Voluntary NI contributions

the_cat

Hi everyone
a quick question if I may…… I have a gap of 9 years in my contributions to get a max pension at retirement age. I am looking to retire fully early and don’t think it’s very likely I will earn any extra years through salary contributions or benefits

Am I right in thinking I should buy at least 3 years worth now and that I will after 2023 only be able to buy a further 6 years? 

p00hsticks

the_cat said:

Hi everyone
a quick question if I may…… I have a gap of 9 years in my contributions to get a max pension at retirement age. I am looking to retire fully early and don’t think it’s very likely I will earn any extra years through salary contributions or benefits

Am I right in thinking I should buy at least 3 years worth now and that I will after 2023 only be able to buy a further 6 years? 

It depends on when you are going to reach state Pension Age, and where those gaps are in your forecast. 

At present you can buy years back to 2006 (although pre-2016 may not necessarily increase the amount of pension you'll get - it depends on your particular circumstance). This was a temporary extension bought in when the new State Pension was introduced.

In April 2023 the rules will revert back to what they were prior to 2016, which is that you are only allowed to buy the previous six years. 

So as long as you are at least 10 years away from SPA, you'll still have time to earn/ get creditted with / buy the necessary years after 2023 if you want to (remembering that the tax year in which you reach SPA doesn't count. You'll just have to make sure that you don't leave it until the last year as you won't be able to buy all nine in one go.  

If any of the current gaps are partly filled it'll be cheaper to buy them than full years - although HMRC will probably ask you to check with the Future Pension Centre first to ensure that those years will actually boost your forecast (if you post the figures from your forecast here and say where the gaps are people can probably let you know if it's likely to be worth doing).

the_cat

Thank you. I’m due to retire in 2033 and all the ‘gap years’ are from 2011 onwards. I have a couple of very recent years (20/21 and I suspect 21/22 although that’s not available to check yet) where there is a partial amount to top up rather than a whole year if that makes a difference?

molerat

You need to post up all the details from your forecast for any meaningful help.

How many pre 2016 years do you have

How many post

Were you in a contracted out pension scheme

If so what is the COPE amount

the_cat

 I have 28 pre 2016 years, none post

my COPE amount is £20.34 per week

p00hsticks

the_cat said:

 I have 28 pre 2016 years, none post

my COPE amount is £20.34 per week

So you could safely buy two pre-2016 years taking you up to 30 - anymore may or may not increase your forecast.

But in your case from what you say it's not absolutely necessary to do that, or in fact to buy any previous years at all. If you are sure you only need 9 more then you could simply buy the years from now until  2030-31 as they happen.

Voluntary contirbutions for past years have to be paid via a one-olff payment, but current years can be paid for monthly via direct debit if you prefer.

You can't buy future years ahead of time.

molerat

If you don't intend working in the future and the part paid years are cheap enough then it may be worth buying them rather than pay full price for future years but as above only 2 pre 2016 years will make a difference. What exactly does your forecast show and how much are these part filled years ?

ukdw

I've got a few years missing too - personally I plan to leave the purchase of additional years until as late as possible - as you never know what might happen with ill health/needing the money, free top up due to Grandchild care etc.  Also the interest/investment growth on the cash will hopefully grow faster than the contribution uplift rate too.