Guide discussion: Voluntary national insurance contributions

molerat

It looks to me that DWP have actioned your increase and passed it on to HMRC.  Your pension was not the full amount for under a full year so would not have been £10300, that would have been the whole year figure HMRC used to work out your tax code.  The £9400 is probably around the correct actual amount for the higher pension so they have now used that to collect the correct amount of tax.  You will have underpaid tax as the new pension will be backdated to the date you paid the VC.

What was your old tax code and the new one including any suffix letters ?

Dixy_3

I have 2 private Pensions. Tax code on 1 is - K196X, changed to K195X, the other is unchanged at 547T. It also says tax underpaid £43.
Thanks for the help.

molerat

That tax code change has increased your allowance, the K prefix means it is a negative allowance amount, so it is less negative meaning you now pay tax on £10 less per year.

MrJohnz1

Linmao said:

I appreciate your diligence in spotting the link, and it's crucial to address inaccuracies. The first paragraph's misinformation about qualifying NI years for the maximum state pension is concerning. It's vital to correct this to avoid misleading individuals, like yourself, who may need more than 35 years. Your 44-year requirement, given your work history, emphasizes the complexity that deserves accurate guidance. Let's advocate for precise information to empower everyone on their pension journey.

Any more info on this please? Just to save me trawling back through many pages, what is the link and what was the inaccuracy ?

The reason I ask is you mentioned some might need more than 35 years. This happened to me. I was 31 years paid, needed 4 years. So I thought! I was asked to pay 6 years to get max benefit (203 pounds pw)

Luckily I was self employed (landlord) and my yearly earnings were less than 10k (not all landlords are raking it in) so it was 6 x class 2 payments, around 180 pounds without looking.

I was contracted out SP2 for 10 years and would like to know how this equated to me having an extra 2 years.

I did pay all, but it took over 2 months and a couple of 2 hour+ phone calls to get my forecast back to max.

molerat

Replying to a nonsense poster, likely an AI, will not help you

35 years is only relevant to those born this century, anyone with a pre 2016 history comes under a transitional arrangement.

At April 2016 you were given a starting amount that was the higher of the new system - COPE or the old system + S2P

Contracting out made a deduction from the new system amount (COPE)

Contracting out and self employment under the old system meant little / no S2P contributions

This meant your starting amount was lower than the value of the equivalent number of new pension years.

Loads of information all over this site.

Dixy_3

Thanks for the above replies, I got my DWP letter this morning which confirms the increase. The way it showed up on the Gov site confused me.

MrJohnz1

molerat said:

Replying to a nonsense poster, likely an AI, will not help you

35 years is only relevant to those born this century, anyone with a pre 2016 history comes under a transitional arrangement.

At April 2016 you were given a starting amount that was the higher of the new system - COPE or the old system + S2P

Contracting out made a deduction from the new system amount (COPE)

Contracting out and self employment under the old system meant little / no S2P contributions

This meant your starting amount was lower than the value of the equivalent number of new pension years.

Loads of information all over this site.

Thanks for the input! I was hoping not to have to trawl through hundreds of pages to find little of use!

( I sort of understand what you wrote, but still a little confused, so not going to try to work out the figures!.)

 There's also conflicting info to try and work out if correct or not. TBH I read today that previously those earning under the tax threshold of any given year did not even have to give class 2 NI contributions to get the stamp. In the GOV website, I'm sure the minimum was much less, something like 8k!

  Just to add, those years I was contracted out I was in full time paid employment, not self. I still feel short changed having to stump up an extra 2 years. Can only be thankful it was class 2 lower amount!

garrytholmes

I will reach my the age of 66 in February this year, following the Martin's show last year, I requested a State Pension forecast, to discover that even though I had paid 36 years of full contributions, there were shortfalls from the pension changes in 2016. On contacting HMRC, I was informed I would need to pay an extra 7 years NI contributions to increase my pension to the maximum SP, this amounted to £5717.40. It took me sometime to find this extra cash, but have now paid this amount at the beginning of January this year. Only, to be informed that this may take 28 weeks to show on my records??

Question: If I start collecting my pension in February, can I presume that it will be at the reduced rate and would I be entitled to back payments to the higher rate after the 28 weeks or simply loose all benefits of the voluntary contribution I have made because I have started collecting my SP?

Dilemma: Should I delay claiming my pension until the VC has been applied to my NI contributions to receive the maximum SP!

molerat

If you claim from the due date when your VCs are added to your record your pension payments will be recalculated using the date those payments were made as the relevant date so backdated to the pension commencement date and paid as a lump sum.  If you do not claim then you would need to wait for your record to be updated to claim and receive the new amount, either as a deferment increased weekly amount or if less than 12 months as a back payment lump sum.

pinnks

My understanding is that as long as the additional NI was PAID before you claim your pension then any shortfall arising because the revisions had not made it through to DWP by the time they calculate your pension will be sorted out by means of a lump sum payment to bring you up to date.