How much to live on

luvchocolate

Some very knowledgeable posters on the pension board...great advice

Albermarle

 Apparently, I can increase my state pension by nearly £20/week for a lump sum of under £2,500 (i.e., three years' contributions). This is a terrific effective rate of return. Assuming that the information I've been given is correct, I'll be doing it.

 For a cost of nearly £2,500 it will increase your pension by around £17.50 a week. With currently Triple Lock increases each year.

To buy an annuity for £17.50 a week with such conditions, would cost around £23,000, so nearly 10 times as much. So a 'no brainer' to use a popular expression.

The real value of the state pension,( and other guaranteed pensions such as in the Public sector )are widely undervalued by many.

Buying NI years on the cheap, is a bargain not to be missed, if you are short of qualifying years.

BooJewels

I did wonder why you weren't going to do it @blue.peter - you can usually get your money back quite quickly - it's a very good return on your investment.   I'm currently paying class 2 as I'm self employed, which is a lower figure and will get my money back in just over the first six months that I get SP.  

Although it has been a nightmare getting it sorted and paid - there's seemingly a gremlin in my tax account hell bent on causing trouble - every time I think I've got it sorted, HMRC send me some daft letter out of the blue that doesn’t even make sense - including several that are demanding payment of £0.00. I made payment in mid November for 22/23 (within about 3 days of getting their payment ref over the phone) and it's still not been credited and one screen shows me that I've paid too much tax and to request a refund and another threatening to fine me for not paying it in time.

The problem then ends up that if you speak to someone, they totally contradict the last person you spoke to - and you create a whole brand new set of problems. I've been on this merry go round for about 4 years or more.

Albermarle

The problem then ends up that if you speak to someone, they totally contradict the last person you spoke to - and you create a whole brand new set of problems. I've been on this merry go round for about 4 years or more.

I had a sort of similar experience when stopping self assessment ( at their request) . Although I was now a PAYE client ( in HMRC jargon), somewhere in the depths of the system, there was still a link to SA that was blocking the PAYE calculations. After several calls around the houses, I was told they knew the problem but could not promise to resolve it.

After that call I got one of their standard communications ' did we do well ? did we resolve your problem?'

I responded in rather 'clear' terms that it was a mess and needed sorting. Three days later all done and dusted.

It is a long shot but maybe worth a try/official complaint.( if not already done so)

Organgrinder

Albermarle said:

The problem then ends up that if you speak to someone, they totally contradict the last person you spoke to - and you create a whole brand new set of problems. I've been on this merry go round for about 4 years or more.

I had a sort of similar experience when stopping self assessment ( at their request) . Although I was now a PAYE client ( in HMRC jargon), somewhere in the depths of the system, there was still a link to SA that was blocking the PAYE calculations. After several calls around the houses, I was told they knew the problem but could not promise to resolve it.

After that call I got one of their standard communications ' did we do well ? did we resolve your problem?'

I responded in rather 'clear' terms that it was a mess and needed sorting. Three days later all done and dusted.

It is a long shot but maybe worth a try/official complaint.( if not already done so)

Good old PAYE.

I have a tax code of 1310L......all assigned to my £4k teachers pension while my teachers salary is assigned BR1!

BooJewels

Albermarle said:

The problem then ends up that if you speak to someone, they totally contradict the last person you spoke to - and you create a whole brand new set of problems. I've been on this merry go round for about 4 years or more.

I had a sort of similar experience when stopping self assessment ( at their request) . Although I was now a PAYE client ( in HMRC jargon), somewhere in the depths of the system, there was still a link to SA that was blocking the PAYE calculations. After several calls around the houses, I was told they knew the problem but could not promise to resolve it.

After that call I got one of their standard communications ' did we do well ? did we resolve your problem?'

I responded in rather 'clear' terms that it was a mess and needed sorting. Three days later all done and dusted.

It is a long shot but maybe worth a try/official complaint.( if not already done so)

For the moment - apart from the 22/23 NI not yet being credited - I think I'm where I should be-ish - see if they tell me to complete a self assessment tax return in April.  I know that my latest round of difficulties have been caused by other parties - starting with the DWP crediting me a number of weeks of Class 1 credits (spanning 3 tax tears) whilst I was in receipt of Carer's Allowance and I paid the balance of remaining weeks for the 2 part years.  Then they decided at some later date to change the number of weeks, making me 2 weeks short for 1 tax year and overpaid 3 weeks for another.  So HMRC decided to allocate some of the next payment I made to the shortfall, leaving the next year 2 weeks short - but now there was also £13-ish floating around 'unallocated' too, from the overpaid year.  I only ever pay them what they tell me to - ironically, the numbers I gave them the first time we spoke, worked out from my own records, turned out to be right to the penny in the end. 

We resolved the various discrepancies with a 6 quid adjustment - also paid within days - but that's the bit that keeps generating demands for payment of varying amounts - including zero.  Trying to resolve this with someone on the web chat, he just decided to delete my status as self employed (instead of marking it that I didn't need to submit a tax return for that year - that only arose because they tried to fine me £100 for not doing one they hadn't asked me to) and the next person along decided that if I wasn't self employed, I couldn't have a business, so deleted that too. So when I tried to get my self-employed status reinstated, I couldn't as I didn't have a registered business, so had 'no source' for self-employed funds.

Having been battling several lots of estate tax matters, CGT, DWP overpayments and under payments, IHT forms, 2 x Probate applications and my own personal tax and NI fiasco, I'm of the opinion that these large Govt. departments are just not fit for purpose.  I'm hoping some of the politicians hoping for my vote at the general election bother knocking on my door so that I can tell them that.  Although the incumbent Tory MP better come clad in flame proof knickers after he stuck up for BoJo over party-gate - when I couldn't even go to my father's funeral!

daz378

Just done a  long post....and it didn't post...that's time I'll never get back

[Deleted User]

@blue.peter, absolutely the right decision to pay the voluntary NI contributions. Very good return for the investment over the years!

blue.peter

[Deleted User] said:

@blue.peter, absolutely the right decision to pay the voluntary NI contributions. Very good return for the investment over the years!

Quite so. I'm very grateful to the kind people who explained it to me.

For anyone interested in the actual numbers, mine are:

Voluntary NI contributions paid: £2,420.60

Increase in state pension bought: £17.47/week (= £908.44/year) 

That's the 2023-24 value. For 2024-25 (when it'll actually come into payment), that's worth £985.66/year. And it's index-linked for life.

£2,420.60 / (£908.44 * 0.8) = 3.33 years to recoup the outlay. I only have to live to 70 to be quids in.

(The 0.8 is to account for the fact that basic rate tax will be payable on the pension. For a non-taxpayer, it'd look even better.)

It's well worth talking to the Future Pension Centre (0800 731 0175) if your State Pension Forecast says that you have a shortfall in your NI record that you can fill to increase your pension. My £2,420.60 paid for three years; you don't have to fill all the years that are available if you don't want to/can't. I paid for mine with a single lump sum, but I believe that a direct debit option to spread the cost is offered.

Albermarle

 And it's index-linked for life.

Better than that it is 'Triple Locked' although probably not for ever. The consensus ( if there is one) is that just a link to average earnings increases would be fair, and more affordable.