Guide discussion: Voluntary national insurance contributions

p00hsticks

I've spotted the link now - for some reason my computer wasn't showing it as highlit before so I missed it.

I agree that the first paragraph needs correcting - saying that 'to get the maximum new state pension (currently £185.15 a week), you need up to 35 qualifying NI years' is simply untrue, and makes those who have already got 35 years mistakenly complacent, as we see too often on these boards.

I for one am going to need 44 years to reach the maximum, having been contracted out for most of my working life.

jem16

p00hsticks said:

I've spotted the link now - for some reason my computer wasn't showing it as highlit before so I missed it.

You may not have missed it. It was edited after your post so may have been missed out originally.

MSE_Ben_S

Thanks for all the feedback so far. We had simplified a few things to keep it accessible to those who don't know anything about pensions, but potentially we went too far with that. We've added in cautionary notes on the 35 years and the contracting out issues.

Audaxer

MSE_Ben_S said:

Thanks for all the feedback so far. We had simplified a few things to keep it accessible to those who don't know anything about pensions, but potentially we went too far with that. We've added in cautionary notes on the 35 years and the contracting out issues.

Thanks, but the following paragraph when it refers to 44 years is still not correct as I have 46 years of full contributions and still need another 3 years of contributions to get to the maximum.

"Many will likely need around 35 qualifying NI years - though for those whose NI records start before 2016, it's not quite this simple. How many years you need is based on your age and NI record, and could be as high as 44 years."

t0rt0ise

Audaxer said:

MSE_Ben_S said:

Thanks for all the feedback so far. We had simplified a few things to keep it accessible to those who don't know anything about pensions, but potentially we went too far with that. We've added in cautionary notes on the 35 years and the contracting out issues.

Thanks, but the following paragraph when it refers to 44 years is still not correct as I have 46 years of full contributions and still need another 3 years of contributions to get to the maximum.

"Many will likely need around 35 qualifying NI years - though for those whose NI records start before 2016, it's not quite this simple. How many years you need is based on your age and NI record, and could be as high as 44 years."

Exactly so. I've got 48 years and still don't quite get a full pension.

Audaxer

t0rt0ise said:

Audaxer said:

MSE_Ben_S said:

Thanks for all the feedback so far. We had simplified a few things to keep it accessible to those who don't know anything about pensions, but potentially we went too far with that. We've added in cautionary notes on the 35 years and the contracting out issues.

Thanks, but the following paragraph when it refers to 44 years is still not correct as I have 46 years of full contributions and still need another 3 years of contributions to get to the maximum.

"Many will likely need around 35 qualifying NI years - though for those whose NI records start before 2016, it's not quite this simple. How many years you need is based on your age and NI record, and could be as high as 44 years."

Exactly so. I've got 48 years and still don't quite get a full pension.

I see that they have now changed that paragraph to the following which is better:
"Many will likely need around 35 qualifying NI years - though for those who started their NI recordt before 2016 - which would be pretty much everyone aged 45 to 70 now - it's not quite that simple. How many years you need is based on your age and NI record up to now, which could mean you need more than 40 NI years." 

staggered

I've paid voluntary contributions for a number of years.  I did some calculations and, like the guide says, worked out that I'd only need to live for about 3 years after retirement age to earn that money back.

As others have said, you need to take account of "opting out".  I was opted out for 2 years, when I worked for a previous employer.  I had no idea I'd done that and had to have it explained to me why I had 24 years of contributions but still needed to make another 13 years contributions to receive a full pension.

Another observation is that the process for paying voluntary contributions (unless it's improved recently) is horribly slow and inefficient.  I rang HMRC to tell them that I wanted to make a contribution, clutching my bank card, expecting to be able to pay HMRC over the phone, like any other 21st century business.  Instead, I was given a bank account number, a 16-digit reference number, and told to make a payment via online banking quoting this 16-digit reference number. 

I was worried that I might have got one of the 16 digits wrong so rang HMRC to ask if they'd received the payment, only to be told that they didn't know, because their system didn't tell them, but that I should check back every few weeks to see if my account had been updated.  I think it took about 6 weeks for it to finally show on my statement.

I think that, if there's an option for the reference number to be sent in the post, that would be better as at least that way you'll be able to double-check you've entered it correctly.

George382

I have (had? I’m 67) 40 years contributions (38 contracted out) pre 2016. I have since been working self employed. I wondered if the years of paying NI un contracted out could be counted instead of some of the contracted out years. DWP we’re very helpful but said it wouldn’t make any difference to my state pension which is £200 a month less than my husbands. Does that sound right? Would I benefit from paying more ? 

Linton

George382 said:

I have (had? I’m 67) 40 years contributions (38 contracted out) pre 2016. I have since been working self employed. I wondered if the years of paying NI un contracted out could be counted instead of some of the contracted out years. DWP we’re very helpful but said it wouldn’t make any difference to my state pension which is £200 a month less than my husbands. Does that sound right? Would I benefit from paying more ? 

It is not a matter of taking account of some years and disregarding others.  Your total history is assessed year by year and the appropriate SP calculated.  So time spent contracted in can outweigh the money lost by being contracted out.

In your case it would seem that you were not contracted in for long enough and that you have no years pre-SP age for which you could now make voluntary contributions.  Were you paying NI continuously until you reached State Pension Age?  You cannot make contributions for years after SP Age.

Silvertabby

During the transitional period almost everyone will have their own individual State pension calculation.

My own calculation really couldn't be simpler:

Full (financial) years of NI contributions from age 16 to to age 60, when I retired.

Contracted out from 1978 to 2016 (the maximum 38 years)

Years needed to qualify for the new single tier pension = 48 (44 from working, 4 from post 2016 voluntary Class 3 NI contributions).

But most people will have much more complex calculations.