GAP in NI contributions for full state pension?

C_Mababejive

Hi all, apologies as im sure this will have been discussed before.

The situation is that i turned 58 in the first quarter of 2022 and my state retirement age is 67.

Im in a DB scheme that was contracted out and i believe is now contracted back in.

Im just looking on the government gateway website and it says thus ;

My pension forecast is £9660.86 pa or 185.15 pw

Presumably thats in current money and by the time i get to claim it it will be closer to £12k or more ...

It also says that pension earned to date is 178.34 upto april 2022.

This obviously leaves a gap and it says i need another two years of contributions. I think it will actually be more like 1.5 years now.

So, if i suddenly stopped work now i would be officially unemployed. If i signed on would i get job seekers allowance?

Would i also get those missing NI contributions credited to me because ive signed on ?

Thanks all..

Dazed_and_C0nfused

If you successfully claimed new style JSA then yes you would get credits.

https://www.gov.uk/guidance/new-style-jobseekers-allowance#:~:text=While you receive New Style,is a regular fortnightly payment.&text=Universal Credit-,You're unemployed or work less than 16 hours a,you need support between jobs.

Once you reach £185.15 your pension stops increasing irrespective of any NI you pay or are credited with and will only change in line with the double/triple lock (or what eventually replaces it).

You do need two qualifying years to reach the standard amount of £185.15/week.

One additional year will add £5.29 and the second the final £1.52.

AndrewB22

This reply was very helpful as my wife’s circumstances are similar. 

I tried to research the rules but found it baffling. When we looked at her pension forecast last year, we noted that she only had to make one more year of contributions to get the full amount. Doing that again this year it says she needs five more years. We can’t prove what it said last year, unfortunately; so perhaps we were mistaken. 

It says in the MSE guide that there are some circumstances where voluntary contributions don’t increase the state pension. I can see that would be the case once you’ve reached the maximum, or if you’re still working or qualifying for free credits, but otherwise it looks like buying voluntary class 3 contributions is a no-brainer. 

Dazed_and_C0nfused

It says in the MSE guide that there are some circumstances where voluntary contributions don’t increase the state pension. I can see that would be the case once you’ve reached the maximum, or if you’re still working or qualifying for free credits, but otherwise it looks like buying voluntary class 3 contributions is a no-brainer. 

Paying for pre 2016 years might not change your starting amount though so adding nothing.  Purchasing post 2016 years is usually a safer bet.  But may not be the best choice for everyone.

You need to give the full details from her forecast and NI history for anyone on here to give a proper explanation.  Or contact Future Pension Centre.

molerat

AndrewB22 said:

This reply was very helpful as my wife’s circumstances are similar. 

I tried to research the rules but found it baffling. When we looked at her pension forecast last year, we noted that she only had to make one more year of contributions to get the full amount. Doing that again this year it says she needs five more years. We can’t prove what it said last year, unfortunately; so perhaps we were mistaken. 

It says in the MSE guide that there are some circumstances where voluntary contributions don’t increase the state pension. I can see that would be the case once you’ve reached the maximum, or if you’re still working or qualifying for free credits, but otherwise it looks like buying voluntary class 3 contributions is a no-brainer. 

The big one for when VCs may not increase the pension is in buying pre 2016 years, that has to be done with a clear understanding of the rules.  Filling post 2016 years if necessary will always add value.

AndrewB22

Thanks. My wife has time before she reaches 67 to buy class 3 contributions for this and future years. Very helpful. 

Does anyone have any insight as to why we are pretty sure, but cannot prove, that last year her NI record showed only one more year’s contributions required, but now it says five?  Admittedly the records said they were checking some of them (although only two or three), and for at least one of them she is certain she paid full stamps - a combination of class 1 and 4, though, as she went from employee to self-employed. 

I think she should probably phone up the DWP and ask. Dreading that, though, as I recently tried to help a Ukrainian refugee apply for pension credit, and DWP were hard to get hold of and it sounds like they’re short staffed. 

Dazed_and_C0nfused

Without any evidence I'm not sure where you would start to be honest.

And Class 4 National Insurance is more akin to an extra self employment tax, it doesn't give any entitlement to State Pension.

Class 2 is what adds qualifying years for the self employed.  This can be paid voluntarily if you are self employed, complete Self Assessment tax returns and don't have sufficient profit to need to pay it 

QrizB

AndrewB22 said:

Does anyone have any insight as to why we are pretty sure, but cannot prove, that last year her NI record showed only one more year’s contributions required, but now it says five?

What does her NI record say (it's a separate page, not part of the pension forecast)? Are there gaps where she thinks there should be full years?

AndrewB22

Her record says she has 35 years contributions but needs 5 more to achieve a full state pension. We’re really, really sure we checked it last year and it said she only needed one more. 

She was contracted out (in a DB scheme) for most of her working life, then self employed from 2009 to 2020, now not working. She didn’t earn enough while at university to get a stamp in those years and had two years abroad before university. We think the year she transitioned from employment to self-employment she would have paid a full stamp because she was earning for five months that year at a salary of £88k, so about £36 that tax year, but on her record that is showing as “not full” and “we’re checking this”. 

AndrewB22

Apart from that year, the record tallies, more or less. It makes sense that she needs more than 35 years because of the years contracted out, so I can see why she needs 40 years in total, and she has time to buy voluntary contributions, so I don’t think we’ve lost out. 

But it is a bit baffling that she has those years where they’re checking the records and very strange that the number of additional years needed has increased.  By far the most likely explanation is that we misread it, but we looked at it properly (both the forecast and the detailed record) and wrote down “only one more year” on the record, so it’s odd. 

AndrewB22

Such a shame we didn’t screenshot it last year. Mine says I have two years to go, but I’m working so will pay those normally, and I’ve screenshot my record just in case they decide I need to pay more!