Is it worth adding to State Pension?

Dunree

Hi folks,

This is a joint question from my partner and I. 

I’m 61 and my partner is 55. 

We were paying full NI contributions until we went self employed September 2017 until around January 22 for her and November 22 for me. 

I’ve checked my shortfall in my contributions and, if I pay just over £8k, I get an extra £33 p/w, or around £1700 per year. 

I currently receive a company pension of around £1380 every four weeks but that reduces when (if) I reach 67 state pension age to take into account the SP. 

The question is, is it worth paying this £8k?

My partners payment will be roughly the same, if we do go down that road. 

I do realise that there are a lot of variables in this, like health etc..

Many thanks,

Dunree. 

QrizB

If you expect to live more than three years past state retirement age, it's worth topping up your pension.

Dunree said:

I’ve checked my shortfall in my contributions and, if I pay just over £8k, I get an extra £33 p/w, or around £1700 per year. 

That surprises me. You should be able to make up £33pw with seven extra years, and extra years are about £900 each. So it shouldn't cost more than £6300.

Dunree said:

We were paying full NI contributions until we went self employed September 2017 until around January 22 for her and November 22 for me. 

The years you were self-employed, you should qualify for Class 2 NI which is about £200 a year, not £900.

Are you still self-employed?

Dunree

Hi QrizB,

Thanks for the reply. 

I’ve checked my Gateway account and the exact amount is £8086. 

No longer self employed, relying on my company pension. 

Update:

The gateway account says between the years of 2017 to 2023 “year not full”

molerat

2017-2023 is 6 years at around £800 each is £4800, you must be misreading something.

You should be able to pay voluntary class 2 at around £180 for the years you were self employed.

Your NI record will not show class 2 rates, only class 3.  You need to speak to HMRC.

What exactly do your forecasts 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

p00hsticks

Dunree said:

Hi QrizB,

Thanks for the reply. 

I’ve checked my Gateway account and the exact amount is £8086. 

No longer self employed, relying on my company pension. 

Update:

The gateway account says between the years of 2017 to 2023 “year not full”

It may cost that much to fill in all possible gaps at Class 3, but it sounds as if  you don't need to fill all the gaps to reach the maximum state pension, just some of them.......

and as others have pointed out, you should be able to make much cheaper Class 2 contributions for the years you were registered self-employed....

Dunree

Hi folks,

Apologies for the delay in responding. 

I should have said that I started claims my company pension in October 2016 and went self employed in October 2017 when we took over a pub tenancy. 

We didn’t take a wage from the pub, we tended to live off my pension. Occasionally we would take dividends from the business. 

Here are the figures from HMRC. 

“ 2023 to 2024

Your record for this year is not available yet

2022 to 2023

Year is not full

You did not make any contributions this year.

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2029. This shortfall may increase after 5 April 2025.

2021 to 2022

Year is not full

2020 to 2021

Year is not full

2019 to 2020

Year is not full

2018 to 2019

Year is not full

2017 to 2018Year is not full

During this time I continued to pay NI through my pension. 

2022 to 2023

Year is not full

You did not make any contributions this year 

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2029. This shortfall may increase after 5 April 2025.

2021 to 2022

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £800.80 by 5 April 2028. This shortfall may increase after 5 April 

2020 to 2021

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £795.60 by 5 April 2027. This shortfall may increase after 5 April 2025.

2019 to 2020

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2026. This shortfall may increase after 5 April 2025.

2018 to 2019

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2025. This shortfall may increase after 5 April 2025.

2017 to 2018

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2025. This shortfall may increase after 5 April 2025.

I’ve removed the hyperlinks. 

If I’m missing any information please let me know. 

I have a feeling I may need to speak to Hector. 

Thank you for all your help so far 😊👍🏻

Regards,

Dunree. 

Ps, no longer self employed.  Living fully off my company pension now. 

QrizB

When you were running the pub, were you self-employed (a sole trader), employed (by the pub) and/or a director of the pub management company? It's not clear whether you qualify for Class 2 NI.

Also, for 2017-18 you say you paid NI through your pension. Pension income is taxable, but is not normally subject to NI. What exactly do you mean here?

Dunree

Morning QrizB,

I was self employed through our limited company. 

I’ll check through my P60’s when I get a chance re the pension income. 

Regards,

Dunree. 

Dazed_and_C0nfused

Dunree said:

Morning QrizB,

I was self employed through our limited company. 

I’ll check through my P60’s when I get a chance re the pension income. 

Regards,

Dunree. 

That isn't self employment.

Presumably you either weren't paying yourself above the LEL for some reason or didn't file Real Time Information reports as an employer for those years.

It's likely that voluntary Class 3 NI is going to be your only option now.

Still a great investment but just be careful about the final year, most will add £5.82/week but as you cannot exceed £203.85/week the final one might only be worth pennies and not worth paying £800+ for.

If you post the current amount you have accrued then it is straightforward to check this.

Dunree

Thanks Dazed,

We generally didn't take a wage as the business couldn't afford it. We'd dip in every now and then if we needed extra for ourselves.

I also had a courier company, that I did take a wage from, for around four years.

Is this what you are looking for?

'2023 to 2024

Your record for this year is not available yet

2022 to 2023

Year is not full

You did not make any contributions this year

You can make up the shortfall

Pay a voluntary contribution of £824.20 by 5 April 2029. This shortfall may increase after 5 April 2025.''

You have:

• 39 years of full contributions
• 6 years to contribute before 5 April 2029
• 6 years when you did not contribute enough

QrizB

Dunree said:

Thanks Dazed,

Is this what you are looking for?

I think D&C is asking for your state pension forecast details:

https://www.gov.uk/check-state-pension

You'll get a screen that looks a bit like this:

Your numbers will be different!