Guide discussion: Voluntary national insurance contributions

p00hsticks

nigelbb said:

p00hsticks said:

Cockerman said:

p00hsticks said:

Dazed_and_C0nfused said:

Cockerman said:

I receive a reduced state pension so contacted the Pension Service for advice. Told that I should pay voluntary NI to fill the 2 out of my 40+ years contributions that were incomplete. This I did back in May. No change to my pension so I have contacted the Pension Service another 3 times for an explanation to now be told that my reduced pension has nothing to do with the 2 years NI contributions that were short and that it is down to me being contracted out or SERPS at some point. So my voluntary NI contribution was money down the drain. Warning: Beware the Pension Service advice. 

Future Pension Centre is the usual recommendation for people in your situation as they have a very good reputation.

Have you contacted them?

I'm not sure the Future Pension Centre will be able to help in this case as the OP says they are already claiming their pension.

The explanation that the OP has received isn't necessarily correct - the OP having been contracted out may explain why they ar receving a lower pension, but it doesn't preclude being able to increase it by making voluntary contributions to top up years that aren't full.

I beleive that it is taking some time for any effect to work through the system if you are already passed State Pension age, so the OP may yet see a benefit.

@Cockerman - I believe that if you can are currently receiving less than £185.15 a week, you  reached SPA after April 2016 and the years you topped up are after April 2016 but before the year you reached SPA then you should see an increase, but it may take some time to work through.... 

Receiving £173.63 SP, reached SPA after April 2016, topped up NI for 2012/13 and 2015/16.

The Pension Service say the reduction is due to me being contracted out back sometime in the past which means I will have a protected rights  pension pot somewhere funded by DHSS from my NI contributions.

Great news but I've still thrown £1270 down the drain by paying voluntary NI when I needn't have. 

Ouch! Yes I suspect that that money was wasted - if the missing years had been after the introduction of the New State Pension in April 2016 then topping up would have increased your pension, but as you already had 35 years prior to 2016 then topping up pre-2016 years wouldn't make any difference.     If you have evidence that the Pension Service wrongly advised you that topping up those years would increase your pension then I think you have grounds for complaint....  

It doesn't help the OP but the advice here is always to only purchase added years after speaking to the Future Pensions Centre to confirm exactly which years should be purchased.

THe MSE Guide at the top of this thread tells people to check with the Future Pension Centre if they have yet to reach State Retirement Age , and the Pension Service if they are already over SP though. The latter is what the OP did and was apparently given the incorrect advice that buying pre-2016 years would boost their pension.

Daliah

The table entitled  How long you're likely to be getting the state pension gives misleading information as there is far more granularity than the table suggest whilst the state pension age is gradually rising to 68. To normalise the state pension age down to full years will give many people false information. Why not simply refer to the official tables?

murfjohn

I am 66 already claiming pension and following Martin's guide found I am seven years short of NI contributions. This shortfall was because I took early retirement and didn't claim anything. I was told at the time NI contributions were fully paid up and would not need to pay anymore. This was from the job centre and was obviously incorrect.  I have contacted the Voluntary National Insurance Contributions on 0800 7310469, and was told as I had some thirty years ago been contracted out, they would have to work out how best to proceed, and because of the number of enquiries this might take up to three months. So that was a month ago. I will update this as and when i get the details.

zathrasB5

I have a similarish position to murfjohn.  I was looking at Martin's guide having seen that action may be required soon.  But I think I am OK.  Checking HMRC I have 38 years full contributions, I am 58 but have taken early retirement and I am living off income drawdown.  I would currently get £176.18. So a little short - the 2 years I have not contributed.  But these will be this year and next year.  So I assume I just sit tight at the moment and in about 3 years time look at paying 2 years in to get the full amount?  And the deadline won't matter as we will be talking about making up missed years in the last 6 years.  One fly in the ointment is that I am sure at one point I was contracted out but when I joined the Scottish Widows pension scheme I think there was some adjustment made and I was contracted back in again.  Not sure on the details of this.

Silvertabby

murfjohn said:

I am 66 already claiming pension and following Martin's guide found I am seven years short of NI contributions. This shortfall was because I took early retirement and didn't claim anything. I was told at the time NI contributions were fully paid up and would not need to pay anymore. This was from the job centre and was obviously incorrect.  I have contacted the Voluntary National Insurance Contributions on 0800 7310469, and was told as I had some thirty years ago been contracted out, they would have to work out how best to proceed, and because of the number of enquiries this might take up to three months. So that was a month ago. I will update this as and when i get the details.

With that amount of contracted out service, only 2016/17 onwards contributations will add to your State pension.  

Sku11

EX H.M. FORCES - CONTRACTED OUT OF S.E.R.P.S. (blissfully unaware) 

Whilst serving in HM Forces I was blissfully unaware that I wasn't accumulating enough years to qualify for a Full State Pension due to being contracted out of S.E.R.P.S. Most had trouble understanding their pay slips / deductions and had a care free attitude, they just wanted to know how much money they got 'in their hand'  to spend on alcohol! 

At the 2016 transition point (I had already left the forces in 2007) I had 35 FULL years, there was a common belief that we were being looked after by the Government and whilst serving, forces pensions were rarely discussed in any great detail, I'm not even sure they were by anyone who knew what they were talking about ?  State pensions were never discussed ?

Several times whilst I was still serving I enquired about paying Additional Voluntary Contributions (A.V.C's) but was always 'advised' that they were of no benefit to Junior Ranks and seemed more relevant to Commissioned Officers.  I digress from the topic.  Suffice to say that FORCES Pension advice / knowledge whilst in the forces was limited at best.

H. M. FORCES (like many public service pensions) were contracted out, this seemed to be beneficial more to the Government than the public servants, most like me weren't even aware they (and their Employers) were paying less NI than they would have done, 'robbing Peter to pay Paul' or sub-contracting the scheme to another pension provider for them to invest, in my mind anyway.....

It was only when I left the forces and became Self Employed that I realised just how complicated any pension was, State Pension was a total minefield [sic] to me, I've been paying voluntary cl2 NI whilst I'm Self Employed......

Now up to and including 2021 I have:
40 years of full contributions

11 years to contribute before 5 April 2032

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

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

£169.10 a week

Forecast if you contribute another 4 years before 5 April 2032

£185.15 a week

£185.15 is the most you can get

Contracted Out Pension Equivalent (COPE)

Your COPE estimate is £44 a week

So looking on the bright side I do at least have enough time left, to work for another 3 years and pay up to 4 more years voluntary cl2 NI, to reach the carrot of a FULL NEW PENSION.

I believe voluntary cl2 contributions are increasing soon, so some may have trouble paying the increased rate ?

I believe there will be many people in the public service sector who may well miss out on a full New State Pension, due to realising - too late in some cases, that they're not in the position they thought they were, with too little time left to pay in?

Hopefully my personal background and forecast above is now all tickety-boo but it could easily have gone wrong with a career change, it might even prompt someone in a similar position to check their own circumstances.

Martin Lewis guides make a lot of sense but Employers need to do more about their schemes and also New Pension is intended to simplify the more complex old State Pension scheme.

Dazed_and_C0nfused

So looking on the bright side I do at least have enough time left, to work for another 3 years and pay up to 4 more years voluntary cl2 NI, to reach the carrot of a FULL NEW PENSION.

You may want to think twice about paying for the fourth year, even at Class 2 rates.

It will only add 18p/week to your State Pension so not nearly as good value as the first 3 years.

Still makes sense if you live long enough but at £9.36/year to start with it will be 10+ years to make a profit, even with inflation increases.

Silvertabby

Sku11 said:

EX H.M. FORCES - CONTRACTED OUT OF S.E.R.P.S. (blissfully unaware) 

Whilst serving in HM Forces I was blissfully unaware that I wasn't accumulating enough years to qualify for a Full State Pension due to being contracted out of S.E.R.P.S. Most had trouble understanding their pay slips / deductions and had a care free attitude, they just wanted to know how much money they got 'in their hand'  to spend on alcohol! 

At the 2016 transition point (I had already left the forces in 2007) I had 35 FULL years, there was a common belief that we were being looked after by the Government and whilst serving, forces pensions were rarely discussed in any great detail, I'm not even sure they were by anyone who knew what they were talking about ?  State pensions were never discussed ?

Several times whilst I was still serving I enquired about paying Additional Voluntary Contributions (A.V.C's) but was always 'advised' that they were of no benefit to Junior Ranks and seemed more relevant to Commissioned Officers.  I digress from the topic.  Suffice to say that FORCES Pension advice / knowledge whilst in the forces was limited at best.

H. M. FORCES (like many public service pensions) were contracted out, this seemed to be beneficial more to the Government than the public servants, most like me weren't even aware they (and their Employers) were paying less NI than they would have done, 'robbing Peter to pay Paul' or sub-contracting the scheme to another pension provider for them to invest, in my mind anyway.....

It was only when I left the forces and became Self Employed that I realised just how complicated any pension was, State Pension was a total minefield [sic] to me, I've been paying voluntary cl2 NI whilst I'm Self Employed......

Now up to and including 2021 I have:
40 years of full contributions

11 years to contribute before 5 April 2032

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

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

£169.10 a week

Forecast if you contribute another 4 years before 5 April 2032

£185.15 a week

£185.15 is the most you can get

Contracted Out Pension Equivalent (COPE)

Your COPE estimate is £44 a week

So looking on the bright side I do at least have enough time left, to work for another 3 years and pay up to 4 more years voluntary cl2 NI, to reach the carrot of a FULL NEW PENSION.

I believe voluntary cl2 contributions are increasing soon, so some may have trouble paying the increased rate ?

I believe there will be many people in the public service sector who may well miss out on a full New State Pension, due to realising - too late in some cases, that they're not in the position they thought they were, with too little time left to pay in?

Hopefully my personal background and forecast above is now all tickety-boo but it could easily have gone wrong with a career change, it might even prompt someone in a similar position to check their own circumstances.

Martin Lewis guides make a lot of sense but Employers need to do more about their schemes and also New Pension is intended to simplify the more complex old State Pension scheme.

RAF pensioner here.

You left the Armed Forces well before the details of the new single tier pension were announced, so how on earth can you infer that your admin bods were remiss in not telling you how your Armed Forces pension would interact with the new rules?  We didn't have  crystal balls!

During your service the details of how the Armed Forces pension interacted with the old State pension were readily available.  You only had to ask.  Briefly, the old system consisted of the basic State pension that everyone paid into, plus the additional State pension (SERPS/SP2) that the Armed Forces (and every other public sector pension scheme) contracted out of.  Instead of paying into SERPS/SP2 you (and the MOD) paid a reduced rate of NI.  In return, the pension schemes had to guarantee that the pension they paid you would be AT LEAST the amount of SERPS/SP2 that you wouldn't get - because you hadn't paid for it.

Looking at your age and dates, am I right in thinking that you did 22 years and so have been in receipt of your AF pension since age 40?  If so, then  you have been receiving your SERPS/SP2 equivalent (that non-contracted out people have to wait until SPA for) since then, as part of your AF pension.

You, I and many like us are the winners here.  Under the old scheme we would have only received the old basic State pension, yet here we are able to add to that with post 2016 contributions.  In my case, I retired at 60 but paid 4 years of voluntary Class 3s in order to take me up to the full single tier pension when I reached SPA earlier this year. 

As for AVCs, when I left the RAF they were only really a thing for aircrew additional death benefits.  Probably still the same for you.

As a SNCO Pers Admin, my job included advising leavers on their pension entitlements.  Those leaving with an entitlement to an immediate pension were usually all ears, but I suspect that most were only interested in £s and Ps and chose to ignore the fine details.  Those leaving with deferred benefits were even worse - I would give them a pensions info pack with their discharge documents, and remind them not only to keep that info safe, but also that they would have to actively claim their pensions (age 60 in my day) when the time came, as the MOD wouldn't come looking for them.  Cue more blank looks and disinterest.

Sku11

Dazed_and_C0nfused said:

So looking on the bright side I do at least have enough time left, to work for another 3 years and pay up to 4 more years voluntary cl2 NI, to reach the carrot of a FULL NEW PENSION.

You may want to think twice about paying for the fourth year, even at Class 2 rates.

@ Dazed_and_C0nfused 

Yes totally agree and I also saw an earlier comment with the same conclusion that there was little value in my fourth and final qualifying year - so highly unlikely to pay for that year.

Sku11

Silvertabby said:

RAF pensioner here.

You left the Armed Forces well before the details of the new single tier pension were announced, so how on earth can you infer that your admin bods were remiss in not telling you how your Armed Forces pension would interact with the new rules?  We didn't have  crystal balls! ........

@ Silvertabby 

Please don't take my post personally - It is only my experience but there was very little interaction with Pers Admin most of Admin was at Unit level.  I was given a book about the Forces Pension, it had some pictures in it   

This is more about Boosting NI Qualifying years than my Forces pension, I'm not blaming anyone for my situation...