Guide discussion: Voluntary national insurance contributions

Dazed_and_C0nfused

Nico60 said:

I’m still not sure of what I will get, it says the £185 per week but then underneath that bit, that I was contracted out at some stage and that £82 was COPE and would be paid through my other pension if I read it right. So does that mean I will only be getting £103 from the government per week? If so I need to get some paid into my NI!

What makes you think that?

Did you actually read what it says on your personalised gov.uk info?  Specifically the COPE section?

Sea_Shell

Audaxer said:

Mmaatttt said:

Am I correct in thinking it's best to pay at the end of the tax year as my £3K can be earning elsewhere until then?

Yes, but best not to leave it until too near the end of the tax year, as HMRC say it can take up to 10 weeks for them to process the payments.

When you enquire and agree how much you need to pay, do you not get a code which you then have to quote when paying, so aren't your quotes "baked in" from the date you send the money, even if they've not got their finger out and allocated the money?

Audaxer

Sea_Shell said:

Audaxer said:

Mmaatttt said:

Am I correct in thinking it's best to pay at the end of the tax year as my £3K can be earning elsewhere until then?

Yes, but best not to leave it until too near the end of the tax year, as HMRC say it can take up to 10 weeks for them to process the payments.

When you enquire and agree how much you need to pay, do you not get a code which you then have to quote when paying, so aren't your quotes "baked in" from the date you send the money, even if they've not got their finger out and allocated the money?

You do get an 18 digit reference number to input when you make the payment online. It may be that it is 'baked in' when you send the money, but I always thought it would be when it was actually applied to your NI record. I just usually send each year's payment well before the end of the tax year to make sure it goes on in good time. If I phone up about 3 weeks after making the payment to check, they will find and apply the payment then and it usually appears the following day.

PTGadd

Thank you Martin Lewis and team for producing the Pension Article.

On the subject of Contracted Out Pension Equivalent (COPE) particularly post 2016

If COPE has been applied then you may not receive the full state pension even if you have 35+ qualifying years before 2016

You can buy NI qualifying years post 2016 up to the tax year before the tax year your state pension age falls into to try and increase your pension

What is unclear is whether you can buy any of these years after you start receiving your state pension

Discussions with the DWP has resulted in contradictory answers, some say no, some suggest you have six years from receiving you state pension to pay but apparently (no clear answer to this) not the tax year your pension age falls into

I have been unable to find any definitive information on the DWP website about this subject

Perhaps Martin Lewis and Steve Webb could look at this very important matter and comment in a future webpage publication

molerat

You can buy back years after you reach pension age.  The same 6 year / 2 year rules apply as when buying them pre retirement including for years back to 2006-07. 6 years after reaching SP age is not really relevant, you can only buy a year up to 6 years after the end of that year - 16-17 (and 06-07 to 15-16 due to the transitional rules) is only available to buy until April 23 whatever the circumstances.  The only question there has ever been is when the years are applied to payments which is believed to be from the date the payments are credited rather than back dated to sp age.

PTGadd

Thank you molerat and others for your reply's

I now have answers to my questions, so thank you, which is more than I can say about the DWP

After almost 18 months of correspondence, no concise answers provided, very disappointing

PierreLeSol

Finally managed to get through to the Future Pensions Centre…..with some good news!

I am due my state pension next year, retired with an occupational pension. I worked for a government department so contracted out of SERP’s. My pension forecast is £142.65 per week as it stands after 41 qualifying years with a gap of eight years of unpaid NI contributions.

After contacting the FPC about NI additional voluntary contributions, they advised me that buying the first two years would not increase my pension forecast so would be a waste of money. Contributing for six of the missed years at a cost of £4,893.20, would increase my pension forecast to £174.39 per week - an additional £31.74 per week (£1650.48 p.a.) above the current pension forecast.

I have calculated that I would break even after just under two years of receiving the increased state pension.
The life expectancy of a male my age is 82 (according to the NSO -I intend to live beyond that!). This would mean by buying the additional voluntary contributions I would receive an additional £26,407.68 over my expected lifetime.

I would definitely advise contacting the FPC for advice as buying back all your missing years of NI contributions may not benefit you financially, as was the case with me. I think it is worth buying back the missing years as it will significantly increase my weekly state pension.

Hope this helps!

molerat

If you had posted all your forecast figures here you would have got that info in around 5 minutes.

jem16

PierreLeSol said:

I have calculated that I would break even after just under two years of receiving the increased state pension.

On those figures breakeven point is just under 3 years and not 2 years. It’s more likely to be closer to 4 years as you’ll be paying tax on the extra. 

I do still agree that it’s the bargain of the century even with a breakeven point of between 3 and 4 years. 

PierreLeSol

 jem16 

On those figures breakeven point is just under 3 years and not 2 years. It’s more likely to be closer to 4 years as you’ll be paying tax on the extra. 

I do still agree that it’s the bargain of the century even with a breakeven point of between 3 and 4 years. 

Thanks Jem16. Misprint on my part. But agree that it’s a good deal despite the extra tax burden!