Cashing in small pension to make up state pension shortfall

Gehngus

Hi All.

Just checking up on my pension status.

I have two entries in the last three years and many from 20 years ago that say "year not full", but when i click on them its says they are looking into it and not to do anything.. so these I assume I will not get any credit for. The last few years shortfall years should be ok, so I will check this with my accountant.

I also have a few in the last decade "year not full" where i can pay £795.60 by 5 April 2023. (they all say the same).

At this moment in time, In order to get my full state pension I have to contribute 12 years more by 2032 (in the next 12 years). this is cutting it a bit close possibly.

I have two small pension from a time when opting out was encouraged, It isn’t much after the government take their bit out.  (2k in one, 7K in the other)

I had considered just cashing them in now and paying something off, but it seems after the tax has been deducted, it is then classed as income which would then reduce our working tax credits. Effectively giving me nothing in the long run.

So the question is.. Could I transfer the smaller of the two over to my state pension without taking a tax hit? is this possible, or do i take the hit and then pay it as a voluntary contribution.

and last of all. is it worth it or should I hang on?

Many thanks

Dazed_and_C0nfused

You could take just the 25% TFLS but you cannot move it direct to pay for the State Pension.

Are you employed or self employed?

molerat

There is no way to transfer across tax free, you would have to take the hit on tax.  If you do take any taxable element from a pension then you would be restricted to how much you can contribute to a DC pension in future.  Just because the system will allow you to fill some pre 2016 gaps it does not necessarily mean they will add benefit to your pension.  Post up the full details from your SP forecast and someone will point you in the right direction

Gehngus

molerat said:

 Post up the full details from your SP forecast and someone will point you in the right direction

Ok. Im just trying to work out how to do this.

Dazed_and_C0nfused

You can see it on your Personal Tax Account.

Make sure you include details past the headline £175.20.

Gehngus

Dazed_and_C0nfused said:

You can see it on your Personal Tax Account.

Make sure you include details past the headline £175.20.

I will include everything.

I am self employed.

between the years 2101 and 2014 i was employed and assumed my NI payment were being made. it seems this wasnt the case. the firm went bust in 2015.

The two pensions from my opted out time are different. the small one 2033 seems to be non taxable

Your State Pension summary

Show your National Insurance number

You can get your State Pension on 24 August 2032. Your forecast is

£175.20 a week

£761.81 a month, £9,141.69 a year

Your forecast

• is not a guarantee and is based on the current law
• does not include any increase due to inflation

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2020

£117.88 a week

Forecast if you contribute another 12 years before 5 April 2032

£175.20 a week

£175.20 is the most you can get

After State Pension age, 24 August 2032, you no longer pay National Insurance contributions.

You have:

• 23 years of full contributions
• 12 years to contribute before 5 April 2032
• 16 years when you did not contribute enough

View years only showing gaps in your contributions

2020-21

Your record for this year is not available yet

2019-20 Year is not full View 2019-20 details 2018-19 Full year View 2018-19 details 2017-18 Year is not full View 2017-18 details 2016-17 Full year View 2016-17 details 2015-16 Full year View 2015-16 details 2014-15 Full year View 2014-15 details 2013-14 Year is not full View 2013-14 details 2012-13 Year is not full View 2012-13 details 2011-12 Year is not full View 2011-12 details 2010-11 Year is not full View 2010-11 details 2009-10 Year is not full View 2009-10 details 2008-09 Full year View 2008-09 details 2007-08 Full year View 2007-08 details 2006-07 Full year View 2006-07 details 2005-06 Full year View 2005-06 details 2004-05 Full year View 2004-05 details 2003-04 Full year View 2003-04 details 2002-03 Full year View 2002-03 details 2001-02 Year is not full View 2001-02 details 2000-01 Year is not full View 2000-01 details 1999-00 Year is not full View 1999-00 details 1998-99 Year is not full View 1998-99 details 1997-98 Full year View 1997-98 details 1996-97 Year is not full View 1996-97 details 1995-96 Year is not full View 1995-96 details 1994-95 Year is not full View 1994-95 details 1993-94 Year is not full View 1993-94 details 1992-93 Year is not full View 1992-93 details 1991-92 Full year View 1991-92 details 1990-91 Full year View 1990-91 details 1989-90 Full year View 1989-90 details 1988-89 Full year View 1988-89 details 1987-88 Full year View 1987-88 details 1986-87 Full year View 1986-87 details 1985-86 Full year View 1985-86 details 1984-85 Full year View 1984-85 details 1983-84 Full year View 1983-84 details 1982-83 Full year View 1982-83 details 1981-82 Full year

Dazed_and_C0nfused

Have you been paying class 2 NI whilst self employed?

Gehngus

Each year I get a letter from my accountant asking me to go onto the gov self assessment and pay my class 2 ni.
I always pay this. Reading back over the letter. It says enter my utr number followed by K
I may have not put the k. Can't remember. But assume it wouldn't be accepted if it was in the wrong format?

Is there somewhere on the gov website to show my payments? 

ElephantBoy57

Gehngus said:

At this moment in time, In order to get my full state pension I have to contribute 12 years more by 2032 (in the next 12 years). this is cutting it a bit close possibly.

If you are 12 years away from state pension age, its unlikely that you can cash in your pensions.

Have you read the policies retirement age, its quite often 10 years before state pension age.

molerat

ElephantBoy57 said:

Gehngus said:

At this moment in time, In order to get my full state pension I have to contribute 12 years more by 2032 (in the next 12 years). this is cutting it a bit close possibly.

If you are 12 years away from state pension age, its unlikely that you can cash in your pensions.

Have you read the policies retirement age, its quite often 10 years before state pension age.

Pension access age is still currently 55, no laws have yet been enacted to change that and it is planned to change for age 68 SPA.  2032 - 67 + 55 = 2020 so accessible now.

garmeg

ElephantBoy57 said:

Gehngus said:

At this moment in time, In order to get my full state pension I have to contribute 12 years more by 2032 (in the next 12 years). this is cutting it a bit close possibly.

If you are 12 years away from state pension age, its unlikely that you can cash in your pensions.

Have you read the policies retirement age, its quite often 10 years before state pension age.

SPA will be 67 from 2028. So it looks like he may be 55 now if he is 67 on 24th August 2032 (per his forecast). Hence he can access these pensions. Whether it is a good idea is a different matter.