Completing National Insurance contributions

atw_uss

Apologies if this is an obvious question - I just want to be sure. I'm currently reviewing when I might be able to afford to retire (- I'll post separately on this dilemma!) and have just looked at my State Pension projections. It says I need to work for another 7 years to be able to claim the full State Pension, but I intend to claim my occupational pension at 60 if possible, which is only 6 years away (I appreciate I won't be able to claim the State Pension until well into my 60s).

I have four years which are incomplete on my record, and which I am eligible to pay into. My question is whether, if I pay the missing contribution for one year, will this then reduce my requirement to 6 years left to work?

This sounds as if it should logically be the case, but I can't see anything definitive on the gov.uk website so thought I should check! Many thanks in advance for any advice you can offer.

MallyGirl

the devil is in the detail here. Can you post exactly what it says as some years won't increase the payout so it is important to buy the right ones.

atw_uss

Thank you! Initially when I check I am told:

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2021

£145.49 a week

Forecast if you contribute another 7 years before 5 April 2034

£179.60 a week

£179.60 is the most you can get

You have:

• 30 years of full contributions
• 13 years to contribute before 5 April 2034
• 8 years when you did not contribute enough

Then I have three incomplete years that I am eligible to complete, for example 2011-12 the most recent incomplete year):

You have contributions from

Paid employment: £XX.XX

You can make up the shortfall

Pay a voluntary contribution of £XXX.XX by 5 April 2023. This shortfall may increase after 5 April 2022.

So, it looks like I might gain the all-important extra year if I make this voluntary payment, but I cannot actually see this confirmed anywhere.

MallyGirl

someone who understands this in more detail will undoubtedly be along.
As someone falling under transitional rules, filling out pre-2016 incomplete years may not add anything to your pension.

Terron

You could pay the seventh year after you retire at 60. Claiming your occupational pension won't stop that.

You would probably need to make a class 3 voluntary contribution, unless you do some self-employed work and qualify to make the (much cheaper) class 2 contributions as I did last year.

atw_uss

Thank you, that is useful to know. Having done a bit more digging, this looks like the infamous COPE/transition situation. However, as I so still have the option to top up the incomplete years, I'll check whether that would make a difference.

molerat

Not quite enough detail in your post but as a general rule if you have less than 30 years pre 2016 then topping up to that amount with available pre 2016 years will add to your pension.  So how cheap are any available years from 2006-07 ?

atw_uss

Quick update: I called the State Pension enquiry number and spoke to a very helpful lady. She explained that in many cases voluntarily contributing to incomplete years pre-2016 won’t add missing years, but in my case it will.

So, the best thing would seem to be to give them a call, as they will know what can or can’t be done. 

drumtochty

You are between a Rock and a Hard Place. You appear to be short of 7 years NI credits. The maximum state pension you can get based on the 2021 / 2022 state pension value is £179.60.per week.

 

You appear to advise that you will work for a further 6 years and retire at 60 years of age. Can you advise the date that your proposed occupational pension will start and we assume you will retire from work at that date. Can you confirm that?

 

Before buying previous years NI credits, can you go onto your personal tax account and check again if:

 

1) The tax year 2020 / 2021 is now fully paid up for NI.

 

2) That your state pension forecast to date is still £145.49 per week.

 

3) During the periods of insufficient NI contributions prior to 2016 were you by any chance being a carer for a relative.

 

If the 2020 / 2021 year is not full from an NI point of view, your forecast state pension to date may increase by a year when it becomes full if it is not already so. Which would amount to approx., £179.60/35 or £5.13 per week to your current earned to date state pension.

 

If you could reply with your proposed occupational pension start date and the three items detailed in items 1 and 2 and 3 we may get some further clarity.

 

With the unknow changes the government may make due to the major borrowing that is going on, I would not be 100% sure that you should wait till after you finish work to buy another year of NI as the deal may well be much worse then.

 

atw_uss

Thank you, drumtochty, for your helpful reply. I think the national insurance/state pension helpline may had answered my query, in that I can make voluntary contributions for my missing year(s) pre-2016. This might not be the case for all people though.

My answer is yes to questions 1 and 2, but I was not a carer (I was in full-time education) - I think all should be well though and I can make a relatively small contribution to close the  gap between now and my proposed retirement date. The lady on the helpline stated that additional years can be 'purchased' currently at around £800 but this could go up in the future.

Dazed_and_C0nfused

judith_sw said:

Thank you, drumtochty, for your helpful reply. I think the national insurance/state pension helpline may had answered my query, in that I can make voluntary contributions for my missing year(s) pre-2016. This might not be the case for all people though.

My answer is yes to questions 1 and 2, but I was not a carer (I was in full-time education) - I think all should be well though and I can make a relatively small contribution to close the  gap between now and my proposed retirement date. The lady on the helpline stated that additional years can be 'purchased' currently at around £800 but this could go up in the future.

Or c£160/year if you pay voluntary Class 2 National Insurance rather than Class 3.

You would need to start a small business and complete Self Assessment returns but voluntary Class 2 can be paid irrespective of any profit you do or don't make.