35 years of full NI contributions and state pension?

SteadyEddie

Well, thank you all for your comments and advice. Between the hashes is the cut and pasted information some of you requested from my State Pension Summary.

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

£160.85 a week

Forecast if you contribute until 5 April 2022

£170.86 a week

You can improve your forecast

You have shortfalls in your National Insurance record that you can fill and make count towards your State Pension.

The most you can increase your forecast to is

£175.20 a week

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The years with a shortfall are 2017/8 & 2018/9. I've not spoken to the Future Pension team at DWP but will do so when they return to work. This is in part why I have sought ideas and advice at the moment. I don't start back to work, other than one day, until 4th Jan. so I have some time available to speak to them. I reach pensionable age in Feb 2023. The cope amount is £97.28/week.

barnstar2077, if you are 43 and continue to contribute another 4 years, how are you able to receive the full pension, yet I've 46 years contributions and 2 more to go before I'm eligible?

Dazed_and_C0nfused

Each person's forecast is unique to them.

Once the new system applies to all (many years in the future) then all that will matter is how many years you have (providing that that is at least 10 years).

If the current tax year and 2021:22 are qualifying years you will hit £170.86.  What happens in 2022:23 is irrelevant as the year you reach SPA can never be a qualifying year.

If you purchase one additional (post 2016) year this will add £4.34/week taking you to your maximum of £175.20. Which is the amount most people will be able to get now.

zagfles

SteadyEddie said:

Well, thank you all for your comments and advice. Between the hashes is the cut and pasted information some of you requested from my State Pension Summary.

#####

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

£160.85 a week

Forecast if you contribute until 5 April 2022

£170.86 a week

You can improve your forecast

You have shortfalls in your National Insurance record that you can fill and make count towards your State Pension.

The most you can increase your forecast to is

£175.20 a week

#####

The years with a shortfall are 2017/8 & 2018/9. I've not spoken to the Future Pension team at DWP but will do so when they return to work. This is in part why I have sought ideas and advice at the moment. I don't start back to work, other than one day, until 4th Jan. so I have some time available to speak to them. I reach pensionable age in Feb 2023. The cope amount is £97.28/week.

barnstar2077, if you are 43 and continue to contribute another 4 years, how are you able to receive the full pension, yet I've 46 years contributions and 2 more to go before I'm eligible?

To try to make this as simple as possible.

You were in a "contracted out" pension scheme. Probably an occupational scheme. That means you got NI rebates which went into that scheme, instead of towards state pension. That means your state pension gets reduced as a result because you're getting that part of the pension from the occupational scheme instead. The level of reduction is different for everyone depending on earnings etc. The COPE amount gives an estimate, so about £97 a week of your occupational pension is from the NI rebates which would otherwise have gone towards the state pension. So compared to someone who wasn't contracted out, you are much better off as even on your current level you are getting £258 from the state pension plus the "COPE part" of the occ scheme.

It would almost certainly be worth you paying one year of the shortfall. If this year and 21/22 are likely to be qualifying years, then you don't need to pay more to get the max. If they aren't, then making up the shortfall would likely be beneficial.

What are your earnings likely to be this year and next?

SteadyEddie

I am going to pay the shortfalls, simply because I will recover the cost within 2.5 years.

wrt to expected earnings, I earn a little more than Basic Minimum Wage. I couldn't forecast how much as my hours vary, but circa 16k/annum.

Thank you to all who've posted and helped me. I very much appreciate it and hope others will find the answers useful too. Take care, stay safe and I wish you all a Happy, Healthy 2021.

Dazed_and_C0nfused

I am going to pay the shortfalls

The years with a shortfall are 2017/8 & 2018/9. 

Why?  If you are earning c£16k this tax year and next you will automatically add 2 years leaving just a single year needed to reach £175.20.

Why not just select the single cheapest post 2016 year and pay that.

Or don't you expect to work next tax year?

SteadyEddie

Dazed_and_C0nfused.

"Why?  If you are earning c£16k this tax year and next you will automatically add 2 years leaving just a single year needed to reach £175.20.

Why not just select the single cheapest post 2016 year and pay that."

I seem to be missing the point here.

I have 2 gaps in my years to date. The amount total £545. £117 and £428. If I don't work for the next 2 years, I'll be further short of max pension, ie. £160. If I work the next 2 years, I'll still have 2 years without full contributions, pension estimate £170. If I pay the shortfalls, I get the max £175 (Pence not typed)
Paying the cheapest single years still leaves me short.

I'll speak with DWP and post what they say.

Dazed_and_C0nfused

You have misunderstood.

You are earning c£16k.  If that continues this tax year and next you get an extra £10.01 taking you to £170.86.

One additional (post 2016) year adds upto £5.01/£5.01.  But in your case would be limited to £4.34 as you cannot exceed £175.20.

Buying a second year adds nothing as you cannot exceed £175.20

molerat

At April 2020 you have £160.85. To get to £175.20 you need 3 more years.  If you are working 20-21 is likely already in the bag so 2 more needed. You definitely need 1 of the back years as you cannot make the full amount without it so buy the cheapest. 21-22 is the next point - will you be working that year ?  If yes then no problems as that will cover the needed year, if no then no real big deal as you will still have that one remaining back year available until beyond the end of 21-22 with only an inflationary increase on the currently shown price so maybe an extra £20. Do you really want to throw away £428 ?

xylophone

I seem to be missing the point here.

At 6/4/16  (at which point you had at least 35 NI years), two calculations were done for you.

£119.30 (full basic old state pension) because you had at least 30 NI years) +  (Additional State Pension - Deduction for Contracting Out) .

£155.65 (full New State pension as you had at least 35 years) - Contracted Out Pension Equivalent (in your particular case this was £97.28).

Your "starting amount" for NSP was the higher of the above calculations.

It is obvious that in your case the calculation under the old rules was the higher of the two, but was still not equal to a full new state pension.

At 6/4/16 you still had a number of years  to go before reaching state pension age and therefore were in a position to improve your pension (up to but not beyond full NSP ) by contributions or credits made for years from 6/4/16 up to the last full tax year before reaching SPA.

In order to receive a full NSP at SPA, it appears that you need to contribute (or be credited) for 20/21 and 20/22 AND pay either 2017/18 or 2018/19 - clearly paying the cheaper of the two makes more sense.

SteadyEddie

molerat said:

At April 2020 you have £160.85. To get to £175.20 you need 3 more years.  If you are working 20-21 is likely already in the bag so 2 more needed. You definitely need 1 of the back years as you cannot make the full amount without it so buy the cheapest. 21-22 is the next point - will you be working that year ?  If yes then no problems as that will cover the needed year, if no then no real big deal as you will still have that one remaining back year available until beyond the end of 21-22 with only an inflationary increase on the currently shown price so maybe an extra £20. Do you really want to throw away £428 ?

Dazed_and_C0nfused said:

You have misunderstood.

You are earning c£16k.  If that continues this tax year and next you get an extra £10.01 taking you to £170.86.

One additional (post 2016) year adds upto £5.01/£5.01.  But in your case would be limited to £4.34 as you cannot exceed £175.20.

Buying a second year adds nothing as you cannot exceed £175.20

Thank you for the info. and guidance. I realise that I sound as thick as 2 (or maybe 3?) short planks, but, I am seriously missing something fundamental here. From my perspective I have 46 years full contributions. 2 to go, inc. this one (in the bag). 1 more takes me to 48 years full contributions. Seems a poor deal over the new 35. I can't make the 22/23 year full, I'll be too old. (looking on the bright side).
So, you both say I need only 1 more year. How so? Obviously I don't want to spend £428 unnecessarily, especially as I have worked throughout this pandemic, and would choose the smallest amount to pay. What is it I am missing please. Simple terms for a simple mind. Where does it say I only need to 1 year shortfall to meet full SPA criteria?