Better to make voluntary contributions to state pension sooner or later?

molerat

So you have 23 years of contributions left before SRA, which if filled will give you £181.82, and need 24 (£185.15 - £60.15 = £125 / £5.29 = 24) leaving you around 1 year short of the maximum.  You need to purchase 1 gap year, which ones is up to you.

was effectively working outside the UK.

What does that mean ? If working outside the UK then class 2 may be available which puts a whole new perspective on voluntary contributions.

InvesterJones

molerat said:

So you have 22 years of contributions left before SRA which if filled will give you £176.53 leaving you around 2 years short of the maximum.  You need to purchase 2 gap years, which ones is up to you.

was effectively working outside the UK.

What does that mean ? If working outside the UK then class 2 may be available which puts a whole new perspective on voluntary contributions.

UK resident, but was working for an intergovernmental organisation so taxed at source and not subject to additional national taxation (on that income only) - hence missing NI contributions.

calcotti

InvesterJones said:... Since I'm unlikely to be working in my final years before collecting a state pension I will need to make some voluntary contributions.

To be clear - is this an expectation that you will be financially able to retire early or because you have health conditions that will prevent you from being able to work. If the former you will need to make voluntary contributions, if the latter you would be able to get NI credits without paying anything. Even if you are well now you may become ill during the next 23 years and be eligible for credits in which case having paid for extra years now would have been unnecessary. 

Audaxer

molerat said:

If all 10 pre 2016 years are available they will all add value but not the full £5.29, only £4.73.

We have just filled gaps for 2 pre-2016 years NI for my wife, and were told by the Future Pensions Centre that it would increase her forecast by a total of £10.01, which I assumed was around £5 for each year. They seemed sure it would increase her SP by that amount. 

molerat

Audaxer said:

molerat said:

If all 10 pre 2016 years are available they will all add value but not the full £5.29, only £4.73.

We have just filled gaps for 2 pre-2016 years NI for my wife, and were told by the Future Pensions Centre that it would increase her forecast by a total of £10.01, which I assumed was around £5 for each year. They seemed sure it would increase her SP by that amount. 

It all depends on whether the 2016 starting amount is based on the old or new systems. If based on the old a pre 2016 year only adds the old value unless it switches the starting amount to the new where it recalculates everything to the new values.

Dazed_and_C0nfused

Audaxer said:

molerat said:

If all 10 pre 2016 years are available they will all add value but not the full £5.29, only £4.73.

We have just filled gaps for 2 pre-2016 years NI for my wife, and were told by the Future Pensions Centre that it would increase her forecast by a total of £10.01, which I assumed was around £5 for each year. They seemed sure it would increase her SP by that amount. 

Suspiciously close to the total of one of each.

Audaxer

molerat said:

Audaxer said:

molerat said:

If all 10 pre 2016 years are available they will all add value but not the full £5.29, only £4.73.

We have just filled gaps for 2 pre-2016 years NI for my wife, and were told by the Future Pensions Centre that it would increase her forecast by a total of £10.01, which I assumed was around £5 for each year. They seemed sure it would increase her SP by that amount. 

It all depends on whether the 2016 starting amount is based on the old or new systems. If based on the old a pre 2016 year only adds the old value unless it switches the starting amount to the new where it recalculates everything to the new values.

Thanks @molerat. If the old amount increases are £4.73 and the new increases are £5.29, does that mean she has one of each increase as the two added come to near enough the total increase she was advised?    

For one of the years she only had part of the year to pay as she had already paid some NI for that year. I assume that doesn't make any difference to the amount of increase for that year?

molerat

Audaxer said:

molerat said:

Audaxer said:

molerat said:

If all 10 pre 2016 years are available they will all add value but not the full £5.29, only £4.73.

We have just filled gaps for 2 pre-2016 years NI for my wife, and were told by the Future Pensions Centre that it would increase her forecast by a total of £10.01, which I assumed was around £5 for each year. They seemed sure it would increase her SP by that amount. 

It all depends on whether the 2016 starting amount is based on the old or new systems. If based on the old a pre 2016 year only adds the old value unless it switches the starting amount to the new where it recalculates everything to the new values.

Thanks @molerat. If the old amount increases are £4.73 and the new increases are £5.29, does that mean she has one of each increase as the two added come to near enough the total increase she was advised?    

For one of the years she only had part of the year to pay as she had already paid some NI for that year. I assume that doesn't make any difference to the amount of increase for that year?

She should not be able to get "one of each" if both are pre 2016 years.  They should both be one or the other depending on which system the starting amount is based on taking those purchases into consideration.  Likely purely a coincidence. 

A year is worth the same no matter how it is obtained or how much is paid for it.

InvesterJones

calcotti said:

InvesterJones said:... Since I'm unlikely to be working in my final years before collecting a state pension I will need to make some voluntary contributions.

To be clear - is this an expectation that you will be financially able to retire early or because you have health conditions that will prevent you from being able to work. If the former you will need to make voluntary contributions, if the latter you would be able to get NI credits without paying anything. Even if you are well now you may become ill during the next 23 years and be eligible for credits in which case having paid for extra years now would have been unnecessary. 

Thanks - reality is probably somewhere in the middle - don't think I'll be able to do the work I want to do either through condition or because I expect it'll be hard to find employment, however I expect there will be some work out there that I could do. So I don't think I'll qualify for credits.

molerat

I assume the current top line of your forecast is £181.82 ?  So you will need to buy at least 1 past year to reach the max.  Are there any part filled cheap years in there which could sway the balance between now or later ?