Is it worth adding to State Pension?

Dunree
Dunree Posts: 401
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edited 27 January at 6:31PM in Topping up your state pension
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. 
Life is now good :)
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  • QrizB
    QrizB Posts: 13,665
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    edited 27 January at 6:33PM
    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?
    N. Hampshire, he/him. Octopus Go elec & Tracker gas / Shell BB / Lyca mobi. Ripple Kirk Hill member.
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  • Dunree
    Dunree Posts: 401
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    edited 27 January at 6:50PM
    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”
    Life is now good :)
  • molerat
    molerat Posts: 31,570
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    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
    p00hsticks Posts: 12,587
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    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
    Dunree Posts: 401
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    edited 30 January at 6:26PM
    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. 
    Life is now good :)
  • QrizB
    QrizB Posts: 13,665
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    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?
    N. Hampshire, he/him. Octopus Go elec & Tracker gas / Shell BB / Lyca mobi. Ripple Kirk Hill member.
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  • Dunree
    Dunree Posts: 401
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    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. 
    Life is now good :)
  • Dazed_and_C0nfused
    Dazed_and_C0nfused Posts: 12,802
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    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
    Dunree Posts: 401
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    edited 2 February at 12:24PM
    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
    Life is now good :)
  • QrizB
    QrizB Posts: 13,665
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    edited 2 February at 1:29PM
    Dunree said:
    Thanks Dazed,
    Is this what you are looking for?
    I think D&C is asking for your state pension forecast details:
    You'll get a screen that looks a bit like this:

    Your numbers will be different!


    N. Hampshire, he/him. Octopus Go elec & Tracker gas / Shell BB / Lyca mobi. Ripple Kirk Hill member.
    2.72kWp PV facing SSW installed Jan 2012. 11 x 247w panels, 3.6kw inverter. 30MWh generated, long-term average 2.6 Os.
    Ofgem cap table, Ofgem cap explainer. Economy 7 cap explainer. Gas vs E7 vs peak elec heating costs.
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