State Pension: Seven Years Not Paid Enough?

Foresty_Forest

I'm 50 and have checked my State Pension National Insurance Record. According to my summary, I have seven years of contributions left to receive £175/week? Currently the estimate of what I'll receive is £143.56. I've been self-employed for a large part of my working life. I also have seven years where I haven't made enough contributions? This puzzles me a little, but it's stated that it's too late to pay for these years. I was a full time student in four of those years.

Is it possible to make up for these lost years? Can I top up my state pension? Should I do it now (I have the means at this time)? I have a private pension on the go.

AlanP_2

There is a lot of SP expertise on here so you will get help but you will probably be asked what EXACTLY does your forecast say, and which years are short?

I don't think being a student qualifies for NI credit so that makes sense for those years.

tacpot12

It might be possible to make up some of these years to increase your state pension to the £175/week mark. You can only make up any of the previous six years.  Your years as a full time student probably don't count, but with more research you might be able to show that a mistake as been made in your case and get one or more of these years credits. I've not idea whether HMRC are likely to correct such mistakes even if you can prove they have been made.  

As you are currently only 50, and have 17 more years when you might make 7 more years of contributions the real question is when should you pay them. If you are ill and know that you will never work again, it would be sensible to pay them now, while they cost the least. If you expect to remain self-employed for a few years, it would make sense to make Class 2 NI Payments in years where you are able to do so, as the Class 2 payments are much lower than the Class 3 payments you would have to make if you were no longer self-employed. You should be able to make Class 2 payments for the 2019-20 tax year if this year is not a full year. You can do this on your self-assessment return, just go into your online account, say you need to amend your return and tick the box to make Class 2 NI contributions. 

When you are ready to make voluntary Class 3 payments, you can call HMRC and they can work out which years it will be cheapest to pay for. (If you have paid some NI in certain years, you will have to pay less to make that year a full year). As you have the money now, I would save this until you now you need to make a payment, and once all the payments are made, use the rest as savings to kickstart your retirement. 

well done for having a private pension on the go. 

molerat

You can make up unpaid years back to 2006-07 but pre 2016 years may not add to your pension amount depending on your personal circumstances.

Class 2 are available to the self employed, <£160 per year - very good value.

As above, post up all the information on your forecast and someone will give you pointers in the right direction

LHW99

Also do you care for grandchildren, or get child benefit - those can give credits

Foresty_Forest

Could I pay for those 7 years now, in advance?

p00hsticks

Foresty_Forest said:

Could I pay for those 7 years now, in advance?

Not if they are for years going forward, no. If you are not currently working and have no intention of doing so prior to retirement age, and can't foresee any way of getting credits (e.g. by caring for grandchildren of working parents) then you can set up a direct debit to pay monthly throughout the year, or pay for the current or past years in one go. You need to contact HMRC to either set up a DD or get a faster payment reference to make a one off payment. If you go down the DD route, don't forget to stop the payments when you've accumulated enough years to maximise your pension.   

xylophone

Could I pay for those 7 years now, in advance?

No, this is not possible.

Do you expect not to have to pay NI at any time over the next 17 years?

Have a look at the link here

https://forums.moneysavingexpert.com/discussion/comment/78019047/#Comment_78019047

produced for the changeover to New State Pension  in 2016.

AlanP_2

I would wait until just before your SP is due before purchasing. Slightly morbid but you could pass away in the next 17 years and it would be totally wated money.

Why not work out approx cost for 7 years NI and save the relevant monthly amount over next 16 years in PBs, or even invested in a S&S ISA for that timeframe?

Foresty_Forest

One of the years is 2019. Which I thought I'd paid for when paying my self-employment tax. It is collected at the same time isn't it? or is it paid for seperately?

Foresty_Forest

Just checked my record - they've updated that year to 'Full Year' - don't know why it said otherwise the other day? So is now 6 years not 7.