Buying extra state pension, worth it?

Mark300zx

Hi,

I have recently retired at 55 and looked at my state pension forecast, it said I had 39 years of contributions up until 2020, with that amount it said I would be circa £50 short of the full £680 per month.

It said I am 3 years short of a full pension, which I believe would cost £800 per year, so please tell me if I am wrong but that equals £2400 n total for an extra £600 per annum before tax?

Is this correct, does it seem value for money and when would I have to pay these contributions?

Dazed_and_C0nfused

As you have "recently" retired you may find you accrue another year once the 2020:21 year is considered (should be in next few weeks).

If you did need to buy 3 years and didn't want start a small business (voluntary Class 2 becomes available at c£160/year) then yes you could expect to pay £2,400.

That would get you between £10.27 and £15.39 per week extra State Pension (exact amount depends on what you have accrued to date).

This might be paid for 30+ years after State Pension age so is fantastic value.  Where else could you get that return?

Get run over by a bus the day after paying the £2,400 and it's wasted money.

xylophone

I have recently retired at 55 and looked at my state pension forecast, it said I had 39 years of contributions up until 2020, with that amount it said I would be circa £50 short of the full £680 per month.

A full new state pension is currently £179.60 per week, (£718. 40 every four weeks which is how SP is usually paid).

What exactly does your state pension forecast say?

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

Linton

Your figure of £2400 cost for £600/year is unbelievably good value - it means that you pay off the costs in 4 years and from then on your £600/year is all free money.

Amateurretiree

Hope you don’t mind me hijacking your thread. I retired at 55 with a DB and already pay income tax on that, so when I get my SP in 8 yrs time I will likely be paying 20% tax on that ( happy to be in the position I’m in).
My question is on the HMRC website it says I am 8 yrs short for my full SP, so I would have to pay 6400 to make it up. My SP currently stands at £151 per week.
Just wondering is it worth me paying this 6400 as I’m going to be taxed on my pension anyway.
I know about the extra credits I could  get for childcare, but I let the other granny have these as her pension is less than mine.
TIA .

nigelbb

Each additional year you purchase is worth an index-linked pension of about £250 per year. Average life expectancy at state retirement age is about 20 years so that is worth in total about £5,000.

Dazed_and_C0nfused

My question is on the HMRC website it says I am 8 yrs short for my full SP, so I would have to pay 6400 to make it up. My SP currently stands at £151 per week.

Your figures don't tally.

If you're currently on £151.00 then 6 years will take you to £179.60.

If you are currently on £151.99 then just 5 years would take you to £177.64.  A sixth year would add the final £1.96.

Amateurretiree

I just checked the website and it says I have to make 8 years up

Amateurretiree

Sorry just to add I retired at 55 and was also COPE’d ( NHS )

Dazed_and_C0nfused

What exactly does your forecast say?

I cannot understand why you would have to pay for 8 years to add just £28.60 when each additional post 2016 year will add 1/35th of £179.60 (c£5.13)

Amateurretiree

My apologies, it says I have 8 years to make another 6 years contributions, I stand corrected. I do find the wording on that site difficult to understand at times!