Guide discussion: Voluntary national insurance contributions

p00hsticks

Strummer22 said:

molerat said:

Strummer22 said:

I'm sure this has been raised already so apologies, but I haven't found this exact question yet.

My wife wants to pay one year of voluntary class 3 NI. The amount isn't relevant but it'll cost less than £16.

How does she actually manage to pay? On https://www.gov.uk/pay-voluntary-class-3-national-insurance it says 'pay now' but then asks you for your Class 3 National Insurance reference number, saying "this is 18 characters and begins with 60. For example 603490017829614130. You’ll find it on your bill."

Can you only obtain this bill/number by phoning HMRC and sitting on hold for several days? Well, hours, but it feels like days....

Yes.

But there are other ways to pay.

Which year is it for ?

Thanks. I can't recall which year but it's within the last 6 years.

Do any of the other ways to pay avoid having to phone HMRC?

You can pay by cheque through the post
Pay voluntary Class 3 National Insurance: By cheque through the post - GOV.UK (www.gov.uk)

Unless it's the earliest of those six years (i.e. 2016-17) then it's still going to be available after April, and as you say there is less than £16 to pay to fill the year the pro-rata price increase after April isn't going to be significant. You may well find that later in the year after the hoohah has died down you'll be able to  get straight through to HMRC to get the reference....

TakeaViewH

Hello everyone, this is my maiden post so I’ll try to keep it brief. 

I was 66 years old last August and have 27 qualifying years of N.I. contributions. My pension is £144.40 per week. I understand I need 35 qualifying years to receive the full state pension. (At least I thought I did!)

I rang the DWP helpline last July for assistance with this and received the attached illustrations at the end of January this year (despite being assured by the DWP that the process would only take 6-8 weeks!) 

I’m afraid I don’t fully understand the illustrations, for example, it seems I can increase my pension more if I buy 6 years instead of 8 years, but to get a full pension I need to buy 11? 

I would really appreciate some guidance.

Thank you.

Dazed_and_C0nfused

I understand I need 35 qualifying years to receive the full state pension

Where did you get that understanding from?

Why do you think you need 11 more years?

molerat

You currently receive £144.60.  The max is £185.15 so you are £40.75 short.  £40.75 / £5.29 = 8 years to reach the max.

Your current pension is based on what you had accrued under the old rules as it was higher than the new.  Were you in a contracted out final salary scheme as that makes a lot of difference to what can be done ? (it looks like you were by the figures in those printouts.)

They have made that very complicated for something that is fairly straightforward. It is really difficult to comprehend those printouts and they offer some really poor (expensive) choices. The simple version is

You need to buy the 6 post 2016 years available, 2016-17 to 2021-22, as that is the cheapest option,  which will take you to £176.14 then any 2 pre 2016 years which takes you to the max £185.15.  Pre 2016 years give a lower return than post 2016, £4.73 v £5.29.

Obviously not cheap at £6541.60 but will be returned as gross pension in 160 weeks. 

The years 2016-17 and earlier need to be purchased before April 5th as they cease to be available after that.  All later years will be available for some time, but that is only 5, and most of them will increase to £907.40 from April 6th.  If you want to buy fewer and receive a lower increase then 2020-21 and 2021-22 are the first to go for as they are cheaper and then post 2016 years as they offer the greater return.

molerat

Dazed_and_C0nfused said:

I understand I need 35 qualifying years to receive the full state pension

Where did you get that understanding from?

Why do you think you need 11 more years?

I think that after  looking at those printouts they have taken on your persona

It does show them the option of buying 11 years to get to £185.15 but nowhere gives the cheapest 8 year method, absolutely awful.

I do wonder if they have a lowish COPE which would make a higher number of pre 2016 years slightly viable.

Some of the printouts show a switch from old to new but going to 30 old to 31 adds £0, to 32 adds 10p, to 33 adds another £5.29.

TakeaViewH

molerat said:

Dazed_and_C0nfused said:

I understand I need 35 qualifying years to receive the full state pension

Where did you get that understanding from?

Why do you think you need 11 more years?

I think that after  looking at those printouts they have taken on your persona

It does show them the option of buying 11 years to get to £185.15 but nowhere gives the cheapest 8 year method, absolutely awful.

I do wonder if they have a lowish COPE which would make a higher number of pre 2016 years slightly viable.

Some of the printouts show a switch from old to new but going to 30 old to 31 adds £0, to 32 adds 10p, to 33 adds another £5.29.

Exactly @molerat why is there no illustration of the cheapest 8-year method?
I'm sorry but what is COPE?
My working life was predominately self-employed but I think I was contracted out of SERPS
Why can't they make things easier for us?
Please bear with me 

Janie2008

You get £4.73 a week for each year you buy pre 2016. (this won't increase) and currently £5.29( this will increase in April) for each year you buy post 2016. So you are better off buying years post 2016. You have 4 of these so should buy them first.

Janie2008

Sorry slight error in my reply. You have 6 post 2016 years.

p00hsticks

TakeaViewH said:

I'm sorry but what is COPE?

COPE stands for 'Contracted Out Pension Equivalent', and is a monetary value linked to time that you were contracted out from the additional state pension (SERPS/S2P) prior to 2016, and therefore paid a lower rate of NI (in return for being enrolled in another private/company pension of some sort). It was used once by DWP when calculating your State Pension entitlement under the new rules on 6th April 2016. That was its only real purpose, and it doesn't affect the value of your forecast now. It does however, help people here work out whether your 'starting amount' in April 2016 was that derived under the old or new rules (the higher of the two being taken) which can influence whether buying more pre-2016 years will have any effect, and also indicates to you (if you weren't already aware) that there is almost certainly another private pension out there somewhere for you. If you have been contracted out, there should be a line in your pension forecast indicating this, and if you click on the link to find out more it will actually show you your personal COPE amount.

molerat

TakeaViewH said:

molerat said:

Dazed_and_C0nfused said:

I understand I need 35 qualifying years to receive the full state pension

Where did you get that understanding from?

Why do you think you need 11 more years?

I think that after  looking at those printouts they have taken on your persona

It does show them the option of buying 11 years to get to £185.15 but nowhere gives the cheapest 8 year method, absolutely awful.

I do wonder if they have a lowish COPE which would make a higher number of pre 2016 years slightly viable.

Some of the printouts show a switch from old to new but going to 30 old to 31 adds £0, to 32 adds 10p, to 33 adds another £5.29.

Exactly @molerat why is there no illustration of the cheapest 8-year method?
I'm sorry but what is COPE?
My working life was predominately self-employed but I think I was contracted out of SERPS
Why can't they make things easier for us?
Please bear with me 

COPE is a contracted out deduction from your 2016 new scheme starting amount.  It often precludes the purchase of pre 2016 years above 30.  As some of the options from those lists take the number above 30 the COPE must be relatively small but there is no way to find out without asking once past state pension age.  

edit .  I have done a bit of playing with my spreadsheet and a COPE of £8.88 fits the £0 and 10p rises with the 31 & 32 year scenario.

edit 2.  Were you in self employment right up to retirement ?  Not paying class 2 NI ?