Guide discussion: Voluntary national insurance contributions

eastcorkram

Dazed_and_C0nfused said:

eastcorkram said:

The money box pension podcast on R4 last week.
Caller says she has , I think, 42 years of NI contributions. Needs to top up two years to get full new state pension. Is it worth it?

Expert says, yes, as you'd make the money back in about , 3 years. But be careful, if you're still working or getting credits, because they might take you to the 35 years you need to get the full amount.

Is it any wonder people get confused.

That was on Money Box??

Yes, moneybox live, can you afford to retire. Broadcast 19/07. 

Dazed_and_C0nfused

eastcorkram said:

Dazed_and_C0nfused said:

eastcorkram said:

The money box pension podcast on R4 last week.
Caller says she has , I think, 42 years of NI contributions. Needs to top up two years to get full new state pension. Is it worth it?

Expert says, yes, as you'd make the money back in about , 3 years. But be careful, if you're still working or getting credits, because they might take you to the 35 years you need to get the full amount.

Is it any wonder people get confused.

That was on Money Box??

Yes, moneybox live, can you afford to retire. Broadcast 19/07. 

Would have expected better from Paul Lewis (assuming he was involved).

Doctor_Who

Dazed_and_C0nfused said:

eastcorkram said:

Dazed_and_C0nfused said:

eastcorkram said:

The money box pension podcast on R4 last week.
Caller says she has , I think, 42 years of NI contributions. Needs to top up two years to get full new state pension. Is it worth it?

Expert says, yes, as you'd make the money back in about , 3 years. But be careful, if you're still working or getting credits, because they might take you to the 35 years you need to get the full amount.

Is it any wonder people get confused.

That was on Money Box??

Yes, moneybox live, can you afford to retire. Broadcast 19/07. 

Would have expected better from Paul Lewis (assuming he was involved).

He wasn't. If you want to listen to the 'expert advice' the question is at ~14mins in the link below.

https://www.bbc.co.uk/sounds/play/m001nw27

driver8v2

I phoned this morning around 09:40 and got connected after about 25 mins.
Matches the quoted average wait time for yesterday, of 30 mins.

Marbles55

So, does anyone have any insight into how long it is taking DWP to action reviews of state pension payments following payment of VNICS? I paid HMRC over £4k in early March, they acknowledged receipt within a couple of days. I have heard nothing from DWP since. I did phone them a month ago and was told I am due a review but still nothing. I’m sure they are very busy but at this rate I’ll have shuffled off this mortal coil before I get the uplift due and the back pay! 

MrPathalogicallyOptimistic

I think Martin Lewis said earlier this year that there were plans for the Voluntary Additional State Pension contributions process to go online to make things easier and quicker.  Was that wishful thinking on my part and if not is anyone aware of a date when this might happened?

molerat

MrPathalogicallyOptimistic said:

I think Martin Lewis said earlier this year that there were plans for the Voluntary Additional State Pension contributions process to go online to make things easier and quicker.  Was that wishful thinking on my part and if not is anyone aware of a date when this might happened?

https://www.moneysavingexpert.com/news/2023/10/new-government-tool-launch-boost-state-pension/

rmackinnon

For people who worked for an employer who 'contracted out' of full NICs, e.g. Public Sector employees from 1982 to 2016, there is likely to be a shortfall in contributions that doesn't show clearly in their NI contribution record. The relevant years may show as full, but actually be short because of this. In this situation, there can be a difference between the pension forecast, which may show as the max of £203 per week, and the estimated weekly pension, along with a number of years additional contributions required to make up the shortfall. None of this is transparent in the public part of the NI system, and is rarely mentioned in guides to topping up.

QrizB

rmackinnon said:

For people who worked for an employer who 'contracted out' of full NICs, e.g. Public Sector employees from 1982 to 2016, there is likely to be a shortfall in contributions that doesn't show clearly in their NI contribution record. The relevant years may show as full, but actually be short because of this.

I don't think that's correct. A full year is full, regardless of whether you contracted out or not.

rmackinnon said:

None of this is transparent in the public part of the NI system, and is rarely mentioned in guides to topping up.

Probably because it isn't true?

jem16

rmackinnon said:

For people who worked for an employer who 'contracted out' of full NICs, e.g. Public Sector employees from 1982 to 2016, there is likely to be a shortfall in contributions that doesn't show clearly in their NI contribution record. The relevant years may show as full, but actually be short because of this. In this situation, there can be a difference between the pension forecast, which may show as the max of £203 per week, and the estimated weekly pension, along with a number of years additional contributions required to make up the shortfall. None of this is transparent in the public part of the NI system, and is rarely mentioned in guides to topping up.

I’m afraid you’ve totally misunderstood how the calculations have been done which is why it’s never mentioned in any guides about topping up as it’s simply not true. 

Your NI Record shows details of qualifying years for the state pension. What matters not is whether it was a contracted out year or not, but whether you have paid enough NI or gained enough NI Credits to make it a qualifying year. Most people who were contracted out still paid enough NI to ensure a qualifying year. I was a member of a Public Sector scheme for 37 years and all my contracted out years are still full years. 

What did happen was that two calculations were done in April 2016 to work out your Starting Amount. One calculation was done under each system and you got the higher of the two calculations. 

So calculation one used 30 years for a full BSP. Added to that was additional pension from GRB/SERPS/S2P. Then a deduction was made for any period of contracting out. 

Calculation two used 35 years giving a full new state pension. This system has no additional pension so nothing added. A deduction was then made for contracted out periods and this was known as COPE. 

If your Starting Amount was higher than the maximum nSP you still got it. This was mostly people who did not contract out or had only a small period of contracting out. 

If your Starting Amount was less than the full nSP you could improve it by making contributions or getting credits from 2016 onwards. This would apply to people who were contracted out or had fewer years in 2016. 

So basically a contracted out year is still a full year for qualifying purposes but it’s the contracted out deductions that may reduce your pension.