Guide discussion: Voluntary national insurance contributions

SwiftSuzie

westholm said:

molerat said:

westholm said:

westholm said:

I don't know whether this has been mentioned in the forum before but you can buy only six previous years of voluntary class 2 NI contributions relative to the current financial year. To go back as far as 2006 you need to pay the much higher class 3 NI contributions. This has been told to me by both the Pensions Service and HMRC, however the article does not make this clear. 

It might be six years from start of last full financial year, i.e. 2016/2017, definitely not 2006/2007.

Not the first time they have been wrong.  Have you tried pointing them in the direction of the law on the matter ?

www.legislation.gov.uk/uksi/2001/1004/regulation/61B

Thanks, so voluntary class 2 contributions go back to 6th April 2013? Has anyone here done that?

Yes. Me. Earlier this year I paid class 2 contributions for 2006/07 to 2022/23. 17 full years at total cost about £2800. I'd had £14,000 in my grubby hand intending to pay class 3, but following advice on here I sent in the CF83 form requesting to pay class 2 if possible, and I sent all of my verification of employment and self-employment abroad. About 10 days later, I received a quote from them and paid it over to HMRC. It took about 6 weeks to be processed but now it has more than doubled my pension. Payback time about 40 weeks. 

Very pleased and thankful I was given the advice on here which saved me a 5 figure sum. My partner was not so lucky. Incorrectly advised the same as you by DwP and actually paid for class 3. Thought even that was a good deal at the time, which it is of course, but not so good as the one I got. Not quite so impressed now!!

ETA: I think my conversations with the resident experts here are around page 68-70ish on this thread.

molerat

westholm said:

molerat said:

westholm said:

molerat said:

westholm said:

westholm said:

I don't know whether this has been mentioned in the forum before but you can buy only six previous years of voluntary class 2 NI contributions relative to the current financial year. To go back as far as 2006 you need to pay the much higher class 3 NI contributions. This has been told to me by both the Pensions Service and HMRC, however the article does not make this clear. 

It might be six years from start of last full financial year, i.e. 2016/2017, definitely not 2006/2007.

Not the first time they have been wrong.  Have you tried pointing them in the direction of the law on the matter ?

www.legislation.gov.uk/uksi/2001/1004/regulation/61B

Thanks, so voluntary class 2 contributions go back to 6th April 2013? Has anyone here done that?

You need to read it again, back to 2006-07.  It may be that you are ineligible to pay back that far for some reason, which you should ask them to clarify if so, but it is not a general rule.

Sorry, I misread the regulation and MSE article is correct. Any idea where the "last six years only" from Pensions Office & HRMC comes from? If I'm ineligible does that mean there must be another regulation that makes me ineligible? I'll write to HMRC because this could save me thousands of pounds.

A bit of further reading .... the Taxman's manual

https://www.gov.uk/hmrc-internal-manuals/national-insurance-manual/nim72270

westholm

SwiftSuzie said:

westholm said:

molerat said:

westholm said:

westholm said:

I don't know whether this has been mentioned in the forum before but you can buy only six previous years of voluntary class 2 NI contributions relative to the current financial year. To go back as far as 2006 you need to pay the much higher class 3 NI contributions. This has been told to me by both the Pensions Service and HMRC, however the article does not make this clear. 

It might be six years from start of last full financial year, i.e. 2016/2017, definitely not 2006/2007.

Not the first time they have been wrong.  Have you tried pointing them in the direction of the law on the matter ?

www.legislation.gov.uk/uksi/2001/1004/regulation/61B

Thanks, so voluntary class 2 contributions go back to 6th April 2013? Has anyone here done that?

Yes. Me. Earlier this year I paid class 2 contributions for 2006/07 to 2022/23. 17 full years at total cost about £2800. I'd had £14,000 in my grubby hand intending to pay class 3, but following advice on here I sent in the CF83 form requesting to pay class 2 if possible, and I sent all of my verification of employment and self-employment abroad. About 10 days later, I received a quote from them and paid it over to HMRC. It took about 6 weeks to be processed but now it has more than doubled my pension. Payback time about 40 weeks. 

Very pleased and thankful I was given the advice on here which saved me a 5 figure sum. My partner was not so lucky. Incorrectly advised the same as you by DwP and actually paid for class 3. Thought even that was a good deal at the time, which it is of course, but not so good as the one I got. Not quite so impressed now!!

ETA: I think my conversations with the resident experts here are around page 68-70ish on this thread.

Thanks for the reply. I haven't left the UK. I could treble my miserable pension from £64 to £192 a week if I make 22 years of voluntary NI contributions from 2006-07 to 2027-28. If I had to pay class 3 for all those years it would cost me £18000 (assuming amount doesn't change from 2025-26 onwards). But for seven of the eight years from 2006-07 to 2013-14 I was self-employed with a small income (of independent means since) which should qualify me for class 2 and reduce the amount to £13400, a saving of £4600. The break-even time for paying £18000 or £13400 compared to no topping-up is 141 or 105 weeks, respectively.

westholm

I think this is how to calculate the break-even time. Let

A = pension per week after making voluntary NI contributions
B = pension per week before, with no voluntary NI
C = cost of voluntary NI
W = weeks to break-even, i.e. time you need to live after retiring to make topping-up worthwhile

then

A * W - C = B * W
W = C / ( A - B )

MouldyOldDough

Who thinks that the system going "online" in around 6 months will make this any simpler for us? 

Silvertabby

I did mine 2 years ago.  Quick, easy and no problems.

Then you-know-who went on the telly and told everyone to ring HMRC/DWP,  just in case they could benefit by topping up their years.  Cue meltdown.

pinnks

I have been doing mine annually for the past few years and also found it easy.  I was lucky this year as I got my 18-digit number just before the muck hit the fan, so could still pay at my leisure...

Will it be easier with the online system?  Probably as most online systems for paying HMRC stuff seem to work quite well.  We'll have to wait and see.  I need to pay my missing 3 years before I claim my pension towards the end of next year, so will be testing it for sure!

skycatcher

Hi,
whilst checking to see if my NI record had been update for lat year yet I noticed my "Most you can get" figure seems to have been reduced since the last time I checked which shown I'd get the max. Based on my NI payemnts upto 5 April 23 I'l get £191.19. If I pay until 5 April  25 I'll get £202.84. I'm self employed and have paid the 22/23 NI and will pay 23/24.

I turn 66 in Nov 25. My question is if I pay 24/25 would that gove me more than their projected £202.84....or am I not uinderstanding something?

Thanks

molerat

Are there any years showing as "checking" ?  That is the only reason that the max possible should reduce - the year does not exist so cannot be counted  £202.84 is by paying 23/24 and 24/25 - £191.19 + £5.82 + £5.82.

skycatcher

molerat said:

Are there any years showing as "checking" ?  That is the only reason that the max possible should reduce - the year does not exist so cannot be counted  £202.84 is by paying 23/24 and 24/25 - £191.19 + £5.82 + £5.82.

Yes 22/23 is down as checking (though i paid it in June!)... So if i pay for 23/24 & 24/25 I'd get the max?