State pension Top Up - Class 3A NI contributions - anyone claimed these with their State Pension?

jay852

Absolutely certain, Class 3a, and they paid a lot of money for it.

pinnks

I was wondering that.  I searched a bit on Class 3A and they do look to have been expensive. 

From an HMRC document, it seems at age 65 £890 would have got you £1 per week additional pension.   £4,450 would add £5 per week or £260 per year, so £25 would have been a shed-load of money, unless I have mis-read it.

xylophone

so £25 would have been a shed-load of money, 

Yes -  £22,250 for payment at age 65. See

State Pension top up
Standard Note:	SN 07067
Last updated:	6 January 2015
Author:	Djuna Thurley
Section	Business and Transport Section

State Pension T

Comparison with annuities 

Some commentators have noted that the cost of the scheme “looks generous compared to current annuity rates.”17 Pensions expert and Government Business Adviser for Older People, Ros Altmann said: 

Relative to the private annuity market, this seems a very good deal for many people. The price of buying these extra state pension rights has been set at about half the cost of buying an inflation-linked joint-life annuity in the open market. For a 65-year old, the annuity rate for an inflation-linked annuity is around 2.9%, so buying the equivalent of £25 a week pension would cost around £45,000, instead of £22,250 (although this does give rpi-linking, rather than cpi), whereas the cost of buying the extra state pension under Class 3A works out at an annuity rate of around 5.8%. About twice as good as the market rate. If you are 65 now and live beyond age 80 or so, assuming inflation is quite low, you will probably get a good deal and the higher inflation is, the better the deal. Of course, you could invest in the markets and do much better, but that entails risk.18 

pinnks

That's what I worked it out to be but decided to just call it a shed-load.  

xylophone

OP, has your relative only just claimed his/her state pension?

When exactly was SPA reached?

You state that the BSP shown on the statement from DWP shows £156.20 which is the current full BSP.

Did/has the relative  opt/opted for a lump sum rather than increased Basic?

https://www.litrg.org.uk/tax-guides/pensioners/what-state-pension-deferral#:~:text=Normally, you start to receive,a time that suits you.

If the claim for SP is very recent, is it possible that the calculation in respect of the lump sum and the calculation for the 3A top up to Additional State Pension has not yet been done?

Otherwise, if not recent and your relative's bank statement shows the payment of £22,250  for benefits at age 65, and you cannot get a satisfactory explanation from  HMRC

https://www.gov.uk/government/organisations/hm-revenue-customs/contact/national-insurance-enquiries-for-employees-and-individuals 

or DWP, your relative would do well to contact the local MP?

cde765

I am in the same position as jay852. A family member paid a large lump sum (Class 3A, not Class 3) in March 2017 to top up her old style pension by £25 per week, but deferred claiming any state pension until now. Her award letter overlooks the top up.

DWP on the phone seem to have no training or knowledge about this, and would not accept that there were voluntary contributions other than Class 3. They also suggested HMRC had not correctly allocated the payment, but HMRC have confirmed they received it and allocated it to the correct pension record.

How do we find someone within DWP who will accept there is a problem? Any ideas welcomed!

molerat

The advice would be the same as in the previous post, contact their MP.  They have contacts.