Voluntary NI contributions - No brainer?

jem16

molerat said:

jem16 said:

Sea_Shell said:

On checking my record further.    It states I have 30 years contributions.   The only gaps I have are the 4 noted in the OP.

My first NI full year, from employment, was 89-90 for which I have my P60 !!  (I have them all!!)

I've also been credited the two tax years prior to that as FULL years, which I can only assume was because I was in full time education until I started work.

I'm a late 1971, so turned 16 in the 87-88 tax year.

Ok as you have exactly 30 years you will need to contact the Future Pension Centre to find out whether or not that earlier year will make a difference. The number is 0800 731 0175.

If they say that it will make a difference then you have to phone HMRC and say you want to pay Voluntary Class 3 for that year. It can then be paid by bank transfer and they will give you the details and the all important 18 digit reference number as per this.

https://www.gov.uk/pay-voluntary-class-3-national-insurance/bank-details

OP has 30 years total, 3 being post 2016 and 4 gaps so 27 pre 2016.  50 - (30 + 4) = age 16.

Thanks. Hadn't done the Maths.

RG2015

Audaxer said:

RG2015 said:

Sea_Shell said:

So my next question would be how 'easy' is it to do?   😎 or 😡?

As, for now, it seems to make sense to at least do the 11-12 year.

AIUI, You have to ring, discuss, agree which years and how much, they give you a reference and bank details, and you then make the transfer quoting that reference?

Sounds simple. 🤣🤣🤣

That is the simple bit and the telephone agents are excellent. Always ring HMRC at 8:00 am on a weekday as you should get through within 10-15 minutes. Later in the day could mean being on hold for 45-60 minutes.

If you aren't aware you need to speak to the Future Pension Service fir.st and then separately to HMRC to arrange the payment.

You then need to wait up to 10 weeks before the payment is reflected on your Personal Tax Account online.

I have been through the pain and it is does work. 

They say you need to wait up to 10 weeks, but when I have phoned HMRC again about 3 weeks after making the payment, they then find and apply the payment and it is has been reflected on my online forecast and NI record the following day.

Now you mention it, I also did this once or twice. Therefore I was incorrect to say you had to wait up to 10 weeks. 

Sea_Shell

Just touching on the COPE and the contracting out for a moment.

I thought that I'd have NI gaps from that period (can't remember for how long I was contracted out for).

Or was the COPE calculation, done in 2016, inclusive of that period, and therefore my "starting point" was adjusted accordingly?

Interestingly ALL my P60s state that I had an "L" tax code letter.

I'm sure I'd read that being contracted out should have been reflected somehow by the letter? 


Just for laughs...I just dug out the paperwork for the Scottish Widows With Profits pension that was my "COPE", and it is now worth (as of April 21 - due a new statement any day) £20,000.

It says that they estimate an annual pension, at age 60 of £360, so just under £7 a week.

My COPE figure was £19.88 

nigelbb

Sea_Shell said:

On checking my record further.    It states I have 30 years contributions.   The only gaps I have are the 4 noted in the OP.

My first NI full year, from employment, was 89-90 for which I have my P60 !!  (I have them all!!)

I've also been credited the two tax years prior to that as FULL years, which I can only assume was because I was in full time education until I started work.

I'm a late 1971, so turned 16 in the 87-88 tax year.

Everyone of your age was credited with NI contributions for the tax year in which they reached the age 16 and for the following two tax years. The policy intention of these “Starting Credits” was to ensure that those staying on in education beyond the minimum school leaving age did not lose future benefit entitlement as a result. It was irrelevant whether you were in education or not as everyone received the credits which were abolished in 2010.

p00hsticks

Sea_Shell said:

Just touching on the COPE and the contracting out for a moment.

I thought that I'd have NI gaps from that period (can't remember for how long I was contracted out for).

Or was the COPE calculation, done in 2016, inclusive of that period, and therefore my "starting point" was adjusted accordingly?

Contracted out years still count as 'full' years, so being contracted out won't result in any gaps in your record (unless you only worked for part of the year) 

The adjustment to your potential 'starting amount' in 2016 was done via your COPE figure (it got subtracted from the calculation made under the new rules - if the result was still higher than that mande under the old rules it became your starting amount)

Sea_Shell said:

Interestingly ALL my P60s state that I had an "L" tax code letter.

I'm sure I'd read that being contracted out should have been reflected somehow by the letter?

L is the standard suffix for a tax code. The variation in letters you've read about  is for the NI category - something different. The latter should be shown on individual payslips, not sure if it makes it onto the P60 (probably not as I guess you could have a combination across the year). Current categories are shown here

https://www.gov.uk/national-insurance-rates-letters/category-letters

'A' used to mean contracted in, D or N was contracted out

Sea_Shell

Thanks again everyone, you've been very informative and have really helped clarify things for me.


My long term plan now includes using the 25% tax free from my SW pension at 60 to buy my other 4 years state pension uplift.😎


ETA - sorry I meant 3 years, as I will also buy the most recent part year before it drops off (in 2026)

OldUserNewName

My understanding (please check with Future Pensions Centre) is:
1. Pre-2016 years will add £4.72 per week (one thirtieth of £141.85), up to a maximum of 30 years [for some people, not the OP, this can take the total pension to more than £185.15 taking Additional State Pension into account].
2. Post-2016 years will add £5.29 per week up to a maximum of £185.15.
3. The benefit of pre-2016 years is calculated before the benefit of post-2016 years is added (regardless of which order they are purchased in).

Edit (6 years ago I think I understood this fairly well; however, it appears I've since partially forgotten some of it).  2nd attempt!

1. For people with fewer than 30 pre-2016 years then adding a pre-2016 year will add somewhere between £4.72 and £5.29 a week [for some people, not the OP, this can theoretically take the pension above the 'maximum' £185.15]

2. For people with between 30 and 34 pre-2016 years then adding a pre-2016 year may increase the pension by up to £5.29 per week (it may have no effect!)

3. Post-2016 years will increase the pension by £5.29 per week up to a maximum of £181.15.

4. The benefit of pre-2016 years is calculated before the benefit of post-2016 years is added, regardless of which order they are purchased in.

Sea_Shell

OldUserNewName said:

1. For people with fewer than 30 pre-2016 years then adding a pre-2016 year will add somewhere between £4.72 and £5.29 a week [for some people, not the OP, this can theoretically take the pension above the 'maximum' £185.15]

Out of interest, under what circumstances would a pre-16 year NOT be worth the full £5.29?

Or are there too many variables?

comeandgo

Are you not considering doing something self employed and paying Voluntary class 2 ?  So much cheaper.

molerat

Sea_Shell said:

OldUserNewName said:

1. For people with fewer than 30 pre-2016 years then adding a pre-2016 year will add somewhere between £4.72 and £5.29 a week [for some people, not the OP, this can theoretically take the pension above the 'maximum' £185.15]

Out of interest, under what circumstances would a pre-16 year NOT be worth the full £5.29?

Or are there too many variables?

If your starting amount is calculated under the old rules then any pre 2016 years purchased can only be valued at old scheme rates. Which is where the different values in my earlier post came from.

If you have less than 30 then buying the one cheap pre 2016 plus 4 post 2016 will give you £183.97, 5 post 2016 will give you £184.53, the 6th year will only pay £1.18 / 62p.

So buying the half price pre 2016 year over a full price post 2016 one will lose you 56p per week but the extra £400ish paid for a post 2016 year will take somewhere in the region of 736 weeks to recoup

In some cases purchasing enough pre 2016 years can flip the starting amount onto the new scheme so all pre 2016 years are valued at the new scheme rate - which is not applicable in your case.