Voluntary Contributions: Worked Abroad + Considering Retiring Early

GianBel

Having gone through Martin's guide, I seem to be in a situation which isn't covered.

I studied, and worked outside the UK until I was about 30. I'm 40 now, so should have 28 more years to contribute before my pension.

I started working in the UK in April 2014, and it's showing that I can top up 2013 - 2014 for £824.20.

1. Why is 2013 - 2014 the only year I can make voluntary contributions for?
2. Is it worth making the £824.20 voluntary contribution on the basis that I might choose to retire early?

molerat

What does it show for the years prior to 2013-14 ?

When / at what age did you leave the UK ?

Have you any full years prior to 2013-14 ?

What exactly does your forecast show ?

Current weekly £££.pp amount accrued up to April 2023
Number of pre April 2016 NI years full
Number of post April 2016 NI years full
Tax year you reach state retirement
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme" if there is one.
Years which show not full and prices

GianBel

Thank you for your help!

molerat said:

What does it show for the years prior to 2013-14 ?

Nothing. It's just not shown. It says:
You have:

•  9 years of full contributions
• 28 years to contribute before 5 April 2051
• 1 year when you did not contribute enough

molerat said:

When / at what age did you leave the UK ?

Before I was born.

molerat said:

Have you any full years prior to 2013-14 ?

No. Nothing is shown.

molerat said:

What exactly does your forecast show ?

Current weekly £££.pp amount accrued up to April 2023
Number of pre April 2016 NI years full
Number of post April 2016 NI years full
Tax year you reach state retirement
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme" if there is one.
Years which show not full and prices

I'm not clear where I can find that information. I can only see this. I don't seem to have an option to show 

Current weekly £££.pp amount accrued up to April 2023

molerat

OK.  You cannot fill years pre 2013 because you were not resident / entitled to contribute, your record only starts from 2013-14.  With only 9 years you currently have no pension entitlement, that is why a lot of the information requested is not shown.  You have 28 years, including 23-24, left before retirement.  The only assumption that can be made at the moment is that those 9 years will be worth £52.42 leaving another 26 years required out of the 28 available to reach the full amount - you won't find that out though until you get the magic 10th year.  The forecast shows you can reach the full amount going forward so your choice whether to hedge your bets with that one year.

Which country were you living / working in overseas ?  There may be some cross border pension entitlement, a fairly complex subject that others are more conversant in.

GianBel

molerat said:

OK.  You cannot fill years pre 2013 because you were not resident / entitled to contribute, your record only starts from 2013-14.  With only 9 years you currently have no pension entitlement, that is why a lot of the information requested is not shown.  You have 28 years, including 23-24, left before retirement.  The only assumption that can be made at the moment is that those 9 years will be worth £52.42 leaving another 26 years required out of the 28 available to reach the full amount - you won't find that out though until you get the magic 10th year. 

Thanks. That makes more sense. So I guess next year I'll be able to see this information, and make a more informed decision?

molerat said:

The only assumption that can be made at the moment is that those 9 years will be worth £52.42

How does one work this out? And how would I work out what I add by buying 1 year, assuming I won't work long enough to reach the max.?

I was going by this from Martin:

The maths is simple. A full NI year usually costs £824 and adds up to £302.64 each year to your pre-tax state pension.

 So I assumed that paying the £824 now would give me an additional £302.64 per year. Meaning if I live 3 years beyond retirement it's paid for itself?

molerat said:

The forecast shows you can reach the full amount going forward so your choice whether to hedge your bets with that one year.

But if I were to work less than 26 years, which I assume will be the case, it would make sense to make the payment now? 

molerat said:

Which country were you living / working in overseas ?  There may be some cross border pension entitlement, a fairly complex subject that others are more conversant in.

Switzerland

molerat

£52.42 is 9/35ths of a full pension, each year filled / purchased is worth £203.85 / 35.  It is slightly more nuanced than that where pre 2016 years are concerned but with so few it is fairly safe to make the assumption about what your current holding is worth.

You have another 28 years to get the 26 needed so enough time plus 2 spare at the far end to top up if necessary, years are available to purchase until 6 years after the end of the year - there is currently an exception to that rule which ends in 2025 which is why you can buy so far back.  The price of a year increases with inflation so yes it will cost more but will be the same price in real terms.  You have until April 2025 to buy that 13-14 so best to wait until you have the full picture when you have 10 in the bag.

theoretica

There is a limit on how long ago you can top up by paying voluntary contributions, and I think 2014 is too long ago - so you may find this is not a choice you have.

molerat

theoretica said:

There is a limit on how long ago you can top up by paying voluntary contributions, and I think 2014 is too long ago - so you may find this is not a choice you have.

Under the transitional arrangements for the introduction of the 2016 pension the 2 year / 6 year rule was extended with years from 2006-07 to 2015-16 treated time wise the same as 2016-17 so a price cut off at April 2019 and being  being available to buy until April 2023 which was extended to July 2023 and further to April 2025 due to the massive demand which HMRC and DWP could not deal with.  A current pension forecast will correctly state exactly which years are available to buy and at what cost, OP's forecast shows 2013-14 is available.

GianBel

molerat said:

£52.42 is 9/35ths of a full pension, each year filled / purchased is worth £203.85 / 35. 

Struggling a bit with this. What is the time period for the £52.42 worth of pension? Months? Same with the £203.85, what time period does it relate to?

Dazed_and_C0nfused

GianBel said:

molerat said:

£52.42 is 9/35ths of a full pension, each year filled / purchased is worth £203.85 / 35. 

Struggling a bit with this. What is the time period for the £52.42 worth of pension? Months? Same with the £203.85, what time period does it relate to?

It's the amount per week.

GianBel

So with 9 years filled I can expect £52.42 per week. Buying/working another year will add £5.82 per week?

Or after 10 years I can expect approx. £232.96 per month.