Am I on the right lines regarding my pension planning

3card

xylophone said:

My wife state pension forecast is approx £135 but I havent checked this for maybe 12 months

What exactly does her state pension forecast say?

https://www.gov.uk/check-state-pension

I have just this minute checked her pension forecast and its more then i remember.
Its telling me her forecast is £175.20  - she needs to continue NI to reach this forecast
Estimate based on her NI record up to 5th April 2020 is £151.22
It actually says that the forecast if she contributes another 5 years before 5th April 2028 (state pension age) would be £175.20 per week

I'm presuming the 5 years required can be made as voluntarily payments between now and 2028 and would that mean it would definitely increase her pension? I only ask because keep seeing that people make NI additional payments and it doesnt count??

Notepad_Phil

3card said:

I'm presuming the 5 years required can be made as voluntarily payments between now and 2028 and would that mean it would definitely increase her pension? I only ask because keep seeing that people make NI additional payments and it doesnt count??

Payments for post-April 5th 2016 years will definitely increase her pension by about £5 per week and yes they can be voluntarily paid. The problem comes when people pay for pre-2016 years when they already have 30 of them as that will not increase the state pension paid.

We wrote to the Future Pensions Centre to be 100% sure that a pre-2016 year would help Mrs Notepad (I was 100% sure that it would, but it's always good to double-check these things). So if you have any pre-2016 years available then that could be an option for you to do as well.

3card

Notepad_Phil said:

3card said:

I'm presuming the 5 years required can be made as voluntarily payments between now and 2028 and would that mean it would definitely increase her pension? I only ask because keep seeing that people make NI additional payments and it doesnt count??

Payments for post-April 5th 2016 years will definitely increase her pension by about £5 per week and yes they can be voluntarily paid. The problem comes when people pay for pre-2016 years when they already have 30 of them as that will not increase the state pension paid.

We wrote to the Future Pensions Centre to be 100% sure that a pre-2016 year would help Mrs Notepad (I was 100% sure that it would, but it's always good to double-check these things). So if you have any pre-2016 years available then that could be an option for you to do as well.

Thanks for the info Notepad
I checked her NI record last night and it tells me that 15/16 her year is not full and only paid £5.88 and for the years afterwards there have been not contributions because shes not been working
This is the breakdowns of her shortfall payments
15/16 - £596.79 pay before April 2023
16/17 - £795.60 pay before April 2023
17/18 - £795.60 pay before April 2024
18/19 - £761.80 pay before April 2025
19/20 - £780.00 pay before April 2026
As it states these figures may increase after April 2021
The forecast reads she would get the maximum of £175.20 per week  if she "contribute another 5 years before 5th April 2028. Are the 5 years its referring to the 5 years listed above? Sorry if this sounds a stupid question but before reading this i was thinking of setting up a DD to pay class 3 contributions for the next 5 years to bring her up to the maximum

I do intend talking to the Future Pensions people but i want to just try to get as much info as possible beforehand

Notepad_Phil

3card said:

Are the 5 years its referring to the 5 years listed above?

No, it will be talking about any 5 post-2016 years, so that would include the 2016/17 and above years. However the 2015/16 year may be useful if she has less than 30 years pre-2016, but best to contact the Future Pensions people to find out whether it will help and by how much as I seem to remember pre-2016 years contribute a bit less to the state pension than post-2016 years do, so even if it does add to the state pension it may be that a more expensive post-2016 year would be the better option.

3card

Notepad_Phil said:

3card said:

Are the 5 years its referring to the 5 years listed above?

No, it will be talking about any 5 post-2016 years, so that would include the 2016/17 and above years. However the 2015/16 year may be useful if she has less than 30 years pre-2016, but best to contact the Future Pensions people to find out whether it will help and by how much as I seem to remember pre-2016 years contribute a bit less to the state pension than post-2016 years do, so even if it does add to the state pension it may be that a more expensive post-2016 year would be the better option.

Thanks Notepad
I will be giving them a ring early next week

bluenose1

Do you have or will you have caring responsibilities for grandchildren. Also elderly relatives in receipt of AA/ DLA can count towards your national insurance contributions. I only have a year to do before full state pension but if I needed more years would wait to see if I had grandchildren or  needed to look after family members etc.
Read on here that even if you just sell on eBay you can class yourself as self employed and pay the reduced self employed contribution.

3card

bluenose1 said:

Do you have or will you have caring responsibilities for grandchildren. Also elderly relatives in receipt of AA/ DLA can count towards your national insurance contributions. I only have a year to do before full state pension but if I needed more years would wait to see if I had grandchildren or  needed to look after family members etc.
Read on here that even if you just sell on eBay you can class yourself as self employed and pay the reduced self employed contribution.

Thanks
When i looked at the caring for grandchildren for NI contributions a while ago i am sure it said something along the lines that the childs parents have to give up some of their NI contributions to pay for the grand parent and i didnt want to do that because who knows whats round the corner for the young parents round the corner

Again i am sure that the HMRC will not accept the occasional sale of Ebay goods as a good reason for a self employed status and surely a self assessment would be required to back up the self employed status

Thrugelmir

3card said:

bluenose1 said:

Do you have or will you have caring responsibilities for grandchildren. Also elderly relatives in receipt of AA/ DLA can count towards your national insurance contributions. I only have a year to do before full state pension but if I needed more years would wait to see if I had grandchildren or  needed to look after family members etc.
Read on here that even if you just sell on eBay you can class yourself as self employed and pay the reduced self employed contribution.

Again i am sure that the HMRC will not accept the occasional sale of Ebay goods as a good reason for a self employed status 

No arguments if you declare the activity and pay income tax. 

enthusiasticsaver

3card said:

bluenose1 said:

Do you have or will you have caring responsibilities for grandchildren. Also elderly relatives in receipt of AA/ DLA can count towards your national insurance contributions. I only have a year to do before full state pension but if I needed more years would wait to see if I had grandchildren or  needed to look after family members etc.
Read on here that even if you just sell on eBay you can class yourself as self employed and pay the reduced self employed contribution.

Thanks
When i looked at the caring for grandchildren for NI contributions a while ago i am sure it said something along the lines that the childs parents have to give up some of their NI contributions to pay for the grand parent and i didnt want to do that because who knows whats round the corner for the young parents round the corner

That is incorrect.  I am 61 and retired 3 years ago and have been looking after my grandchildren on a regular basis since then.  I was three years short of NI contributions for a full SP because I was in a contracted out scheme for part of my working life and obviously retiring 8 years early also had an impact.  I have been claiming my daughters NI credits under childcare responsibility to give me additional years but as she is able to claim child benefit she gets the NI credits from that as well as working so it should not impact on her in the future.  The only time I would think it could be a problem is if the parent did not claim child benefit due to earning too much (over the £50k per annum). 

Albermarle

Thrugelmir said:

3card said:

bluenose1 said:

Do you have or will you have caring responsibilities for grandchildren. Also elderly relatives in receipt of AA/ DLA can count towards your national insurance contributions. I only have a year to do before full state pension but if I needed more years would wait to see if I had grandchildren or  needed to look after family members etc.
Read on here that even if you just sell on eBay you can class yourself as self employed and pay the reduced self employed contribution.

Again i am sure that the HMRC will not accept the occasional sale of Ebay goods as a good reason for a self employed status 

No arguments if you declare the activity and pay income tax. 

It depends on the level of activity . If you are an occasional seller of second hand goods and clearly not an active trader and/or your profits  are less than £1000. In this case you do not have to declare anything to HMRC due to the Trading Allowance.