Voluntary NI contributions - No brainer?

fly-catchers · 27 January 2023 at 11:15PM

Got my 18 digit number today! After getting my NRA65 lump sum I thought I would put some of it to good use!

gamston · 28 January 2023 at 9:40AM

hi folks, just check my NI shortfull, i need to pay £825 for 8 yrs when i retired early, total £6600 that takes my state pension from £142 pw to £174 pw, looks to me as if it will take me just over 4 years to get my £6600 back in the extra pension (on 20% tax), is that worth it ?
with this extra pension + company pension I'm around £1000 below the 40% tax theshold so in a few years the repayment period could rise if i go in the 40% theshold (yes I know I'm lucky, but I did pay lots of money into my pension)

Dazed_and_C0nfused · 28 January 2023 at 10:09AM

Let's assume worst case scenario you would always pay 40% tax on the extra £1,832/year you are buying (using 2023:24 uprated value).

So post tax you are getting £1,100.

When you get your 100th birthday telegram from the King you will have had 30+ years of that £1,100. And in reality it will almost certainly have increased with some form of inflation proofing each year.

Seems a good return on your £6,600 😊

Silvertabby · 28 January 2023 at 10:52AM

I only needed to buy 4 years to take me up to the full nsp. No brainer for me - as a basic rate taxpayer I will get my investment back in just under 4 years.

Have you factored in April's 10.1% increase (which applies to pensions yet to be paid as well as actual pensioners) into your calculations?

jem16 · 28 January 2023 at 11:04AM

gamston said:

hi folks, just check my NI shortfull, i need to pay £825 for 8 yrs when i retired early, total £6600 that takes my state pension from £142 pw to £174 pw, looks to me as if it will take me just over 4 years to get my £6600 back in the extra pension (on 20% tax), is that worth it ?
with this extra pension + company pension I'm around £1000 below the 40% tax theshold so in a few years the repayment period could rise if i go in the 40% theshold (yes I know I'm lucky, but I did pay lots of money into my pension)

Are you sure all 8 years are required as £142pw to £174pw is only an increase of £32pw which is just over 6 years worth of contributions?

What years are you looking at paying and how many years do you have? What exactly does your forecast say?

Dazed_and_C0nfused · 28 January 2023 at 11:17AM

jem16 said:

gamston said:

hi folks, just check my NI shortfull, i need to pay £825 for 8 yrs when i retired early, total £6600 that takes my state pension from £142 pw to £174 pw, looks to me as if it will take me just over 4 years to get my £6600 back in the extra pension (on 20% tax), is that worth it ?
with this extra pension + company pension I'm around £1000 below the 40% tax theshold so in a few years the repayment period could rise if i go in the 40% theshold (yes I know I'm lucky, but I did pay lots of money into my pension)

Are you sure all 8 years are required as £142pw to £174pw is only an increase of £32pw which is just over 6 years worth of contributions?

What years are you looking at paying and how many years do you have? What exactly does your forecast say?

Good point, it's even better value if the cost is only £4,950.

Similarly if the 8 years is correct but they take the weekly pension to £185.

Audaxer · 28 January 2023 at 11:26AM

jem16 said:

gamston said:

hi folks, just check my NI shortfull, i need to pay £825 for 8 yrs when i retired early, total £6600 that takes my state pension from £142 pw to £174 pw, looks to me as if it will take me just over 4 years to get my £6600 back in the extra pension (on 20% tax), is that worth it ?
with this extra pension + company pension I'm around £1000 below the 40% tax theshold so in a few years the repayment period could rise if i go in the 40% theshold (yes I know I'm lucky, but I did pay lots of money into my pension)

Are you sure all 8 years are required as £142pw to £174pw is only an increase of £32pw which is just over 6 years worth of contributions?

What years are you looking at paying and how many years do you have? What exactly does your forecast say?

Yes, important to know what years are missing, as I recently found out pre-2016 years may only increase the weekly amount by £4.73 rather than £5.29.

p00hsticks · 28 January 2023 at 12:29PM

Audaxer said:

jem16 said:

gamston said:

hi folks, just check my NI shortfull, i need to pay £825 for 8 yrs when i retired early, total £6600 that takes my state pension from £142 pw to £174 pw, looks to me as if it will take me just over 4 years to get my £6600 back in the extra pension (on 20% tax), is that worth it ?
with this extra pension + company pension I'm around £1000 below the 40% tax theshold so in a few years the repayment period could rise if i go in the 40% theshold (yes I know I'm lucky, but I did pay lots of money into my pension)

Are you sure all 8 years are required as £142pw to £174pw is only an increase of £32pw which is just over 6 years worth of contributions?

What years are you looking at paying and how many years do you have? What exactly does your forecast say?

Yes, important to know what years are missing, as I recently found out pre-2016 years may only increase the weekly amount by £4.73 rather than £5.29.

Or not increase it at all if you already had 30 (or sometimes 35) full years prior to 2016 - the devil is the detail, which is why we're always asking people to get their own indivudal forecasts and post the details up in order to be able to comment fully.

gamston · 28 January 2023 at 1:16PM

hi folks

these are my short fall figures

2021 to 2022