Voluntary NI Contributions when already on track for full pension 15 March at 11:58AM in Pensions, annuities & retirement planning 7 replies 157 views

CardiffCrank

I know this is an annoyingly vague question so please accept my apologies in advance!

I am a good distance from pension age - I need 25 full years' contributions out of the 28 possible remaining years to receive a full pension. For £330 I can top up one partial year, so that I would then only need 24/28.

I can only see two reasons it might be worth making this contribution, and I wonder if anyone out there could suggest additional good reasons, or maybe explain why these actually aren't good reasons.

1. If I take early retirement, it might mean a higher state pension
2. If the pension rules are changed again when I'm older, for example to increase the retirement age, having the extra full year might stand to my benefit.

If anyone can think of anything else I should be bearing in mind when I make this decision, I'd love to hear it. Thanks!

molerat

An under half price year may be a reasonable idea as you only have a little bit of slack at the other end but without the full details it is hard to say.  It is not like you are buying 5 full price years ahead when you don't need to.

If you post up the full details it will give the overall picture

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

CardiffCrank

Thanks @molerat

Accrued: £53.80pw

Pre-2016: 5 full years, two from paid employment which show on the record, and the other three of which aren't visible but I've been told they were probably the "starter credits" that I would have been given when I received my NI number in 2007 on first arriving in the UK and that makes sense

Post-2016: 5 full years

Reach retirement: 2050/51

COPE: Nil

Years shown as not full: 2016-17, 31 weeks of credits, £332.85 to top it up. 2008-16, nothing paid, not living in the UK at the time, £824.20 each to top them up

Suzycoll

CardiffCrank said:

I know this is an annoyingly vague question so please accept my apologies in advance!

I am a good distance from pension age - I need 25 full years' contributions out of the 28 possible remaining years to receive a full pension. For £330 I can top up one partial year, so that I would then only need 24/28.

I can only see two reasons it might be worth making this contribution, and I wonder if anyone out there could suggest additional good reasons, or maybe explain why these actually aren't good reasons.

1. If I take early retirement, it might mean a higher state pension
2. If the pension rules are changed again when I'm older, for example to increase the retirement age, having the extra full year might stand to my benefit.

If anyone can think of anything else I should be bearing in mind when I make this decision, I'd love to hear it. Thanks!

hi

At your age it is probably not worth you paying to top up NI credits, I wouldn't even consider it. Why would you ?

However, on saying that it all depends if you are paying NI at the moment . If you are working you will be , if you are claiming benefits or child benefit  NI contribution is  paid for you.

If you are  long way off from SP age?  The age you can claim your SP WILL  PROBABLY rise further in the future 
Are you muddling up state pension with private pension?

1 if you take early retirement ,no it wont increase your state pension - SP is  nothing to do with your private pension . Your SP age is calculated by the govt and you cant change it 

2 If/when the SP rules change you should (technically) have notice of it,  although I would keep a keen eye on news/gov And keep checking it 

Basically if you have £300 to spare best thing to do is pay extra into your private pension

apologies if i have misunderstood your question. 

CardiffCrank

Suzycoll said:

At your age it is probably not worth you paying to top up NI credits, I wouldn't even consider it. Why would you ?

That's what I'm wondering about! I can think of two reasons to do it. If they're not good reasons, I won't do it.

1 if you take early retirement ,no it wont increase your state pension - SP is  nothing to do with your private pension . Your SP age is calculated by the govt and you cant change it

I do understand that I can't get the SP until a fixed date (which is a long way away in 2051). Right now, I have to keep working to 5 April 2047 to build up a full SP, but if I make the extra payment I only need to work up to 5 April 2046 to get the full pension. And in future, if they move the age up to 70 with 37 years of payment or something similar, I might well appreciate having banked a full year while I could. There's no reason to think I'd be able to do anything about them changing the rules.

Basically if you have £300 to spare best thing to do is pay extra into your private pension

Worth thinking about, yes. At least that way I'll definitely benefit from it, when the state pension is more of a maybe.

molerat

Seeing the overall picture I agree with above.  You have a fair bit of time and the pension age will likely have increased by then giving you maybe another 1 or 2 years of extra contributions available.  So stuff it in your personal pension instead.

Suzycoll

CardiffCrank said:

Suzycoll said:

At your age it is probably not worth you paying to top up NI credits, I wouldn't even consider it. Why would you ?

That's what I'm wondering about! I can think of two reasons to do it. If they're not good reasons, I won't do it.

1 if you take early retirement ,no it wont increase your state pension - SP is  nothing to do with your private pension . Your SP age is calculated by the govt and you cant change it

I do understand that I can't get the SP until a fixed date (which is a long way away in 2051). Right now, I have to keep working to 5 April 2047 to build up a full SP, but if I make the extra payment I only need to work up to 5 April 2046 to get the full pension. And in future, if they move the age up to 70 with 37 years of payment or something similar, I might well appreciate having banked a full year while I could. There's no reason to think I'd be able to do anything about them changing the rules.

Basically if you have £300 to spare best thing to do is pay extra into your private pension

Worth thinking about, yes. At least that way I'll definitely benefit from it, when the state pension is more of a maybe.

the key here is how much income do you want /are you able to live on when you are retired?

If you aim to retire at say 60 then your private pension (if you choose to claim it ) will have to last you until you claim your SP.
Just my opinion but i would not worry about your NI contribution at all (providing you are still working and intend to work for a while yet).

Great you are thinking about and preparing for it though.

I am much older than you . If I had my time over again my advice would be to put every single penny...and more...into a private pension. At least a private pension covers any spouse/ dependants you may have and will/should give them a share if you die. (sorry).

SP doesn't get passed on to anyone except the Treasury (unless you are currently 80 years old when some SP does get given to spouse ) 

don't worry about SP - any government could (and will ) change the rules by 2051. Maybe just review it again say 10 years away from  SP age and then 5 years and see how your NI record is looking? you can always top up later if you are a bit short 

Bottom line is 1- don't give any money to the government if you don't have to 2-don't trust the government with your SP

best wishes 
 

CardiffCrank

Suzycoll said:

Bottom line is 1- don't give any money to the government if you don't have to 2-don't trust the government with your SP

I can definitely get behind that philosophy!! Thanks very much for your thoughts.