Guide discussion: Voluntary national insurance contributions

calcotti

Note the last paragraph of what you have quoted.

If you’re working you may still need to pay National Insurance contributions until 11 May 2028 as they fund other state benefits and the NHS.

Whether or not you have to pay NI will depend on how and how much you pay yourself.

Dazed_and_C0nfused

Yes.  It helps keep the country running.

If you would prefer not to pay NI you simply need to earn less than the primary threshold, currently £1048/month.

Geeby

Hi

I've been following this thread for the last few days and figured I'd take up Molerat's earlier invitation and post up the details of my own pension forecast in the hope that its contributors can provide any help or advice. 

Briefly, I'm an expat that has been working abroad for the past 25 years and, as a result, have racked up a significant period of time where I have not been contributing towards my NICs.

I contacted the FPC a couple of weeks ago to ask how to go about making voluntary payments of NI who advised that I first check with HMRC whether or not the tax years I want to make the voluntary payments for will increase my State Pension.

Before contacting HMRC, however, I would like to hear the thoughts and insights of the forum itself.

Your National Insurance record

You have:

* 13 years of full contributions

* 8 years to contribute before 5 April 2030

* 30 years when you did not contribute enough

Your State Pension forecast is currently as follows:

State Pension August 2030

Estimate based on your National Insurance record up to 5 April 2022

£68.77 a week

Forecast if you contribute until 5 April 2030

£111.09 a week

The most you can increase your forecast to is:

£185.15 a week

Based on the details above, can anyone provide me with their own reading of my Pension Forecast as well as what my next steps should be.

Thanks

dunroving

Geeby said:

Hi

I've been following this thread for the last few days and figured I'd take up Molerat's earlier invitation and post up the details of my own pension forecast in the hope that its contributors can provide any help or advice. 

Briefly, I'm an expat that has been working abroad for the past 25 years and, as a result, have racked up a significant period of time where I have not been contributing towards my NICs.

I contacted the FPC a couple of weeks ago to ask how to go about making voluntary payments of NI who advised that I first check with HMRC whether or not the tax years I want to make the voluntary payments for will increase my State Pension.

Before contacting HMRC, however, I would like to hear the thoughts and insights of the forum itself.

Your National Insurance record

You have:

* 13 years of full contributions

* 8 years to contribute before 5 April 2030

* 30 years when you did not contribute enough

Your State Pension forecast is currently as follows:

State Pension August 2030

Estimate based on your National Insurance record up to 5 April 2022

£68.77 a week

Forecast if you contribute until 5 April 2030

£111.09 a week

The most you can increase your forecast to is:

£185.15 a week

Based on the details above, can anyone provide me with their own reading of my Pension Forecast as well as what my next steps should be.

Thanks

I'm not an expert on all aspects of these issues, but was myself overseas for 23 years and am currently below the 35 years needed for the new state pension (when I was overseas, the existence of Class 2 NICs wasn't advertised widely). I was mistakenly told when I returned that in order to make up lost (past) years, I would have to make Class 3 voluntary NI contributions. This was incorrect, so I'd recommend you don't get caught with the same wrong information. You (unlike me) have lost (past) years that go back to 2006. With reference to the Martin Lewis article that prompted this thread, don't let them tell you that you can only pay 6 past years.

All of the above is of course dependent on you figuring out how many years you will need to pay in order to get new state pension without overpaying. A lot depends on whether you plan to return in the next 8 years. If you do, you will be required to pay Class 1 NI (assuming you are in PAYE employment). My admittedly inexpert interpretation is:

You currently have 13 years NICs and will need an additional 22 to get the new state pension.
You can pay Class 2 (the cheapest) voluntary NICs for the past 16 years (back to 2006). This would take you up to 29 years [NOTE this option is only open for another few months; read the main article].
If you did this, you'd need an additional 6 years to get to 35 years. If you stay abroad, you can pay Class 2 for 6 years and then stop. However, if you returned at any time, you'd have to pay NICs up to 2030 - so you could end up "overpaying" by 2 years more than necessary.

Personally, as Class 2s are a no-brainer and relatively inexpensive, I'd be paying the 16 past years while you can - money n the bank, so to speak. All you have to lose is the amount of the excess 2 years Class 2, which in the big scheme of things isn't a lot of money.

p00hsticks

Dazed_and_C0nfused said:

Easycruiser said:

I thank Martin for trying to clarify this complicated subject however unless others have a different experience from me it isn't worth his while.

I have contacted the number quoted - 0800 731 0469 - three times since February 2022 and on each occasion have been told that they cannot give me any information on what benefit I would gain by paying for the incomplete years. They said this was dealt with by another department which I cannot contact directly. They have apparently passed on my details to this other department three times now and I have received no reply.

I am anxious to find out if I am able to increase my pension by paying for the extra years but its not worth the anxiety it causes. I have now given up.

Why not do what the rest of the country does and contact the (extremely helpful) Future Pension Centre.

They invariably get glowing reviews from posters on this forum.

https://www.gov.uk/future-pension-centre

I suspect (from the telephone number Easycruiser is calling) that they are already over State Pension Age. The MSE guide says that in these circumstances you need to call the Pension Service rather than the Future Pension Centre. Unfortunately as Easycruiser says and others have also reported,  the former does not have a dedicated team to answer such queries from the public and it is difficult to get a meaningful response from them.

And as once you reach SPA your online State Pension Forecast is no longer available, it;s also difficult for anyone here to advice on whether filling in gaps would increase the pension.

Pat38493

Interesting discussion that mentions contracted out of DB schemes a few times.

I was in a DB scheme from 1991 until 2008 when it was deferred.  I was definitely contracted out for some amount of time as I have very old documents about it, and I was for some time under the impression that if you were contracted out in the old days, your state pension would be less.

However, when I check my state pension entitlement on the gov.uk web site, it says I have the full years of entitlement and there is no way to increase it.  Hopefully this is reliable information.

DBdoobydoo

Dazed_and_C0nfused said:

Yes.  It helps keep the country running.

If you would prefer not to pay NI you simply need to earn less than the primary threshold, currently £1048/month.

The other way to avoid paying National Insurance is to carry on working past state pension age. It's a lovely bonus of which many are unaware.

Geeby

Dunroving, thanks for the feedback and the personal perspective that you provided. Your comments were very helpful.The point regarding the class of NICs I should pay was one that I was a little unsure of and one which I will certainly emphasise when I contact HMRC. Speaking of which, I am currently unable to contact HMRC personally and plan on having a family member contact them on my behalf and would like to know whether this would be a problem - data protection and everything! And depending on what details HMRC ask for, would we be better calling or writing to them? Any suggestions would be much appreciated.

calcotti

HMRC will not speak to someone else in lieu of you unless you are with them so that you at least say enough to authorise them to do so.

dunroving

Geeby said:

Dunroving, thanks for the feedback and the personal perspective that you provided. Your comments were very helpful.The point regarding the class of NICs I should pay was one that I was a little unsure of and one which I will certainly emphasise when I contact HMRC. Speaking of which, I am currently unable to contact HMRC personally and plan on having a family member contact them on my behalf and would like to know whether this would be a problem - data protection and everything! And depending on what details HMRC ask for, would we be better calling or writing to them? Any suggestions would be much appreciated.

The advantage of communicating in writing (email) is that you have a record of the conversation and what you were told. It also allows you to organise your thoughts and your questions beforehand, for example using bullet points for each question.

The advantage of calling is that (sometimes) it means you get a faster reply. On the one hand, you have a long time left before you retire so you have plenty of time - but there is the April 2023 deadline (for back-paying to 2006) to think of, which leans towards calling. You could perhaps try writing first and if you don't get a reply within 2 weeks, give them a call.

The number I called recently to request them to bill me for two years at Class 2 (not an overseas thing, different reason) was 0300 200 3500 (M-F 8am to 6pm). If you don't feel like you are being given correct information (e.g., if they tell you that you must pay Class 3, or that you can't back pay to 2006), ask to speak to a team leader. It's not uncommon for the front line staff to be unfamiliar with special cases like yours.