Are missing NI Pension contributions worth it?

CranstonPF

Hi,

after checking my wife's pension forecast she will get £162.49/ week which can be increased to £185.15 by payment of outstanding NI contributions as she retired early.

Based on the Gov.UK pensions website forecast it advises a payment of £5968 would be required for the 8 missing years.  Ignoring the triple lock increase to recover the £5965 payment would take 263 weeks or circa 5 years. I appreciate that with pension increases that return would be sooner. Grateful if someone can confirm my simple evaluation. 
Many thanks

Pat38493

You most likely don't need to buy 8 years to get it up to the full amount. 

You should call DWP to find out which years it would be best to purchase.  Lots of other threads with the info on this topic.

molerat

Your figures are a bit confusing but in general buying gaps is a no brainer. It shouldn't take that long to recover the capital or is she a 40% taxpayer ? Post up the exact details from her forecast and someone will point you in the right direction.  Not all years will add to her pension and the final one may only add pennies.

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

Dazed_and_C0nfused

CranstonPF said:

Hi,

after checking my wife's pension forecast she will get £162.49/ week which can be increased to £185.15 by payment of outstanding NI contributions as she retired early.

Based on the Gov.UK pensions website forecast it advises a payment of £5968 would be required for the 8 missing years.  Ignoring the triple lock increase to recover the £5965 payment would take 263 weeks or circa 5 years. I appreciate that with pension increases that return would be sooner. Grateful if someone can confirm my simple evaluation. 
Many thanks

Why do you think buying 8 years is necessary 🤔

Assuming the £162.49 is what she has already accrued then adding 4 years would take her to £183.65.

And a fifth would add the final £1.50/week.  So not such good value but not to be totally discounted.  Particularly as it will really be the final £1.65 in a week or so.

The above assumes she has 4/5 post 2016 years available to buy.

~£3.3k as a one off outlay will add ~£1.2k/year (at 2023:24 rates) to her State Pension so even factoring in basic rate tax she will be in profit well within 4 years.

Can you find a better investment for that money?

CranstonPF

Hi Thanks for the swift reply. Full details are as follows

Current Pension forecast £162.47 weekly.

No of Full years up to 2016 37

No of Full years post 2016 Nil

Tax year retirement 24/25 ie March 2025

Not sure what COPE is

Years not full and prices to top up

21/22 £800
20/21 £795
19/20 £824
18/19 £824
17/18 £824
16/17 £824
15/16 £824
14/15 £253

Many thanks

Dazed_and_C0nfused

Personally I would probably go for the full 5 years as the extra one is fixed price to pay but gets the triple lock annual increase.

But some would only buy 4.

Not sure where you have got this from?  That's what can be bought, not what needs to be bought.

Based on the Gov.UK pensions website forecast it advises a payment of £5968 would be required

molerat

Cope is shown in a click link in the section "You've been in a contracted-out pension scheme"

But it doesn't really matter as with 37 pre 2016 years any year 2015-16 and earlier will not add to her pension so cannot be purchased.

Only years 2016-17 and later will add value.

If she has £162.47 at April 2022 she needs another 5 years to reach the maximum. 4 will take her to £183.63 at £5.29 each and the 5th will add £1.52

4 years will cost £3244.80 and will be recovered gross in 153 weeks

5 years will cost £4069 and will be recovered gross in 179 weeks.

CranstonPF

Hi, Thanks for the feedback. Much appreciated

Can you please confirm if that is the most recent 5 years to pay. i.e 17/18 to 21/22.

Thanks

Dazed_and_C0nfused

CranstonPF said:

Hi, Thanks for the feedback. Much appreciated

Can you please confirm if that is the most recent 5 years to pay. i.e 17/18 to 21/22.

Thanks

Any post 2016 year will add the same.

The first four bought add £5.29/week (current rate) and a fifth the final £1.52/week.

So go for the cheapest first.  Some will be increased in July so if you are spreading them out it might be cheaper to buy a new year like 2022:23 than an older one after July.

molerat

The 2 cheapest, 20-21 and 21-22 at £795.60 and £800.80, then any of the others (2016-17 and later) at £824.20 each.

CranstonPF

Thanks to everyone for this help. Probably the best and most helpful forum I have been on.