Guide discussion: Voluntary national insurance contributions

molerat

MrJohnz1 said:

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!

The free stamp for class 2 is only a very recent introduction, previously no payment - no stamp.  Those employed would receive a stamp for earning over the LEL though.  Many self employed did not pay the voluntary class 2 because they didn't have to and it was an extra expense but did not understand the implications of that decision.

When you were contracted out you paid lower NI which was only towards the basic pension, only those contracted in paid towards additional pension.  Being contracted out was in fact beneficial with the introduction of the new 2016 pension as you benefitted from the contracted out pension and had the ability to increase the state pension post 2016, something you would not have been able to do under the old scheme.  I was able to purchase years to increase my pension by around £17.50 pw at today's rate due to the introduction of the new pension and all the pension increases with the triple lock instead of part only increasing with CPI.  

You have not been short changed, a definite winner, and are very lucky that you had the ability to top up at class 2 rate unlike me, and the vast majority of those contracted out, who had to pay class 3.

Bricks

I have been looking at my NI record on the gov.uk website and there are several years where it says this when I click on "details"

I think this was the case when I looked some time ago. Does anyone know what this actually means - when will it get updated? If it still isn't updated the next time I look, do I need to chase it up with them?

Dazed_and_C0nfused

Bricks said:

I have been looking at my NI record on the gov.uk website and there are several years where it says this when I click on "details"

I think this was the case when I looked some time ago. Does anyone know what this actually means - when will it get updated? If it still isn't updated the next time I look, do I need to chase it up with them?

Were you self employed in those years?

Bricks

Dazed_and_C0nfused said:

Bricks said:

I have been looking at my NI record on the gov.uk website and there are several years where it says this when I click on "details"

I think this was the case when I looked some time ago. Does anyone know what this actually means - when will it get updated? If it still isn't updated the next time I look, do I need to chase it up with them?

Were you self employed in those years?

Yes, some (I think actually all) of them.

molerat

Generally means that you were registered self employed and did not pay class 2.  It is unlikely to update until the final reconciliation ahead of retirement.  Were you self employed ?  Do you need those years ?

Bricks

molerat said:

Generally means that you were registered self employed and did not pay class 2.  It is unlikely to update until the final reconciliation ahead of retirement.  Were you self employed ?  Do you need those years ?

As above, yes I was self employed for at least some of them. At the moment I don't necessarily need those years - it depends what happens between now and pension age.

There are 6 years it says that for - if they all turned out to be false alarms, then I'd feel reasonably confident I'll be able to make up enough years in time. If all of them don't count though, then maybe I would consider doing some back payments to be safe. In other words I could do with knowing, in order to decide whether I have a problem or not.

Ictmims

I was able to increase my pension by making three years additional NI contributions.

Mid-July 2023, I got the umpteen digit code for making the payment and had to call another number and wait to be answered.

Made my payment to the account (by electronic bank transfer) as required, then waited.

Nothing happened (no increase) so I called again.

Told I had to call the tax office to get my payment sent to the pensions office so, I did that.

A payment for my backdated increase, and a new increased amount came into my bank account.

After waiting a while, I found my increase was short, so called again!!!

Got informed that one of my annual payments was put into the final year - so it did not count! In December, I had this moved to a year that would count.

I have a feeling another call is needed to get the third years contribution moved from the tax office to the pensions office, and a request for the back payment will be needed.

Now, at the start, I calculated the increase would incur tax at 20%, and the benefit would take three years to break even with my extra NI payment. Not accounting for the annual cost of living increase on my pension - of around 10% last year.

So, overall I am happy with the improved pension, but not with the way I had to deal with numerous different government offices to pursue the progress.

Ictmims

I "contracted out" from 19 years old. Expected my company pensions were all I'd get, so was over the moon when I discovered the state pension would enhance my lifestyle to "affordable" 🥳

peadar

Do you need to call up Future Pension etc every time you want to make a voluntary contribution? I made one last year and got an 18 digit number - I can go right through to the payment page for another year online using that number, but at no point was any year specified (there are 3, all costing a different amount) which makes me a bit wary.

peadar

I got my question answered on the HMRC community forum by HMRC admin. Basically each 18 digit number is unique to the specific payment so, yes, you have to ring the NI helpline on 0300 200 3500 every time you want to buy a year! 

The only way round it is to dig out your chequebook (or order one) and send a cheque by post to the National Insurance Contributions & Employer Office with a covering letter and NiNo on the back of the cheque.