Qualifying years: 1/30th or 1/35th?

cbmaxyz

I'm 38, started paying NI in 2007-8, and my state pension forecast is a bit higher than I'd expect.  After running some numbers I've realised that years before 2016-17 are contributing 1/30th of the total, whereas subsequent years are contributing 1/35th.  Is this correct?  I see no mention of this in the MSE state pension guide, but it seems important because it means that if you have a choice of paying Class 3 NICs for (say) 2015-16 or 2016-17 then you should pick the former, as it will cost no extra up-front but give you a bit more once you're retired.

Dazed_and_C0nfused

Unfortunately it's not that simple.

For plenty of people a pre 2016 year will add exactly £0.

Each person under transitional rules really does need to look at their own personal situation.

molerat

It is not as simple as that.  The value of pre 2016 years can be either 1/30th old pension value or 1/35th of new pension depending on your personal circumstances.  It can even switch from old to new when purchasing extra years. The reason why your supposition is not in any MSE article is because it simply is not true.  A post 2016 year will give £5.29, a pre 2016 year will give either £4.73 or £5.29, or even £0.00, it cannot give more than a post 2016 year.  It is not a simple case of the number of years in calculating your pension amount, in April 2016 a calculation was done giving you the higher of the old or new schemes which took into account additional pension and contracted out service. If you post up all the details someone will explain how the figures were arrived at.

Current £.pp amount accrued up to April 2022
Number of pre 2016 NI years full
Number of post 2016 NI years full
Financial year you reach state retirement
Any COPE amount shown
Years which show not full and prices

You obviously did not fully digest the information given in your previous way off base post https://forums.moneysavingexpert.com/discussion/6426204/why-is-new-state-pension-higher-than-old/p1

cbmaxyz

molerat said:

If you post up all the details someone will explain how the figures were arrived at.

Oh, thank you, that'd be great.  My figures are:

£100.08 per week accrued up to April 2022

11 full years up to and including 2015-16

6 full years from 2016-17 and after

Reach state retirement in October 2052

No COPE mentioned

And what I noticed is:

(11 * 1/30 + 6 * 1/35) * 186 = 100.09

Which is a penny off my estimate - but as you can see, it does involve rounding up 185.15 to 186, so perhaps it's coincidence??

The reason I'm looking into this is I'm trying to work out whether to pay Class 3 for 2006-7 before it's too late.  I think it could be worth it because I'm considering emigrating, and I'd rather pay the Class 3 at this year's rates than future rates.

This would all be so much simpler if the government web site "showed its working"! 

mark5

If you were in s2p/serps (not opted out) then pre 2016 pension years probably were more valuable than post 2016 ones, they were building up a larger state pension than the new one for many people. 

I don’t think class 3 would have the same accrued credits though.
I know very little though.

p00hsticks

cbmaxyz said:

molerat said:

If you post up all the details someone will explain how the figures were arrived at.

I think it could be worth it because I'm considering emigrating, and I'd rather pay the Class 3 at this year's rates than future rates.

Under the current rules, if you are in employment immediately prior to emigrating then once you are abroad you will be able to pay for current years at the much cheaper Class 2 rate.

cbmaxyz

p00hsticks said:

Under the current rules, if you are in employment immediately prior to emigrating then once you are abroad you will be able to pay for current years at the much cheaper Class 2 rate.

That's great to know - thanks.  How many years can you do that for?  Just the one?

pinnks

p00hsticks said:

cbmaxyz said:

molerat said:

If you post up all the details someone will explain how the figures were arrived at.

I think it could be worth it because I'm considering emigrating, and I'd rather pay the Class 3 at this year's rates than future rates.

Under the current rules, if you are in employment immediately prior to emigrating then once you are abroad you will be able to pay for current years at the much cheaper Class 2 rate.

You need to be employed abroad too.  Have a look at Social Security abroad: NI38 - GOV.UK (www.gov.uk) which sets out the criteria for Class 2 and Class 3 if you live abroad.

p00hsticks

cbmaxyz said:

This would all be so much simpler if the government web site "showed its working"! 

I really don't think it would - but if you really want to know, here's a post that shows the basic 'old rules' and 'new rules' calculations used when working out your individual 'starting amount; as at the introduction of the new State Pension in 2016

Additional NI contributions if you have full history but were contracted out — MoneySavingExpert Forum 

p00hsticks

cbmaxyz said:

p00hsticks said:

Under the current rules, if you are in employment immediately prior to emigrating then once you are abroad you will be able to pay for current years at the much cheaper Class 2 rate.

That's great to know - thanks.  How many years can you do that for?  Just the one?

As far as I'm aware. going forward until you reach state pension age - there are several emigrees who regularly post on this board that have been doing it for ages.  

pinnks

It is indeed every year going forward but you would need to keep an eye on your pension forecast to make sure you stop aying in the appropriate year if you reach the max before SPA.