Reference number for Class 3 NI voluntary contributions. Do I need to do this before April

Iiyama

Hi all

For three weeks daily, I have tried to contact HMRC as have many others for my 18-digit reference number to pay for missing years.

However, I'm wondering if I can wait until after April when the pressure on HMRC has reduced and I might stand a better chance of getting through!

I worked in the NHS and like many when I contacted the future pensions centre I was told there was a shortfall and I could pay for the missing years. Looking at my NI record I have 40 years of total contributions. But as I retired at 55 there are three years when I did not contribute enough:

1982-1983 I guess this is too far back to top up

2020-2021 Can top up

2021-2022 can top up

2022-2023 I'm predicting this will show the same.

Given the years I have a shortfall are recent years according to my NI record. Could I wait until after the 6th of April or do I need to make the payments before then (once I get that reference number)

Advice appreciated

p00hsticks

Yes you can wait until after April, although the price of the 2020-21 year will rise. 

Are you sure that buying those years will increase your state pension ?

What exactly does your state pension forecast say ? 

Iiyama

p00hsticks said:

Yes you can wait until after April, although the price of the 2020-21 year will rise. 

Are you sure that buying those years will increase your state pension ?

What exactly does your state pension forecast say ? 

Thanks for taking the time to reply. My forcast shows :

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022

£164.37 a week

Forecast if you contribute another 4 years before 5 April 2030

£185.15 a week

When I phoned them they said the shortfall was due to being contracted out and not paying enough NI. She told me buying the additional years would take me up to the maximum state pension.

molerat

An extra 3 years will add £5.29 each to £180.24 and the 4th will add £4.91 taking you to £185.15.

p00hsticks

molerat said:

An extra 3 years will add £5.29 each to £180.24 and the 4th will add £4.91 taking you to £185.15.

But you have enough years between now and when you reach State Pension age to get those four years without having to buy previous ones.
  
After April you can buy up to six previous years. So you can always keep hold of your money for now, and wait until just before you reach State Pension Age to buy them. That way the money is still yours if you decide to go back to work or become entitled to 'granny credits', and isn't wasted if you get hit by a bus.
  
Or another option to help you budget could be to wait until after April and then start paying for each year as it arises in monthly installments via direct debit. 
Pay voluntary Class 3 National Insurance: Direct Debit - GOV.UK (www.gov.uk)

Iiyama

p00hsticks said:

molerat said:

An extra 3 years will add £5.29 each to £180.24 and the 4th will add £4.91 taking you to £185.15.

But you have enough years between now and when you reach State Pension age to get those four years without having to buy previous ones.
  
After April you can buy up to six previous years. So you can always keep hold of your money for now, and wait until just before you reach State Pension Age to buy them. That way the money is still yours if you decide to go back to work or become entitled to 'granny credits', and isn't wasted if you get hit by a bus.
  
Or another option to help you budget could be to wait until after April and then start paying for each year as it arises in monthly installments via direct debit. 
Pay voluntary Class 3 National Insurance: Direct Debit - GOV.UK (www.gov.uk)

I do a very small amount of non-contracted work paying less than £200 per month just to keep the brain ticking over! I don't pay NI on that. And would rather not as it pays so little.

I don't intend to go back to work. I'm comfortable with my pension and savings. So can't see how I would get the 4 missing years back before Im 67.

The idea of holding onto my money for now and waiting until I'm close to getting my pension appears to be an excellent idea and allows my savings to continue to gather interest.

molerat

Iiyama said:

p00hsticks said:

molerat said:

An extra 3 years will add £5.29 each to £180.24 and the 4th will add £4.91 taking you to £185.15.

But you have enough years between now and when you reach State Pension age to get those four years without having to buy previous ones.
  
After April you can buy up to six previous years. So you can always keep hold of your money for now, and wait until just before you reach State Pension Age to buy them. That way the money is still yours if you decide to go back to work or become entitled to 'granny credits', and isn't wasted if you get hit by a bus.
  
Or another option to help you budget could be to wait until after April and then start paying for each year as it arises in monthly installments via direct debit. 
Pay voluntary Class 3 National Insurance: Direct Debit - GOV.UK (www.gov.uk)

I do a very small amount of non-contracted work paying less than £200 per month just to keep the brain ticking over! I don't pay NI on that. And would rather not as it pays so little.

I don't intend to go back to work. I'm comfortable with my pension and savings. So can't see how I would get the 4 missing years back before Im 67.

The idea of holding onto my money for now and waiting until I'm close to getting my pension appears to be an excellent idea and allows my savings to continue to gather interest.

You have got the years 2022-23 to 2029-30, another 8 available years to pay the 4 years necessary.  The price of a year only increases with inflation so unless you have any gap years that are particularly good value they effectively will cost the same as the current year.  You do not have to fill past gap years all at once, you can buy them as they come up.

PatrickPrecis

I was surprised to read that paying additional years voluntary contributions can make good the shortfall caused, not by missing years, but by the pre 2016 NI contributions having been reduced due to membership of a pension scheme such as teachers/local govt.
I have 39 years of full pre 2016 contributions and could pay an additional 7 years ( my pension started yesterday at 66, paying 150pw instead of the full 182 !).
Given that I have spent a month in the phone queue can people point me to the pensions guidance which shows the payment of voluntary NI contributions will reduce the shortfall created by being  contracted out ?

PatrickPrecis

Should read "membership of a CONTRACTED OUT  pension scheme such as teachers........"

molerat

PatrickPrecis said:

I was surprised to read that paying additional years voluntary contributions can make good the shortfall caused, not by missing years, but by the pre 2016 NI contributions having been reduced due to membership of a pension scheme such as teachers/local govt.
I have 39 years of full pre 2016 contributions and could pay an additional 7 years ( my pension started yesterday at 66, paying 150pw instead of the full 182 !).
Given that I have spent a month in the phone queue can people point me to the pensions guidance which shows the payment of voluntary NI contributions will reduce the shortfall created by being  contracted out ?

Years 2015-16 and earlier will not add to your pension, you are limited to an absolute maximum of 35 but most likely 30 if contracted out - it's complicated -  but any available gaps 2016 gaps 2016-17 and later will add value at £5.39 each up to the maximum £185.15.

AFAIAW there is no official written guidance, it is all contained in the various pensions acts and that is like wading through treacle, but many of us on here know exactly how it works.  There used to be a Royal London flow chart but that was a few years back

p00hsticks

PatrickPrecis said:

Given that I have spent a month in the phone queue can people point me to the pensions guidance which shows the payment of voluntary NI contributions will reduce the shortfall created by being  contracted out ?

I've found this a very informative guide, although not from an official government source
The new state pension - your questions answered - Royal London