State pension: Is there any point in me topping up years where I had a National Insurance shortfall?

Shadweller

Please can anyone advise on the following?

This is what my You Gov National Insurance record says:

   You have:

• 31 years of full contributions
• 14 years to contribute before 5 April 2037
• 6 years when you did not contribute enough              

And this is what my pension forecast page says:

     You can get your State Pension in 2037

Your forecast is £203.85 a week, £886.38 a month, £10,636.60 a year

Your forecast

• is not a guarantee and is based on the current law
• does not include any increase due to inflation

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2023

£200.14 a week

Forecast if you contribute another year before 5 April 2037

£203.85 a week

£203.85 is the most you can get

You cannot improve your forecast any further, unless you choose to put off claiming. 

As far as I understand it, I only need one more full year to get a full state pension according to the forecast, and 4 more according to my National Insurance record page (If I need to achieve 35 full years). I believe that the forecast page is correct in my case considering that my NI contributions started many years before 2016.

In any case, whether it's one more year or 4 more years required, am I correct in assuming that I will automatically hit the target, provided I either continue working as an employee, and so continue topping up my NI, or even if I was unemployed and claiming benefits, I'd still get NI credits and so could not fail to hit the requirement?

(Unless I leave the country, or do not work and do not claim benefits, or get sent to prison. I have no plans on doing any of these things.)

It seems to me that there is no advantage to be gained by topping up a couple of years shortfall in my case, seeing as I'm all but guaranteed to hit the qualifying criteria for the maximum state pension. Please can anyone confirm if I am wrong or right in my assumptions regarding this?

Thank you.

molerat

35 years is of no relevance to you, that only applies to those born this century.  Your forecast clearly shows you need one more year to reach the full amount, that one year giving you the final £3.71.  If you continue working for this 23-24 financial year you will get that one year needed.

QrizB

Yes, you only need one more full year.

No, you don't need 35 years.

No, there's no benefit for you in buying past years.

Shadweller

molerat said:

35 years is of no relevance to you, that only applies to those born this century.  Your forecast clearly shows you need one more year to reach the full amount, that one year giving you the final £3.71.  If you continue working for this 23-24 financial year you will get that one year needed.

Thanks for confirming the forecast is correct. I'm happy that has been confirmed and I don't need to waste my money on pointless top ups.

One more thing though, I believe that even if I didn't work, provided I was claiming benefits,  I'd receive NI credits and could still get the one more year that I need?

Dazed_and_C0nfused

Shadweller said:

molerat said:

35 years is of no relevance to you, that only applies to those born this century.  Your forecast clearly shows you need one more year to reach the full amount, that one year giving you the final £3.71.  If you continue working for this 23-24 financial year you will get that one year needed.

Thanks for confirming the forecast is correct. I'm happy that has been confirmed and I don't need to waste my money on pointless top ups.

One more thing though, I believe that even if I didn't work, provided I was claiming benefits,  I'd receive NI credits and could still get the one more year that I need?

Certain benefits give you an entitlement to NI credits.  Although DWP don't seem very good at telling HMRC about them.

But if you are currently working and earning well above the LEL you will already be some way to adding the final year you need.

And as others have said having 35 years isn't a feature of the new scheme as far as you're concerned.  You are under transitional rules and 32 years is sufficient (for you).

Shadweller

Dazed_and_C0nfused said:

Shadweller said:

molerat said:

35 years is of no relevance to you, that only applies to those born this century.  Your forecast clearly shows you need one more year to reach the full amount, that one year giving you the final £3.71.  If you continue working for this 23-24 financial year you will get that one year needed.

Thanks for confirming the forecast is correct. I'm happy that has been confirmed and I don't need to waste my money on pointless top ups.

One more thing though, I believe that even if I didn't work, provided I was claiming benefits,  I'd receive NI credits and could still get the one more year that I need?

Certain benefits give you an entitlement to NI credits.  Although DWP don't seem very good at telling HMRC about them.

But if you are currently working and earning well above the LEL you will already be some way to adding the final year you need.

And as others have said having 35 years isn't a feature of the new scheme as far as you're concerned.  You are under transitional rules and 32 years is sufficient (for you).

Thanks Dazed_and_C0nfused.

Well, I have just been made redundant, and I have a period of payment in lieu of notice before I can sign on, so there is going to be a gap in my NI contributions this month.

I will have to see how the next few weeks, months and years unfold as to how quickly I can get my next job or not, and get that final year of NI contributions completed, one way or another.

badmemory

Your pay so far this tax year may be enough on its own to fill this year, especially as you get some pay in lieu of notice & maybe holiday pay too.  I think (& I'm sure someone will confirm) that you need to have earned the LEL for the year which is around £6.5K.

kaMelo

The LEL for 2023/24 is £6,396.
If your earnings this financial year exceed this then 2023/24 is already a full year in regard to your state pension.

Brie

DWP couldn't tell me if getting JSA would give me any NI contributions in any way.  They said I should ring HMRC to check.  Why they didn't know is a bit of a mystery if that's what they're dealing with all day - lack of training or lack of interest in my opinion.

That said it may not have mattered at all as I only got JSA for a couple of weeks before DWP pulled my claim (because they didn't know what they were doing and went back on what I had been told - so maybe it's best not to trust them in any case).   But as it turned out because I had worked for 4 months that was sufficient to give me sufficient contributions for the year.  

Shadweller

Thinking about it, I have had previous gaps in employment where I was claiming JSA, and it shows on my NI contributions records page that I received NI credits for those periods. And those periods ended up counting as full years as far as my records show. The last time this happened was about 4 years ago, so assuming nothing has changed I've no reason to believe this won't happen again.

I'll see when I get my P45 how much I earned in this tax year from my job. I wasn't on a very good wage, and I don't think PILON and redundancy pay counts towards NI credits, so I don't think I'll have hit that earnings requirement for the year yet. So I don't think the full state pension is a done deal for me quite yet, but I'm quite sure that I'll get over the line one way or another before too long.

badmemory

PILON is subject to both tax & NI payments.