only on roughly 62p per week. If you do pay and get the extra £20pw then that would be taxable at 20%.

wkt54

Thank you Jem
When I rang last week, the girl asked if I was receiving any other benefits. I said no, but she didn't ask if I had any other pensions.
Would they take of the 20%, and give me 16 pounds?

jamesd

What HMRC will do is have you get £20.52 a week of extra untaxed state pension and send the work pension people a tax code which causes the tax to be taken from that. So the tax due on the extra state pension will show up as about a £4.10 a week reduction in the work payment.

xylophone

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

https://www.litrg.org.uk/tax-guides/pensioners/how-my-tax-collected

wkt54

Thanks again.
As a matter of interest, how is it possible to receive the full amount of 175 pounds a week?

molerat

Unlikely that you can but without a full breakdown of your NI history and pension forecast it is only a guess.  The vast majority who spent many years in a contracted out pension scheme can only make up their pension with post 2016 years of which there are obviously only a limited amount before your state pension age.  The Royal London guide describes how it works.

I have 42 years but only get £168 simply because there were not enough post 2016 years to get the extra amount.