National Insurance contributions to state pension

Ned61

Probably a stupid question but HMRC say that full pension can be achieved with 35 FULL years of contributions. Does that mean that if you have “only” covered 90% of a full year then that year does not count? My early-retired wife has 25 years and she wants to pay her NI voluntarily for the next 10 years. However, if she paid from now (January) to end of March it would not be a full year so would that money just disappear and not count to a pension?

sammyjammy

35 year rule only applies to those that started paying NI/working from 2016 onwards, your wife may need more or less than this, she should check her state pension forecast on gov.uk.

If she started paying voluntary NI now she could then make up the rest of the year to fill it, she maybe able to pay previous years as well which could be cheaper.

molerat

HMRC do NOT blindly state that 35 years are required for a full pension, you need to read the heading above that statement.   If a year is not full it does not count but the NI record will state how much it will cost to make that year full.  The pension forecast will state how much she has accrued at April 2023 and how many more years she needs for a full pension. To make voluntary contributions you either set up a direct debit and payments will be taken over the year, if the direct debit is stopped I assume that a part year would be credited and the record will show what is required to complete the year, or past empty years are paid in full at a later date.

Ned61

Thanks for your response, appreciated. You say “if a year is not full it will not count” which I think is what I am wrestling with. I’m probably being a bit thick. 

It does seem, from what you say, that a part year will NOT count but one will be told how much is needed to make it up. So I think it would make sense for my wife to start voluntary contributions in April so that they all count in a single financial year.

Also (and again, if I have misunderstood I apologise) vagaries of timing of getting and leaving jobs over a lifetime could mean that there are fewer full years than if permanent employment was accrued.

in short, wouldn’t this mean that many people have contributed towards the state pension but have accrued zero contribution to their pension, because they didn’t do a full year. That feels like stealing money on a technicality by HMRC but again, I must have misunderstood, because that would be a scandal of Post Office proportions.

molerat

The NI system has many quirks.  Very few people would work only part of the year every year and earn less than 52 x the LEL, currently £6396, in that year.  But yes, if you have only contributed part of a year that year does not count but can be made up, normally within 6 years from the end of that year.

What your wife needs to do is look at her NI record and see if there are any part years back as far as 2006-07 that can be made up cheaply.  Depending on how long she has before SP it may not be worth buying years just yet, the price of a year only increases with inflation each year so are effectively the same price.   

If you post up a few anonymous details from her forecast then you will get some good pointers on the way forward.

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

amanda1024

Ned61 said:

in short, wouldn’t this mean that many people have contributed towards the state pension but have accrued zero contribution to their pension, because they didn’t do a full year. That feels like stealing money on a technicality by HMRC but again, I must have misunderstood, because that would be a scandal of Post Office proportions.

There isn’t a state pension pot, national insurance is just general taxation. That’s why however much you earn (and thus however much national insurance you pay), the state pension is still the same amount as for someone just over the limit who’s worked the same number of years. And if you have fewer than ten years contributions there’s no state pension at all, I think.

Flugelhorn

Ned61 said:

in short, wouldn’t this mean that many people have contributed towards the state pension but have accrued zero contribution to their pension, because they didn’t do a full year. That feels like stealing money on a technicality by HMRC but again, I must have misunderstood, because that would be a scandal of Post Office proportions.

definitely not stealing! there is a huge variation in NI payments - I had 3 jobs and according to the HMRC  I paid "too much " NI so they sent me some back, however I will still only get the same  state pension as someone who only paid the minimum contributions  

Ned61

Thanks for all the inputs. In the end, I contacted someone who said to make sure that I don’t fill up more than 5 years of NI before 2016 due to rule changes and the number of years she has in. 

By the way, trying to actually pay money to HMRC is a disaster. Beyond the NI number they want you to get an16 digit further number (!!!!!! why?) to pay online, the number can only be got from a phone number that never answers and eventually just cuts you off. As with many things, it was quicker for me to write some cheques and send a letter. Let’s see if that works. 

Thanks again for all inputs

molerat

I contacted someone who said to make sure that I don’t fill up more than 5 years of NI before 2016 due to rule changes and the number of years she has in.

Who was "someone" ?  That is the very basic "filling up to 30 years cannot fail to add value" but may not be necessarily the case, it is all down to your very specific personal situation so unless they had all that information, as in my list above, and the knowledge of how to relate that data to topping up it could lead to you missing out on some cheap top ups.

As long as you are not desperate for the payments to be credited a cheque in the post is often the simplest way but may take many months to be actioned.