Guide discussion: Voluntary national insurance contributions

Boat_to_Bolivia

Boat_to_Bolivia said:

molerat said:

Am I missing something

Yes you are.  You pay a one off £824 and get £275 per year for the rest of your life for each year you buy.  Depending on your tax situation 3 to 4 years to recoup the capital outlay.

Thank you, I understand now...I really was missing something. Many thanks

Just to clarify, if I pay for one extra year at £824 I'll get £275 extra a year state pension?

I know it's all simple for you in the know, but it's very confusing for me... My apologies

Bluerayz

Thank you for such a comprehensive guide - it confirmed what I was doing was a no brainer. I got a pension forecast as I had worked overseas and was advised I could pay for 16 years shortfall - it will bring my pension to £180 ish per week eventually and take me only 3 yrs to get voluntary contributions back - so today I have sent HMRC a cheque via the correct link you supplied - a good move for me as I live on my own with no other pension provision - I chose to put my money into first house at 21 years old and paying mortgage on single income I did not have money for private pension aswell but invested in property years ago at the sacrifice of everything else which has worked out better for me - I would recommend anyone to do a pension forecast and if you can make up any class 3 national insurance contributions for missing gap years it's a good plan for the future of your government pension if you can only afford to pay for one year gap you can make further payments for more in future but 5 April 2023 is the deadline for the maximum 16 years contributions. 🎇

p00hsticks

Boat_to_Bolivia said:

Boat_to_Bolivia said:

molerat said:

Am I missing something

Yes you are.  You pay a one off £824 and get £275 per year for the rest of your life for each year you buy.  Depending on your tax situation 3 to 4 years to recoup the capital outlay.

Thank you, I understand now...I really was missing something. Many thanks

Just to clarify, if I pay for one extra year at £824 I'll get £275 extra a year state pension?

Yes. And as others pointed out, you may not even have to pay £824 as you may qualify to pay the much cheaper Class 2 rate.

Plock

Has anyone had experience of paying voluntary ni contributions class 3 for the years 2006 to 2016 in order to fill the gaps and increase your pension as Martin has advised. Those of us in the right age group have until 5th April 2023 to pay, but HMRC advised me to definitely get confirmation from the DWP that those contributions would indeed bring about an increase in my state pension. On phoning the DWP they said that the voluntary contributions for the years 2006 to 2016 would definitely not increase my state pension. Can anyone confirm that they have paid voluntary ni contributions and received said increase to their pension. Thank you

Silvertabby

Plock said:

Has anyone had experience of paying voluntary ni contributions class 3 for the years 2006 to 2016 in order to fill the gaps and increase your pension as Martin has advised. Those of us in the right age group have until 5th April 2023 to pay, but HMRC advised me to definitely get confirmation from the DWP that those contributions would indeed bring about an increase in my state pension. On phoning the DWP they said that the voluntary contributions for the years 2006 to 2016 would definitely not increase my state pension. Can anyone confirm that they have paid voluntary ni contributions and received said increase to their pension. Thank you

If Martin really did say that if EVERYONE with pre 2016 gaps would increase their pensions by plugging those gaps, then he was wrong.

Every calculation is different, but rule of thumb is that if you have any contracted out (of SERPS/SP2) service then plugging any pre 2016 years may not/definitely won't increase your pension.

Mind you, Martin isn't infallible.  Some time ago, on one of his tv shows, he assured a retired couple that he could DEFINITELY save them some tax.  Turned out he meant the married tax code transfer, in that the non-taxpayer (ie, the wife), transferred some of her unused tax allowance to her husband.  Really?  I'm sure we are not the only pensioner couple who are both tax payers in our own right.

molerat

Plock said:

Has anyone had experience of paying voluntary ni contributions class 3 for the years 2006 to 2016 in order to fill the gaps and increase your pension as Martin has advised. Those of us in the right age group have until 5th April 2023 to pay, but HMRC advised me to definitely get confirmation from the DWP that those contributions would indeed bring about an increase in my state pension. On phoning the DWP they said that the voluntary contributions for the years 2006 to 2016 would definitely not increase my state pension. Can anyone confirm that they have paid voluntary ni contributions and received said increase to their pension. Thank you

It is down to individual circumstances. If you would like to post up all the figures from your forecast including your pre and post 2016 NI years split and any COPE then someone here will talk you through the reasons  And, yes, many have paid pre 2016 years and increased their pension.

Plock

Thank you Molerat,  I reached state pension age 66 in dec 20, and was surprised to find I had 15 years ni contributions, from various jobs and caring for my father. I was shown that I could pay voluntary ni contributions from the 06/07 tax year up to 19/20 making 14 extra years pension. The cut off date to make those contributions up to the year 16/17 is 05 04 2023. Upon speaking with the DWP yesterday, they assured me that only paying voluntary ni contributions from 2016 onwards would result in an increase in my state pension, any payments going back to 2006 would have no effectual increase. And a letter from them (though stuck in a six month queue) will say the same thing. I'm afraid I don't know what COPE stands for. I'm afraid without seeing evidence to the contrary I'm inclined to believe that people are wasting their money.

p00hsticks

Plock said:

Thank you Molerat,  I reached state pension age 66 in dec 20, and was surprised to find I had 15 years ni contributions, from various jobs and caring for my father. I was shown that I could pay voluntary ni contributions from the 06/07 tax year up to 19/20 making 14 extra years pension. The cut off date to make those contributions up to the year 16/17 is 05 04 2023. Upon speaking with the DWP yesterday, they assured me that only paying voluntary ni contributions from 2016 onwards would result in an increase in my state pension, any payments going back to 2006 would have no effectual increase. And a letter from them (though stuck in a six month queue) will say the same thing. I'm afraid I don't know what COPE stands for. I'm afraid without seeing evidence to the contrary I'm inclined to believe that people are wasting their money.

How much State Pension per week are you actually getting at the moment ?

molerat

Plock said:

Thank you Molerat,  I reached state pension age 66 in dec 20, and was surprised to find I had 15 years ni contributions, from various jobs and caring for my father. I was shown that I could pay voluntary ni contributions from the 06/07 tax year up to 19/20 making 14 extra years pension. The cut off date to make those contributions up to the year 16/17 is 05 04 2023. Upon speaking with the DWP yesterday, they assured me that only paying voluntary ni contributions from 2016 onwards would result in an increase in my state pension, any payments going back to 2006 would have no effectual increase. And a letter from them (though stuck in a six month queue) will say the same thing. I'm afraid I don't know what COPE stands for. I'm afraid without seeing evidence to the contrary I'm inclined to believe that people are wasting their money.

If you really do have only 15 years contributions, meaning your pension would likely be around £79.35, then IMO they are wrong.  Pre 2016 contributions should add to your pension up to 30 years minimum.

I'm afraid without seeing evidence to the contrary I'm inclined to believe that people are wasting their money.

I worked out my SIL's pension which is due next year.  She currently has 26 pre 2016 years and I calculated she could add another 5, making 31 even though she has a COPE, plus 2 post 2016 years for the sum of £3078.  She contacted FPC this morning and they confirmed my calculations were spot on taking her from £154 to the full £185.15. The first time my spreadsheet calculations have had a live DWP test

Vestas

The guide seems OK to me although its obviously not that clear regarding individual circumstances relating to pre/post 2016 contributions.

It could do with having a simple statement that, in general post 2016 top-ups are going to benefit most people more than pre-2016 top-ups if both are available to you. Having said that this will be a moot point after April 5 2023 but even so it might be helpful in the interim.

Also it seems unclear to me whether if you make pre-2016 top-ups (I didn't) then those top-ups are treated as contracted out if that was your last status/position pre 2016. Seems strange that they would be given no money will be going to your contracted-out pension fund from those top-ups (or if it is then its of negligible value now) but I can't find anything definitive either way. Wasn't really a factor for me as the post-2016 topups did the job for me so maybe I didn't look hard enough?

Main reason for posting is to say that the people on the National Insurance - General Enquiries helpline (0300 200 3500) are incredibly helpful. I phoned up at 8am this morning and a guy called Derek with a great Geordie accent quite literally talked me through the whole process of paying online (18 digit reference number etc) and waited while I did it to make sure it all went through as expected (it didn't first time so he waited while I tried again). He was clear they couldn't advise as to whether your payments would make a difference to final pension figures and repeatedly advised to check forecast/talk to DWP if unsure. Top notch service, all done within 25 minutes.