Guide discussion: Voluntary national insurance contributions

molerat

jevans90 said:

So is it not worth topping up those previous 8 years where I had gaps and just paying some NI contributions going forward? The years 2008-2014 are around 800pounds each to pay so it's a lot.
I understand if you cannot give a yes/no answer, but this has confused me a little 

You can top them up and they will add value but you likely have access to class 2.  You will likely need another 26 years to reach the full £185.15 which if you are working you may be able to get.  Paying any back years will obviously reduce the number of years you will need going forward and especially good if you can get the past few back years at class 2.  It is up to you how you do it.

Rainbow_Zippy_2

Great resource in this thread, just looking some confirmation on best way forward. Like everyone we have been trying for a few months (on and off) to get through without success, but hopefully will get through some day soon:-

I am in the fortunate position of having 32 years of contributions and forecast of £195.69

My wife has the following forecast:

State Pension available in 2039

Forecast for April 2038 is 185.15

At April 2022 its  111.09

21 yrs full contributions 

14yrs didn't contribute 

16 yrs left to contribute 

Gaps in NI record
4 years from 2011 to 2015, when self employed (small earnings exemption)
6 years from 2015 to 2021, when not working / working part time 

Now back working full time from 2021 onwards but unlikely to continue much past 60 (2032).

Is it possible to fill the four self employed years with vol class 2 contributions (£2.50 x 52weeks x 4 years)?
Am I right to think we can drip feed the other extra contributions over the next few years (e.g. 2018 in 2024, 2019 in 2025 etc.) to boost to full pension.

molerat

The first easy hit are those 4 class 2s (at £3.15 pw / £163.80 pa). 

Any of those 2015 - 2021 part filled and cheap ?

The only problem drip feeding the back years is the price.  2018-19 is currently £824.20, from April it will be £907.40 and increase again from April 24.

She needs 14 years to get to the max and will likely pick up 10 of those going forward but has capacity for 16 ahead so not a panic situation.

You need to get a move on though as those class 4 years are no longer available after April ( although there has been some talk of a bit of flexibility over that date)

Rainbow_Zippy_2

molerat said:

The first easy hit are those 4 class 2s (at £3.15 pw / £163.80 pa).  Any of those 2015 - 2021 part filled and cheap ?

The only problem drip feeding the back years is the price.  2018-19 is currently £824.20, from April it will be £907.40 and increase again from April 24.

She needs 14 years to get to the max and will likely pick up 10 of those going forward but has capacity for 16 ahead.

You need to get a move on though as those class 4 years are no longer available after April ( although there has been some talk of a bit of flexibility over that date)

Thanks. Will get on with the 4 years of class 2's (£655.20). Can we just send a cheque in as getting through on Future pension line seems close to impossible ATM.

Nothing significant in the part filled years - still showing mostly £700+, but will probably try to fill a few years at same time as the class 2s, before price increases.

Dodge1664

Hi,

I'd be most grateful if one of the resident experts could comment on my situation.

NI record
========
15 years of contributions
15 years to contribute
9 years of contributions were before April 2016
COPE estimate is £1.28 a week.
Worked in UK private sector for 6 years before April 2016.
8 years between 2008 and 2016 not full.

State Pension Forecast
=====================
estimate based in existing record                £79.73 a week
forecast if I contribute up until 5 April 2037 £159.08 a week
most I can increase forecast to is                £185.15 a week

Questions
==========
1. how many years should I fill in so that I can still reach the maximum, assuming I contribute for the remaining 15 years? I think probably 5, as I would then have 35 years. Is there any way these pre-2016 years might not count? I ask because the MSE article mentions that its possible that they might not count.

2. How is the estimate based on existing record calculated? £185.15x15/35=£79.35. They have £79.73. Why the small discrepancy?

3. Why the discrepancy with forecast based on continued contributions? £185.15x30/35=£158.70. They have £159.08.

thanks, Dodge

jevans90

Thanks for all your help @molerat and @pinnks too!

molerat

Dodge1664 said:

Hi,

I'd be most grateful if one of the resident experts could comment on my situation.

NI record
========
15 years of contributions
15 years to contribute
9 years of contributions were before April 2016
COPE estimate is £1.28 a week.
Worked in UK private sector for 6 years before April 2016.
8 years between 2008 and 2016 not full.

State Pension Forecast
=====================
estimate based in existing record                £79.73 a week
forecast if I contribute up until 5 April 2037 £159.08 a week
most I can increase forecast to is                £185.15 a week

Questions
==========
1. how many years should I fill in so that I can still reach the maximum, assuming I contribute for the remaining 15 years? I think probably 5, as I would then have 35 years. Is there any way these pre-2016 years might not count? I ask because the MSE article mentions that its possible that they might not count.

2. How is the estimate based on existing record calculated? £185.15x15/35=£79.35. They have £79.73. Why the small discrepancy?

3. Why the discrepancy with forecast based on continued contributions? £185.15x30/35=£158.70. They have £159.08.

thanks, Dodge

You need 20 years more to reach the max (at £5.29).  You have 15 years left going forward taking you to £159.08 and by adding 6 past years gets you to £185.15.  With only 9 pre 2016 years you are safe to fill as many as are available but using any pre 2016 years will give an overall lower outcome than post 2016 years.  35 years is not relevant to you as you are a transitional rules pensioner.  If you were to fill up with 8 pre 2016 years and 12 post 2016 you would be £1.51 short so needing another 1 to reach the max.  To reach the max in 20 they all need to be post 2016 which cannot be done with your record, you will have to take the small hit or get a 21st year for the extra small amount. As said somewhere in another post, the reasons are "because it is complicated"

You current amount is based on your pre 2016 history where a line was drawn plus what you have earned since 2016.  Your 2016 starting amount was the higher of 9 years old basic plus S2P or 9 years new minus COPE.  The old calculation was the higher at £40.35 against £38.79 new meaning adding any pre 2016 years ( which recalculates that starting amount at 2016 rates) only gives £4.73 (at current rate) until you add 4 when the new rate takes over - "it's complicated" and yours is a particularly good one for stress testing my spreadsheet !

windward10

molerat said:

windward10 said:

I am already claiming state pension but I was in the Fire Sevice and had been opted out for 23 years. My online information said I had 39 years of full contributions but 11 years when I didn't pay enough. I have been trying to sort this out for some while and I have requested a forecast but have been passed from pillar to post by the State Pension Service. The online NI details only show the years that were not full with no detail about how much.

I know they are stretched, especially after Martin's TV slot the other day, but I am really annoyed that I will miss the deadline due to the delays on their system. I am on chemo and have a bit of brain fog so this doesn't help when dealing with their confusing and circular contact options.

I found out today the forcast request is on the system but they are currently taking up to 6 months to be sent out. In addition it will take up to 6 months to register any additional payments on to their system before I will get any increase, although this should be back dated. For me timescale is quite important.

I am not sure about my actuarial life expectancy and whether it is going to be worth topping up. Is there any way to calculate how much I could top up or what the increase would be worth, without having to wait for their delayed forecast?

Class 3s are generally excellent value and pay back in around 3 years gross, and around 4 years after 20% tax.

Which years are viable to pay depends on your personal history.  Being fire service means you were in a contracted out scheme meaning any years 2015-16 and earlier most likely cannot add to your pension.

How much are you currently receiving, which financial year did you reach state retirement, how many full years pre 2016, how many post 2016, which years are showing as gaps.From that we can figure out your options.

I retired from the Fire Service due to ill health in 2001 and was self employed after that until 2019.

I reached state retirement age (66) in July 2021

My current state pension is £142.84 per week so £42.31 pw short (2k per year).

According to the online NI info I have 39 full years and 11 when I did not pay enough.

Years not full - no detail available

2007-2008 (1)

2011-12 (1)

2015-2021(6)

Years with no contribution. These show that I would need to pay £824.20 per year

2008-2011 (3)

The info does not contain any detail other than that.

molerat

How are those full years split pre and post 2016 ?

You are 8 years short of the max amount.  It is unlikely that pre 2016 years will be useable - answer to above will confirm.

So it looks like there are 5 available years post 2016 which will take you to £169.29

Any gap years whilst self employed should be payable at class 2 rates, £163.80 per year, so well worth doing.

The big problem is going to be speaking to someone as those years with no detail will be self employed and no contributions, messes the system up.

Dodge1664

molerat said:

Dodge1664 said:

Hi,

I'd be most grateful if one of the resident experts could comment on my situation.

NI record
========
15 years of contributions
15 years to contribute
9 years of contributions were before April 2016
COPE estimate is £1.28 a week.
Worked in UK private sector for 6 years before April 2016.
8 years between 2008 and 2016 not full.

State Pension Forecast
=====================
estimate based in existing record                £79.73 a week
forecast if I contribute up until 5 April 2037 £159.08 a week
most I can increase forecast to is                £185.15 a week

Questions
==========
1. how many years should I fill in so that I can still reach the maximum, assuming I contribute for the remaining 15 years? I think probably 5, as I would then have 35 years. Is there any way these pre-2016 years might not count? I ask because the MSE article mentions that its possible that they might not count.

2. How is the estimate based on existing record calculated? £185.15x15/35=£79.35. They have £79.73. Why the small discrepancy?

3. Why the discrepancy with forecast based on continued contributions? £185.15x30/35=£158.70. They have £159.08.

thanks, Dodge

You need 20 years more to reach the max (at £5.29).  You have 15 years left going forward taking you to £159.08 and by adding 6 past years gets you to £185.15.  With only 9 pre 2016 years you are safe to fill as many as are available but using any pre 2016 years will give an overall lower outcome than post 2016 years.  35 years is not relevant to you as you are a transitional rules pensioner.  If you were to fill up with 8 pre 2016 years and 12 post 2016 you would be £1.51 short so needing another 1 to reach the max.  To reach the max in 20 they all need to be post 2016 which cannot be done with your record, you will have to take the small hit or buy a 21st year for the extra small amount. As said somewhere in another post, the reasons are "because it is complicated"

You current amount is based on your pre 2016 history where a line was drawn plus what you have earned since 2016.  Your starting amount was the higher of 9 years old basic plus S2P or 9 years new minus COPE.  The old calculation was the higher at £40.35 against £38.79 new meaning any pre 2016 years only add £4.73 (at current rate) until you add 4 when the new rate takes over - "it's complicated"

thanks molerat. Clearly, I haven't understood this properly. As its not possible to get through to an advisor on the phone, I'll have to get my head around it, even if it is "complicated". How did you derive the figures £40.35 and £38.79 above? Sounds like I'd be best off paying for 5 pre 2016 years, contributing another 15 new years, and accepting a slightly decreased pension. The 6th pre 2016 contribution would be mostly wasted.