Voluntary NI contributions - No brainer?

Sea_Shell

Is this a no-brainer?   I “think” I understand it… 

I have checked my state pension forecast on Gov.uk, and it states that the maximum I can get is £185.15 per week, and my current forecast is £158.08.  It says I need to contribute another 6 years to get the full amount.

£185-£158=£27 / 6 = £4.50 per week extra per year bought?

I’m currently 50 yrs old.  I have “self-retired” and have no plans to return to work (unless the wheels fall off, but that’s another thread!)   Fit and healthy so, fingers crossed, I’ll make it to SPA.

I’ve checked my NI record, and I currently have 4 “gaps” where I didn’t pay enough.   Some are whole years, and some are part years.   The missing ones state the following payment required to “pay them up”.   I don't qualify for any of the other methods of gaining NI years, childcare etc.

20-21 - £795.60 (full year, discounted)

19-20 - £380.40 (part year)

11-12 - £412.10 (part year)

10-11 - £824.20 (full year, no discount)

 

So I’m thinking that I should at least, for the time being, pay up those two part years, before they drop off my record, once the new 6 year rule kicks in.

No brainer, right?   Have I understood it all?

Dazed_and_C0nfused

19-20 yes but you probably need to provide more details and some of the more knowledgeable posters will check 11-12 as that's not necessarily going to improve things.

Don't forget buying 6 extra qualifying years won't actually add £4.50/year.

The first 5 will add £5.29/year.

The sixth will add the final 62p.  So that ones not quite so attractive.  Although it would be more attractive if you went down the voluntary Class 2 NI route rather than Class 3.  

Milltir

Simplifying and only looking at full years, £185.15 divided by 35 = £5.29 to buy an additional year.
£5.29 x 5 = £26.45 per week if purchasing 5 years.
£158.08 + £26.45 = £184.46.

Sea_Shell

OK, so I get the bit about only really needing 5 years, rather than the full 6, as that 6th year doesn't really get me anything, but how could that 11-12 year not be worth it?   Surely that's better to buy now at the "discounted price" rather than have to pay a full year later?

Audaxer

It is a no-brainer making the voluntary contributions, currently for around £800 per year, but a couple of points below to take into account:

It's currently £5.29 per week extra for each year's contributions paid, so 5 additional years will add £26.45 when paid. That would take you up to £184.53 by my calculations, so not worth paying a 6th year for an extra 62 pence per week. I'm in a similar position with 4 years to pay, but my last year is not worth paying as it would only give me around 40 pence a week extra.

Any years before 2016 might not make a difference filling the gap, so I would check the 2011/12 year with the Future Pension Service first to see if filling that gap will increase it.

Dazed_and_C0nfused

Pre 2016 years are not guaranteed to increase your starting amount so may not be of any overall benefit.

Post 2016 years will increase your starting amount, subject to the £185.15 cap for anyone who wasn't already over the standard amount.

If you post more info about your NI record other posters will explain if adding 11-12 will be beneficial or not.

Milltir

Indeed yes!
I was merely trying to point out that you in reality need 5 not 6 years. It was a different scenario for me because I filled years Class 2 when working overseas, but HMRC calculated how much I needed to pay the part years corresponding to my overseas assignment in addition to the full years.

Sea_Shell

What extra NI info would be needed?

I was contracted out for a few years (can't remember how many).


Are you in agreement that the 19-20 year would definitely be worth paying up, if nothing else?

Sea_Shell

I have a COPE estimate of £19.88, if that's relevant.

The rest of my employment history is bog standard PAYE from the age of 17, all UK.

No maternity, no childcare, no benefits etc.

RG2015

Sea_Shell said:

What extra NI info would be needed?

I was contracted out for a few years (can't remember how many).


Are you in agreement that the 19-20 year would definitely be worth paying up, if nothing else?

I have done this for 5 years from 16/17 to 20/21 and this has increased my pension by about £25/£26 per week. I ignored any missing years prior to 16/17.

However, I spoke to the Future Pension Service before I did anything.

However credible users on here may appear, I would never rely upon their advice without checking with the real experts.

molerat

How many pre 2016 years do you have ?

How many total years do you have ?

The number of pre 2016 years already held and COPE  is the crux of whether pre 2016 years are worth buying or not.

The general rule is

If less than 30 pre 2016 years held then making up to 30 cannot fail to add value

If between 30 and 34 buying pre 2016 years may or may not add value depending on personal circumstances

If 35 or more pre 2016 years held then more cannot add value.