Don’t know what to do for the best

Amateurretiree

I have an NHS pension of 15000 a year so am already paying tax, I’m 59 and fully retired .
Im three years short of a full State Pension due to being Contracted Out, so is it worth me paying the extra years as I’m just going to be paying more tax anyway?

I know I should be able to work this out myself but I’m just having a mental block.
My current state pension at 67 is currently £150 per week.

Thanks in advance.

Nebulous2

Very much so, if you live. A year will cost you about £800 and will give you an additional £5 a week. £260 a year. Less 20% tax means you get £208 in your hand. Live 4 years and you are in profit. Live 8 and you have doubled your money. 

I'm in a similar position to you. Retired at 59 with a DB pension from the local authority. I also need 3 years to get a full pension. I've taken a part-time job with the NHS, partly to get the National Insurance contributions, rather than pay the extra years. 

Stubod

..yes, all things being equal, it makes financial sense to buy extra SP up to the maximum amount, I do it for my OH every year, costs around £700 but pay back is only a few years...

pip895

An even better idea is to declare yourself self employed, just selling some unwanted possessions on ebay or marketplace will do.  You can then pay Class 2 NI at under £160/year.  You do have to fill in a tax return but there isn't much to that.

Silvertabby

Absolutely.  I am buying the 4 years I need to take me up to the full single tier pension (2 down, 2 to go).  I will also pay tax on all of my state pension but, as Nebulous says, I'll get my investment back after just 4 years.

In my case, the first 3 years will buy me the full £5.13 per week extra, with the 4th year buying me about £4.80 - but I'm still going for the 4th year.

Dazed_and_C0nfused

Amateurretiree said:

I have an NHS pension of 15000 a year so am already paying tax, I’m 59 and fully retired .
Im three years short of a full State Pension due to being Contracted Out, so is it worth me paying the extra years as I’m just going to be paying more tax anyway?

I know I should be able to work this out myself but I’m just having a mental block.
My current state pension at 67 is currently £150 per week.

Thanks in advance.

Something is wrong with your figures.

You will need to purchase six post 2016 years to reach the standard new State Pension.

The first five will add £25.65/week and the sixth adds the final £3.95.

Even if you buy voluntary Class 3 NI it is amazing value for money.  If you can find an inflation proofed investment that is government secured that returns the same please let us know 🙂.

Dazed_and_C0nfused

Looking at previous posts you said this about two years ago,

Yes we have both checked as we were both in contracted out pensions. We are both currently entitled to 150 pounds per week, considering doing the top up.

So maybe first thing to do is check your current forecast as £150/week accrued to April 2019 would probably be more like £160/week now just with triple lock increases.

Amateurretiree

Dazed_and_C0nfused said:

Looking at previous posts you said this about two years ago,

Yes we have both checked as we were both in contracted out pensions. We are both currently entitled to 150 pounds per week, considering doing the top up.

So maybe first thing to do is check your current forecast as £150/week accrued to April 2019 would probably be more like £160/week now just with triple lock increases.

Thanks. It’s now saying £151.82 a week and I have to contribute 6 years by 2028.

Dazed_and_C0nfused

So five years will take you to £177.47/week

The sixth will only add the final £2.13/week so not as good a deal as the first five but assuming basic rate tax and you'd be buying Class 3 rather than Class 2 then you will get your £800 back after about 9 years.

Live to 100 and you are still quids in 🙂

SomeMadeUpName

Dazed_and_C0nfused said:

Amateurretiree said:

I have an NHS pension of 15000 a year so am already paying tax, I’m 59 and fully retired .
Im three years short of a full State Pension due to being Contracted Out, so is it worth me paying the extra years as I’m just going to be paying more tax anyway?

I know I should be able to work this out myself but I’m just having a mental block.
My current state pension at 67 is currently £150 per week.

Thanks in advance.

Something is wrong with your figures.

You will need to purchase six post 2016 years to reach the standard new State Pension.

The first five will add £25.65/week and the sixth adds the final £3.95.

Even if you buy voluntary Class 3 NI it is amazing value for money.  If you can find an inflation proofed investment that is government secured that returns the same please let us know 🙂.

Something is wrong with your figures too (just a typo I assume):

The first five years will add £5.65 pw not £25.65

Sorry to be a pedant, but the deal is good enough without ramping it up fivefold!!

Albermarle

SomeMadeUpName said:

Dazed_and_C0nfused said:

Amateurretiree said:

I have an NHS pension of 15000 a year so am already paying tax, I’m 59 and fully retired .
Im three years short of a full State Pension due to being Contracted Out, so is it worth me paying the extra years as I’m just going to be paying more tax anyway?

I know I should be able to work this out myself but I’m just having a mental block.
My current state pension at 67 is currently £150 per week.

Thanks in advance.

Something is wrong with your figures.

You will need to purchase six post 2016 years to reach the standard new State Pension.

The first five will add £25.65/week and the sixth adds the final £3.95.

Even if you buy voluntary Class 3 NI it is amazing value for money.  If you can find an inflation proofed investment that is government secured that returns the same please let us know 🙂.

Something is wrong with your figures too (just a typo I assume):

The first five years will add £5.65 pw not £25.65

Sorry to be a pedant, but the deal is good enough without ramping it up fivefold!!

Each year you 'buy' gives you £5.13 extra per week . So if you buy 5 years your pension will increase by £25.65 pw.