Pension Confusion…34 Full years…should I buy another one?

mamabuddah

Not being particularly savvy in these things, I find myself coming here (MSE) when I get stuck…
According to my Nat Ins Record I see
“ You have:

• 34 years of full contributions
• 15 years when you did not contribute enough”

From memory I was “contracted out” and in 2006-2007 my record for that year shows 

“ You have contributions from

National Insurance credits: 39 weeks

These may have been added to your record if you were ill/disabled, unemployed, caring for someone full-time or on jury service.

Find out more about gaps in your record and how to check them.

You can make up the shortfall

Pay a voluntary contribution of £206.05 by 5 April 2023. This shortfall may increase after 5 April 2023.”

other years are asking for £800+ to make up the year as there were no contributions at all (retired due to ill health and pensioned)

Am I right in thinking, if I pay this amount (giving myself another year) would my weekly pension increase by £5ish ?

I’m currently getting £149.21 per week.

Unlike buying other years, where breakeven is between 3 and 4 years, but buying this year, breakeven would be in about 10 months, so from then on I’d be winning. (So to speak)

Are my assumptions correct? Would paying £206.05 to buy that year be the correct option for me?

molerat

A pre 2016 year may not add to your pension especially if contracted out.

For any meaningful comment you need to post the full details of your forecast including how many pre and post 2016 years you have and any COPE amount.

mamabuddah

molerat said:

A pre 2016 year may not add to your pension especially if contracted out.

For any meaningful comment you need to post the full details of your forecast including how many pre and post 2016 years you have and any COPE amount.

Confusion reigns here 😂 not sure where my forecast is (will have to search through documents) , if it helps, I received my state pension in March this year, I’ve had no qualifying years since 2005-2006, so everything is pre 2016, including the full 34 years shown, as I’d been “ill health” retired from work and in receipt of my works pension (so no Nat ins paid) I’d just assumed (after hearing Martin talking about buying years) when I’d checked and saw I could buy the year I’d missed, that it may benefit me…
told you I’m not particularly money savvy 😂🥴

MallyGirl

It might benefit you but the rules are complex and the 35 years is a red herring if you are thinking about that.

QrizB

It's possible, but not certain, that buying the missing pre-2016 year will help.

It's also very likely that buying additional yearts after 2016 will also help. £800 might sound a lot but it will buy you over £5 a week additional pension and so pay for itself in roughly three years.

Albermarle

You can contact these people. They have access to all your details and can advise accordingly.
Contact the Future Pension Centre - GOV.UK (www.gov.uk)

molerat

The COPE amount is the critical thing here.  Unless you specifically saved it somewhere it is unlikely to be on any forecast.  You are best speaking to the FPC who will confirm either way. https://www.gov.uk/future-pension-centre

(If the COPE amount is anywhere close to £25.75 then that pre 2016 year could add value - that is the minimum the COPE would need to be to have a current pension of £149.21)

mamabuddah

A big thanks 🙏 to everyone who replied, I’d just navigated away for a minute to re-read the pensions guide on here, so I’m going to give the pensions number a ring tomorrow…

xylophone

 if it helps, I received my state pension in March this year, I’ve had no qualifying years since 2005-2006, so everything is pre 2016, including the full 34 years shown,

At 6/4/16, two calculations were done for you and your "starting amount" for new state pension was the higher of the two.

Old rules

Full Basic (because you had at least 30 years) + (Additional State Pension - Deduction for Contracting Out.)

£119.30 + (ASP - Deduction for Contracting Out)

New Rules

(34/35 x Full NSP) - Contracted Out Pension Equivalent.

(34/35 x £155.65) - COPE.

£151.20 - COPE.

If you were contracted out for a substantial number of years then the Old Rules Calculation would almost certainly have given the higher amount.

Your starting amount revalued (triple/double lock) up to and beyond your drawing your pension in March.

You are now receiving £149.21.  A full NSP is currently £185.15.

Now look at this,  (page 6) produced at the inception of new state pension.

https://www.dpf.org.uk/explorer/files/TOPPING-UP-YOUR-STATE-PENSION-GUIDE.pdf

but also the first note on page 14.

Check with DWP on whether buying the 2006/7 year will improve your pension - years from 2016 /17 - 2020/21 certainly could.

xylophone

and the 35 years is a red herring if you are thinking about that.

 Maybe not quite in this case - see note on page 14 of link above.