Guide discussion: Voluntary national insurance contributions

molerat

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?

You have failed to grasp the nuances of pre 2016 contributions.  There is no such thing as a contracted out year.  A year either counts or it does not. You can only use a maximum of 30 or 35 pre 2016 years depending on circumstances.  If you had less than 30 then making up to 30 will definitely make a difference, making up to 35 may or may not add value depending on your circumstances mainly around contracting out.  It is actually very simple but there is no simple statement that would clarify the situation I am afraid due to the number of factors involved.  The most straightforward explanation is

If you have less than 30 pre 2016 years then making up to 30 must add value (to your 2016 starting amount but may remove the benefit of post 2016 years)

If you have between 30 an 34 pre 2016 years then adding extra may or may not add value depending on circumstances

If you have 35 or more pre 2016 years then adding more can not add value.

Vestas

OK that makes it clearer, thanks. In my case its going to end up more or less 50:50 in terms of pre/post 2016 contributions (19 for both, assuming I keep up future contributions) and about 55:45 in terms of contracted in/out so wasn't any point in making pre-2016 top-ups as far as I could see.

Vestas

19 years in pre 2016, then 19 years in post 2016 is what I meant, previouspost might not have made that clear.

molerat

The biggest reason for buying pre 2016 years when you have enough spare going forward is if they are cheap part filled.  In my SIL's case they were between £174 and £550 so a real no brainer decision.

Vestas

molerat said:

The biggest reason for buying pre 2016 years when you have enough spare going forward is if they are cheap part filled.  In my SIL's case they were between £174 and £550 so a real no brainer decision.

If the year is "empty" then its £824.20 which obviously skews the decision somewhat

Lou117

molerat said:

Lou117 said:

The person at the helpline said that if I made payments for 5 (of the 6) years I would be eligible for the full £185.15. He was adamant that I only need to pay the 5 years and said that by paying 4 years I would add £5.29 per week, whereas the final 5th year would add a further £3.57.

This equates to £4,069 and my calculations are that my breakeven is just over 3 years.

The full £185.15 less your currently held £160.42 = £24.73.  Divide that by the £5.29 you get for each year purchased = 4.67 years.  .67 x £5.29 = £3.57 for the final year.

Any looking after grandchildren whilst the parent works ?

Hi All

I made a payment of £4069 on 2 November. I called HMRC today and they confirmed receipt and then very helpfully applied it to my missing years. I now have confirmation that my pension account is full.
Thanks so much to everyone who contributed to the forum and to Molerat for his specific assistance.

77shelf88

i wonder if i could get some advice as not sure if i have missed some thing  had a pension forecast which states my pension in about 18 months would be £172.78  , £12 .37 less than a full pension of £185.15  .To get the full amount they want me to pay three years NI totalling £2420.60  ,   by my reckoning  it would take me nearly 4 years to break even (not the 3 years on the calculator)    if that is right or am i missing something  as i am not sure on my figures if it is worth it ..           Thank you in advance

Dazed_and_C0nfused

77shelf88 said:

i wonder if i could get some advice as not sure if i have missed some thing  had a pension forecast which states my pension in about 18 months would be £172.78  , £12 .37 less than a full pension of £185.15  .To get the full amount they want me to pay three years NI totalling £2420.60  ,   by my reckoning  it would take me nearly 4 years to break even (not the 3 years on the calculator)    if that is right or am i missing something  as i am not sure on my figures if it is worth it ..           Thank you in advance

Answered on your other post

macman

I was self employed in tax year 2015/16 but did not pay Class 2 NI contributions because I was below the earnings threshold. Can I still purchase these, or does the 6 year backdating rule now mean that year is unavailable to me?
I paid for 3 subsequent missing years (2016/17, 2017/18, and 2018/19) last year, but at that time was told that I could not go back as far as 2015/16, so have the rules been changed?

molerat

I believe you should still be able to pay the voluntary class you were entitled to pay at the time for any year going back to 2006-07 under the transitional arrangements.  You would certainly be able to pay class 3 so why not class 2 ? Whether a pre 2016 year will actually add benefit is a whole other question.

How many pre 2016 years do you hold ? What exactly does your forecast show ?