Guide discussion: Voluntary national insurance contributions

Pat38493

Veteran1 said:

Hoping members can help. I reach state pension age in June 2025. Including the current tax year I will have 33 years full national insurance contributions (just checked on Government Gateway) and am looking to purchase two additional years (2020/21 and 2021/22) at a combined cost of £1596.40.

However the Government Gateway calculator says this will only increase my weekly pension by £12.64 per week, taking close to three years to break out of deficit.

I’m confused as I thought 35 years would entitle me to the full state pension rate.

Your help is much appreciated.

The 35 years thing only applies to people who started their working life after 2016.  Everyone else is in a transition mode which means you could need anything from 30 to about 45 or more years depending on your NI and pension membership history.  For example if you were contracted out due to being a member of a DB pension for a lengthy period, this would result in you needing a lot more years.  

Nevertheless it is probably still worthwhile to add extra years as it's a good deal - you may need to purchase more than 2 years to get to the full amount.

molerat

I’m confused as I thought 35 years would entitle me to the full state pension rate.

No, as clearly stated on the relevant .gov pages.  https://www.gov.uk/new-state-pension/what-youll-get

If your National Insurance record started before April 2016

You may have been contracted out. While you were contracted out, you or your employer paid more into your workplace or private pension and less into your State Pension.

If you were contracted out, you will usually need more than 35 qualifying years to get the full rate of new State Pension.

If your National Insurance record started after April 2016

If your National Insurance record started after April 2016 you will need 35 qualifying years to get the full rate of new State Pension.

35 years is only relevant to someone born this century.  Those with a pre 2016 history are on a hybrid scheme and need as many as it takes all dependent on your personal circumstances, between 28 and 50 years being seen on these forums, with more than 35 needed being due to contracting out.

How much does your forecast show as your accrued amount up to April 2023 / 2024 ?

Mu0

I am about to be 66y and begin receiving my State Pension.

According to the HMRC website

1. My pension will be £221.20 per week (?maximum currently)

2. Apparently I can increase it to £224.91 by topping-up NI

How is it possible to increase it above the 'maximum' by adding NI?

The difference is £3.71 pw, which is nontrivial over a 20y horizon.

I have tried phoning the helpline but did not get a clear answer.

Any clarifying thoughts gratefully received.

molerat

It can only increase to above the new maximum if the whole pension amount was accrued before April 2016,  you would be adding another pre 2016 year and the starting amount is based on the old rules .  If you would like to post up some details one of us will explain precisely how this is worked out.
Number of full NI years 15-16 and earlier
Number of full NI years 16-17 and later
Any COPE amount shown

Years which show not full and prices

edit:  run a few scenarios and can't figure it out - I get £226.44 as the only possible outcome.

canary2211

A good experience!

HMRC/Future Pensions generally get a poor press on here and I accept that in more complex cases it can be tricky.  But in my straightforward case:

Rang Future Pension on the dot of 8am (not 7.59.50 nor 8.01), spoke to excellent adviser at 8.04. Clear answers, patient, confirmed what I thought; she put me through to HMRC - took 2 or 3 minutes - equally excellent officer gave me Class 3 payment reference.  

I transferred cash from my bank - all complete by 0820! 

A week later I get a revised and correct pension letter: the payment has been correctly allocated to the correct year and the pension is now max (within a few pennies). 

Well done I say.  Perhaps I was lucky but set your alarm for before 8am!

Silvertabby

canary2211 said:

A good experience!

HMRC/Future Pensions generally get a poor press on here and I accept that in more complex cases it can be tricky.  But in my straightforward case:

Rang Future Pension on the dot of 8am (not 7.59.50 nor 8.01), spoke to excellent adviser at 8.04. Clear answers, patient, confirmed what I thought; she put me through to HMRC - took 2 or 3 minutes - equally excellent officer gave me Class 3 payment reference.  

I transferred cash from my bank - all complete by 0820! 

A week later I get a revised and correct pension letter: the payment has been correctly allocated to the correct year and the pension is now max (within a few pennies). 

Well done I say.  Perhaps I was lucky but set your alarm for before 8am!

Nice to hear a good report.  People are quick to hit the keyboards when they are unhappy, not so much when they are.

As I've said before, I didn't have a problem paying my Voluntary Class 3s either.  This was during Covid, and I went straight for the 18 digit number, bypassing Future Pensions.  The very helpful chap I spoke to had obviously been told that everyone must check with Future Pensions first (to cut out those who mistakenly assumed that paying pre 2016 gaps would increase their pensions) but he was happy when I explained that (a) I was only paying post 2016 gaps and (b) I was a retired pensions administrator.

Applying for my pension was pain free as well.  I applied on line 3 months before my birthday, and received a letter just a week later confirming my (correct) State pension, the date and amount of my first payment, and the amount of my subsequent 4-weekly payments.

Couldn't fault the tax office, either.  I knew that HMRC would (eventually) sort out my tax codes, but as I didn't want to rack up arrears of nearly £180 per month I rang them a month after my State pension kicked in.  Spoke to a very helpful lady who sorted out my codes while we spoke.

molerat

I have never had any problems contacting HMRC but I suspect we are in a bit of a slow period currently, it was those leaving it to the last minute that caused all the problems.  But come January next year when Martin is on the telly telling everyone there is only 3 months left ..........

Silvertabby

molerat said:

I have never had any problems contacting HMRC but I suspect we are in a bit of a slow period currently, it was those leaving it to the last minute that caused all the problems.  But come January next year when Martin is on the telly telling everyone there is only 3 months left ..........

Exactly.  I made my payments before ML told everyone - regardless of their SPA date or personal circumstances -  to ring Future Pensions just to see if they could increase their State pensions.  

Then the fight started..........

norfolkandnorwich

@Silvertabby said:
Couldn't fault the tax office, either.  I knew that HMRC would (eventually) sort out my tax codes, but as I didn't want to rack up arrears of nearly £180 per month I rang them a month after my State pension kicked in.  Spoke to a very helpful lady who sorted out my codes while we spoke.

Like you, I've now paid (three years') Voluntary Class 3s to get my maximum SP up to within 80p of the maximum (due to receive it in March 2026) and received very prompt and informative advice from both FPS and HMRC.

I'm hoping claiming my SP will be equally pain free but I'm wondering what you meant about tax codes racking up arrears. To avoid the same (I'm currently in receipt of LGPS work pension taxed at basic rate) if you could give me a heads up about the implications for my tax codes and what I need to explain at the appropriate time to sort it out.

Silvertabby

norfolkandnorwich said:

@Silvertabby said:
Couldn't fault the tax office, either.  I knew that HMRC would (eventually) sort out my tax codes, but as I didn't want to rack up arrears of nearly £180 per month I rang them a month after my State pension kicked in.  Spoke to a very helpful lady who sorted out my codes while we spoke.

Like you, I've now paid (three years') Voluntary Class 3s to get my maximum SP up to within 80p of the maximum (due to receive it in March 2026) and received very prompt and informative advice from both FPS and HMRC.

I'm hoping claiming my SP will be equally pain free but I'm wondering what you meant about tax codes racking up arrears. To avoid the same (I'm currently in receipt of LGPS work pension taxed at basic rate) if you could give me a heads up about the implications for my tax codes and what I need to explain at the appropriate time to sort it out.

I'd already retired and was in receipt of my RAF and LGPS pensions.  My tax code was applied to my RAF pension, while my LGPS pension was/is BR.

When my State pension kicked in the full amount was liable for 20% tax.  I knew that HMRC would get around to it eventually but, in the meantime, I would be racking up arrears of £180 per month.

By speaking to HMRC a month after my SPA date I was able to ask them to adjust my tax code and start taking the tax due (from my RAF pension) before the arrears had racked up further.