Increasing State Pension

jem16

j.p said:

Poster j.p now acknowledges that years prior to 5/4/2016 are not worth the same as years following 6/4/2016, i.e., that they do not have the power to increase one's pension by the same amount, even though buying them might cost the same. The former increase it by at most £134.25 / 30 worth of pension a week at current rates, or about £4.50, while the latter increase it by £175.20 / 35 a week, or about £5.00, giving a difference of 50p, or about 10%. 

For anyone who has already 35 years or more like me, years before 2016 are worthless as they will make no difference to either of my calculations which gave my Starting Amount. 

jem16

j.p said:

Till I discovered simply that because at the time I wasn't working, the system thought that going forward I wouldn't be working, so it wasn't factoring in all the years left to work in the forecast, whereas for my partner because they were working, it thought going forward they'd keep on working, and was factoring that in the forecast.

My forecasts have always factored in the years left to work. It assumed I would be working going forward. I finished work at the end of 2014 so my last qualifying year was 2014/15. I didn’t initially pay for years until just before the price was due to rise at the end of two years after tax year finishes. First year I needed to contribute was 2016/17 so I paid for it in March 2019. 

Previous forecasts from 2016 onwards assumed I would be paying for those years going forward. Forecasts in 2017 and 2018 saw the headline forecast figure going down, not because it wasn’t assuming I would work going forward but because it noted I hadn’t contributed for 2016/17 and 2017/18. Once I paid for 2016/17 the forecast recalculated. 

That’s why my forecast shows 3 figures. The top figure is what I can achieve if I contribute from now till SPA. The 2nd figure is what I’ve accrued up to April 2020. The 3rd figure is the most I can achieve. Figures 1 and 3 happen to be the same at the moment as I’ve now filled all years from 2016 to 2020 but if you have gaps from 2016 to 2020 those 2 figures will be different. 

nigelbb

j.p said:

Interesting… So one could work just one year in Britain, and then set out a monthly or quarterly Direct Debit to pay Class 3 contributions synchronously, and let it run for 34 years (as long as he'll always be a tax resident) and that'll take care of it. A 100% pension, no 10-year limit. That'd be a handy way to buy a state pension for dependants, or say, if you won £27k at the lottery, drip-feed it into the pension system over 35 years, and at retirement age they'll pay you back the whole amount every 3 years, adjusted for inflation, no questions asked, for as long as you can live. What's not to like? (unless someone would argue that's system abuse; I think it's certainly a system vulnerability - or meant to help but there's always those who help themselves)

That is exactly what you are permitted to do & if you work abroad you are entitled to pay Class 2 National Insurance contributions  There is a contributor to this forum whose name I cannot remember but as I recall they worked in the UK for about 5 years then emigrated to the USA & continued paying Class 2 National Insurance contributions. They now receive a full pension of over £9,000/year for a total outlay of at most £4,500.