Plugging NI shortfall

Bettinha
Bettinha Posts: 1 Newbie
edited 13 June 2023 at 3:27PM in Topping up your state pension
Hello - I was told by HMRC that I can only pay the NI shortfall for 2 years prior to 2016 because I was part of the many millions of workers who were opted out of full NI contributions. Is this correct information - I can only buy 2 years? 

Comments

  • p00hsticks
    p00hsticks Posts: 12,796 Forumite
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    Bettinha said:
    Hello - I was told by HMRC that I can only pay the NI shortfall for 2 years prior to 2016 because I was part of the many millions of workers who were opted out of full NI contributions. Is this correct information - I can only buy 2 years? 
    It very much depends on what your record says, and you've not told us that.
    It's possible that, even if there are more pre-2016 years available to buy, they won't actually increase your pension.
    If you have a state pension forecast and post up the details here people will be able to help

    • Maximum amount of forecast
    • Current amount up to April 2022
    • Years you have available going forward until you reach State Pension Age
    • Number of full years prior to April 2016
    • Number of full years after April 2016
    • Years which are not filled
    • Whether there is a COPE mentioned and if so what the amount is (this will show by clicking a link there is a statement along the lines of ' like many, you have been contracted out.....'.)
  • xylophone
    xylophone Posts: 44,361 Forumite
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    I was part of the many millions of workers who were opted out of full NI contributions.

    Do you mean that you were a member of a pension scheme that was "contracted out" of SERPS/S2P.

    https://techzone.abrdn.com/public/pensions/Tech-guide-contracting-out

    You paid less in NI because your occupational/private pension scheme to which you/your employer contributed was a replacement for  additional (not Basic) state pension accrued through SERPS - with S2P, even if contracted out, it was possible for moderate earners to accrue some additional state pension.

    https://en.wikipedia.org/wiki/State_Second_Pension

    With regard to voluntary contributions,  see the booklet below which was produced to coincide with the introduction of NSP in 2016. Does the chart on P6  help explain?

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


  • Last July  contacted future pensions to get a pension forecast. At that time was told my pension would be £166.73 a week - but could increase it to £177.31 by buying 4 full years contributions. This I duly did. Last week decided to look at my contribution record only to discover different years had been allocated than those I specified.

    I asked for another pension forecast as I’ve spent the last week going from pillar to post being directed to one phone number and another , often in circles (all supposing that the number didn’t just drop out or running out of time to hold on) trying to discover what is going on but to no avail. Today the forecast came back as the original amount of £166.73!!!  So, it appears that I have contributed nearly £2000 (luckily, it seems I had some half years that I could top up , so could have been worse) to the Government for absolutely no return! Monday next day when I have hours to spend able to try and get to the bottom of this. Very much not impressed and have zero confidence I will ever see any return on this money.

    as a word of warning to others, if you have deferred your pension (I was entitled to mine last September, but am hoping to defer for a year) you cannot use the ordinary channels for getting the information- believe it or not, apparently I can no longer use the Future Pensions service, but must approach the actual Pensions service. Honestly, this week I feel as if I am a pawn in a Kafka story!
  • molerat
    molerat Posts: 31,824 Forumite
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    edited 22 March 2023 at 1:07PM
    Which year did you ask to pay and which year did they allocate the payment to ?
    Something does not look right with your figures - you state that buying 4 years would increase you from £166.73 to £177.31, an increase of £10.58 which is only the increase of 2 years.   If you had one of those post retirement option printouts from DWP they can be very misleading as they give options that are quite simply nonsensical, one seen on here adding full price years for an increase of £0.00 and £0.10p.  If you still have that print out carefully read the options you chose as there could be cause for complaint if it has mislead you into spending money. 
    What years are now showing as available to buy ?
  • molerat said:
    Which year did you ask to pay and which year did they allocate the payment to ?
    Something does not look right with your figures - you state that buying 4 years would increase you from £166.73 to £177.31, an increase of £10.58 which is only the increase of 2 years.   If you had one of those post retirement option printouts from DWP they can be very misleading as they give options that are quite simply nonsensical, one seen on here adding full price years for an increase of £0.00 and £0.10p.  If you still have that print out carefully read the options you chose as there could be cause for complaint if it has mislead you into spending money. 
    What years are now showing as available to buy ?
    Paid to complete years 18-19 and 19-20 (which was done) but assuming have allocated remaining money to 20-21 and 20-22 although asked specifically for 16-17 and 17-18. Pension forecast was done over the phone as couldn’t do this online as over pension age. The original figures came from a future pensions consultation last July (when Inwas under pension age). Thanks for the interest
  • xylophone
    xylophone Posts: 44,361 Forumite
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    Are you saying that your state pension forecast provided  July 2022 ( a couple of months before you reached SPA) was £166.73?

    You were therefore £18.42 short of full NSP?

     You had at least 35 qualifying years at 5/4/16?

    None of the years from 2016/17 - 21/22 were qualifying years?

    You needed to pay VC for any four of those years?

    This would  surely have given you a full NSP?
  • molerat
    molerat Posts: 31,824 Forumite
    Name Dropper Photogenic First Post First Anniversary
    molerat said:
    Which year did you ask to pay and which year did they allocate the payment to ?
    Something does not look right with your figures - you state that buying 4 years would increase you from £166.73 to £177.31, an increase of £10.58 which is only the increase of 2 years.   If you had one of those post retirement option printouts from DWP they can be very misleading as they give options that are quite simply nonsensical, one seen on here adding full price years for an increase of £0.00 and £0.10p.  If you still have that print out carefully read the options you chose as there could be cause for complaint if it has mislead you into spending money. 
    What years are now showing as available to buy ?
    Paid to complete years 18-19 and 19-20 (which was done) but assuming have allocated remaining money to 20-21 and 20-22 although asked specifically for 16-17 and 17-18. Pension forecast was done over the phone as couldn’t do this online as over pension age. The original figures came from a future pensions consultation last July (when Inwas under pension age). Thanks for the interest
    If the years purchased are all  2016-17 and onwards then it would make no difference which ones they applied, they each would add the same amount, the later ones would be the cheapest to buy.  It is likely that the pension service have not yet updated your record and will not do it until you put your pension into payment.

  • xylophone said:
    Are you saying that your state pension forecast provided  July 2022 ( a couple of months before you reached SPA) was £166.73?

    You were therefore £18.42 short of full NSP?

     You had at least 35 qualifying years at 5/4/16?

    None of the years from 2016/17 - 21/22 were qualifying years?

    You needed to pay VC for any four of those years?

    This would  surely have given you a full NSP?
    Yes, was going to be £166.73 in July 2022 before extra contributions paid. I now have 37 year’s contributions with years unpaid being 2010-2011 thru 2017-2018. I have another unpaid year (1990-1991)  but know that is too far back to make any difference . Also I was contracted out for a time so aware may not be entitled to full amount, hence thought £177 reasonable.
  • p00hsticks
    p00hsticks Posts: 12,796 Forumite
    First Post Name Dropper Photogenic First Anniversary
    xylophone said:
    Are you saying that your state pension forecast provided  July 2022 ( a couple of months before you reached SPA) was £166.73?

    You were therefore £18.42 short of full NSP?

     You had at least 35 qualifying years at 5/4/16?

    None of the years from 2016/17 - 21/22 were qualifying years?

    You needed to pay VC for any four of those years?

    This would  surely have given you a full NSP?
    Yes, was going to be £166.73 in July 2022 before extra contributions paid. I now have 37 year’s contributions with years unpaid being 2010-2011 thru 2017-2018. I have another unpaid year (1990-1991)  but know that is too far back to make any difference . Also I was contracted out for a time so aware may not be entitled to full amount, hence thought £177 reasonable.
    As you've now paid for four additional post-2016 years, that should take your pension to the maximum £185.15. It may be that as others have said your records have not yet been updated and your pension will not be recalculated until you actually claim it. 
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