Voluntary Contributions for the tax year in which I reach State Pension Age?

Suffolk_lass

Today I rang HMRC to obtain my reference number to pay Voluntary Class 3 for the last four contribution years. No problem. Answered within 15 minutes (I rang at just after 08.00). It is exactly what I was expecting it to be. 

However, the advisor agreed my figures and gave me the number, but then he told me I could increase my state pension if I also pay for the 23-24 tax year. I will reach state pension age in March 2024. It is the difference between receiving a full new state pension and receiving less, because I was opted out while working in the public sector. My understanding was that this year would not count as my birthday is before the end of the tax year. Here are my questions:

1. Have the rules changed and I have missed it?
2. If not, if I deferred taking my pension until the new tax year, could I then pay for 23-24?
3. And lastly, if I am self employed, the suggestion is that I can pay voluntary Class 4 for the whole of the tax year in which I reach SPA, and that this might count. Is that right?

I am a beekeeper, spending way more on my equipment than I make from doorstep sales, but I could register as self employed so that this last year counts

p00hsticks

I'm  not aware of any recent change in legislation that would allow you to count the year in which you reach State Pension Age.
 
I can't find the reference to the original legislation right now, which would show if it has been changed, but I did locate it and post it on this board previously - I'll have a further hunt for it. 

p00hsticks

I've now looked back and found my original post on the subject 
NI pension final year top up — MoneySavingExpert Forum

Checking out the link to the actual legislation given there (it's in the Social Security Contributions and Benefits Act 1992)  there doesn't seem to have been  any revisions to the pertinent section since it was originally passed  - Section 44) 7) a) ii).    

Suffolk_lass

Thank you @p00hsticks - I had been looking at the NI Contributions legislation from 2015!

That rules out the second possibility too. I have also been looking at Class 4 (which run to the end of the tax year in which SPA is reached). I have not found anything that says that final year counts for retirement pension.

I shall not be deferring my pension to make up any shortfall, as it is now 9 weeks for 1% in the New State Pension and I would need to defer by 27 weeks to make up the difference. I don't have the tax imperative to defer (the real intention of this facility). 

My conclusion is that the advisor to whom I spoke gave me incorrect advice. I might just test with them again to see if I get the same answer twice, but it will be by post.

pinnks

Class 4 NIC has nothing to do with your pension entitlement - it is just a duty you must pay if you are self-employed.

Suffolk_lass

pinnks said:

Class 4 NIC has nothing to do with your pension entitlement - it is just a duty you must pay if you are self-employed.

Thank you, very helpful. That had not occurred to me. A quick check and self employed pay both Class 2 (that do count) and Class 4 (that don't) through self assessment. [Here is a link for anyone wishing to verify; first that they do not count, then via the How Much You Pay link, under self employed.]

p00hsticks

Suffolk_lass said:

My conclusion is that the advisor to whom I spoke gave me incorrect advice. I might just test with them again to see if I get the same answer twice, but it will be by post.

Was the advisor you refer to from HMRC or the Future Pensions Centre (DWP) ?

HMRC have no idea of what impact - if any - making a voluntary NI contribution will have on your State Pension forecast, which is why they should be insisting that you first speak to the FPC to confirm that your payment will  have the desired effect before giving you the reference. 

Suffolk_lass

It was HMRC. He told me that he has done it for lots of people  . 

Dazed_and_C0nfused

Suffolk_lass said:

It was HMRC. He told me that he has done it for lots of people  . 

Then that's going to lots of extremely disappointed people.

but then he told me I could increase my state pension if I also pay for the 23-24 tax year. I will reach state pension age in March 2024

pinnks

p00hsticks said:

I've now looked back and found my original post on the subject 
NI pension final year top up — MoneySavingExpert Forum

Checking out the link to the actual legislation given there (it's in the Social Security Contributions and Benefits Act 1992)  there doesn't seem to have been  any revisions to the pertinent section since it was originally passed  - Section 44) 7) a) ii).    

Looking at the statute, the section you quote appears relevant only to the old state pension.  The new state pension is legislated for in the Pensions Act 2014 (PA14) and lead you on a merry goose chase to a very similar conclusion.

S2(4) PA14 defines "qualifying year" as, "a tax year, during a person's working life" and you then go on the hunt for the meaning "working life", via S22(1) PA14, to S122(1) of Social Security Contributions and Benefits Act 1992 and finally to Paragraph 5(8) of Schedule 3 to that Act, which, not surprisingly borrows the wording from S44 that you quote, adding only a short reference to death:

"(8) ... a person’s working life is the period between—

(a)(inclusive) the tax year in which he attained the age of 16; and

(b)(exclusive) the tax year in which he attained pensionable age or died under that age."

Same outcome; different route...

p00hsticks

Suffolk_lass said:

It was HMRC. He told me that he has done it for lots of people  . 

So not at all qualified to give any sort of advice on State Pension entitlement.
 .
He'd have had no idea whether or not the payments you were making would have any effect on your state Pension forecast at all, although perhaps he should have been aware that the year in which you reach State Pension Age would never count.... 

I suspect this is what happens when HMRC respond to all the complaints that people can't get though on the phone lines by getting more staff to man them but not training them adequately before hand .....