Is it worth adding to State Pension?

molerat

Everything to work out your pension options can be done from the information asked earlier

Current weekly £££.pp amount accrued up to April 2023
Number of pre April 2016 NI years full ........ I suspect 38
Number of post April 2016 NI years full ......... I suspect 1
Any COPE amount shown, in a click link in "You've been in a contracted-out pension scheme", if there is one ......... I suspect there will be as you would otherwise already have reached the full amount

Nanathome

Hi, last year FPC advised I was 10 years short of a full pension. Buying 9 yrs would give me £203.08/wk, a tenth year would only give me .77p more. My COPE estimate is £9.49/wk. I bought 5 years voluntary credits.

Just had the latest grandparents credits updated and I am now 4yrs short. FPC now say just buy 3 years, a fourth costing £824.20 would take about 5 yrs to break even. That doesn't sound correct though.

I contacted HMRC with an intention to buy 4 yrs and have the 18 digit number to go ahead but am doubting whether that is wise. Thinking I should go back to them to change it to 3 years.

 Molerat you have been helpful in the past, can you advise please?

Dazed_and_C0nfused

Nanathome said:

Hi, last year FPC advised I was 10 years short of a full pension. Buying 9 yrs would give me £203.08/wk, a tenth year would only give me .77p more. My COPE estimate is £9.49/wk. I bought 5 years voluntary credits.

Just had the latest grandparents credits updated and I am now 4yrs short. FPC now say just buy 3 years, a fourth costing £824.20 would take about 5 yrs to break even. That doesn't sound correct though.

I contacted HMRC with an intention to buy 4 yrs and have the 18 digit number to go ahead but am doubting whether that is wise. Thinking I should go back to them to change it to 3 years.

 Molerat you have been helpful in the past, can you advise please?

Buying 9 yrs would give me £203.08/wk, a tenth year would only give me .77p more
I bought 5 years voluntary credits.

So at that point 4 more years were useful and one not really worth the bother.


Just had the latest grandparents credits updated and I am now 4yrs short.

So now 3 useful years left to get and one more that is not really worth the bother.


FPC now say just buy 3 years

Isn't that where you started 🤔

QrizB

Nanathome said:

Hi, last year FPC advised I was 10 years short of a full pension. Buying 9 yrs would give me £203.08/wk, a tenth year would only give me .77p more. My COPE estimate is £9.49/wk. I bought 5 years voluntary credits.
Just had the latest grandparents credits updated and I am now 4yrs short. FPC now say just buy 3 years, a fourth costing £824.20 would take about 5 yrs to break even. That doesn't sound correct though.

Wee the "grandparents credits" years before 2016?

Pre-2016 years aren't always worth as much. It could be that, due to getting credit for early years, buying 3 years will get you to £201.50 (or so) and your 4th year will make up the difference.

Nanathome

QrizB said:

Nanathome said:

Hi, last year FPC advised I was 10 years short of a full pension. Buying 9 yrs would give me £203.08/wk, a tenth year would only give me .77p more. My COPE estimate is £9.49/wk. I bought 5 years voluntary credits.
Just had the latest grandparents credits updated and I am now 4yrs short. FPC now say just buy 3 years, a fourth costing £824.20 would take about 5 yrs to break even. That doesn't sound correct though.

Wee the "grandparents credits" years before 2016?

Pre-2016 years aren't always worth as much. It could be that, due to getting credit for early years, buying 3 years will get you to £201.50 (or so) and your 4th year will make up the difference.

Thanks for replying.

Grandparents credits were for 2011-12 Full year credited, and 2012/13 Part year, which I topped up. So both years now filled.

2021/22 Part year which I aim to top up, as a cheap year, and 2022/23 Full year. 

This has helped me to fill 4 years altogether, Unfortunately I cannot claim 2023/2024 as I reach state pension age near the end of March, a final year which doesn't count for anything. 

My main query was how FPC could suggest I would make up the cost of the fourth year (£824.20), over a period of five years. If this only increases my pension by 77p per week, wouldn't it take many more years? So I think 3 years is the probably the safe option. Just need confirmation that's the right way to go.

molerat

My main query was how FPC could suggest I would make up the cost of the fourth year (£824.20), over a period of five years. If this only increases my pension by 77p per week, wouldn't it take many more years? So I think 3 years is the probably the safe option. Just need confirmation that's the right way to go.

QB above gave a possible reason above.  It all depends on which years were available and which years you actually purchased.  A pre 2016 year will likely only add £5.21 with a post 2016 year giving £5.82.  The more pre 2016 years you purchase the more that final year will give resulting in it taking less years for it to pay back. 5 years payback means that year could be worth £3.17, £2.40 more than the 77p originally quoted and could be the result of purchasing 4 pre 2016 years rather than 4 post 2016 years.

Nanathome

Thanks to you both, I will get back to HMRC to change to 3 years voluntary. Fingers crossed they will let me alter it.

molerat

You really need to look at the overall picture rather than each year in isolation.

Buying year A for £X gives £Y per week, X / Y = Z weeks to pay back

Buying years A & B for £C gives £D per week, C / D = E weeks to pay back

and so on.  

When I worked it out for my SIL buying the final part value top up year took her total payback time from 81 weeks to 100 so only an extra 19 weeks against the stand alone payback for that year of 301 weeks.

Do you have access to your on line tax account ?

Posting up the actual amounts, as in what I asked the previous poster earlier, makes things a lot easier to figure out, it is just fairly straight forward maths.

Nanathome

Thanks molerat,

I'm afraid it's like explaining electricity to me, goes straight over my head, but hubby seems to understand this a little better. I just didn't see how it was worth paying £824.20 for the fourth year vol top up, for just 77p extra a week pension. And FPC thought it wasn't worth it, but then said it would only take 5 years to recoup.

Before I made any voluntary contributions my estimated state pension forecast was £136.83.

FPC originally advised 10 years short. Buying 9yrs would give me £203.08, 10yrs would give me £203.85

5 Previously bought;
                             1)  2012-2013 459.65 (GP credits added 2017)
                             2)  2013-2014 824.20
                             3)  2014-2015 824.20
                             4)  2015-2016 824.20
                             5)  2020-2021 795.60                                    Cost £3,727.85
   
Possible to buy;      
                              1)  2017-2018 824.20
                              2)  2018-2019 824.20
                              3)  2019-2020 824.20
                              4)  2021-2022 184.80 (GP credits)
                              5)  2022-2023  FULL grandparents credits    Cost £2,657.40

                                                                                                  = Ten years covered Total  cost £6,385.25
                                                                                        
                              or I could just buy 3yrs at £824.20              =  Nine years covered Total cost £5,561.05                      
I tried to work it out but got stuck and even more confused. Is it worth paying for the ten years? 

Nanathome

Hi, I asked for my National Insurance record and the letter dated 1/2/2023 confirmed 28 qualifying years up to April 2022.