Voluntary NI contributions and allowance

BattyJ

I am shortly topping up missing years of NI now that I have at long last received the HMRC statement letter.

Does the NI top up count toward the £60,000 annual pension contribution allowance?

Ayr_Rage

No, you are not topping up a pension.

BattyJ

Even though it’s for topping up missing state pension?

TadleyBaggie

No, you are not topping up a pension, just NI which is a tax.

molerat

Before you top up do you fully understand the effect that topping up a particular year will have on your pension ?  Are you aware that topping up pre 2016 years may not add anything to the pension amount

BattyJ

Where is the reference or deals that pre 2016 years might not count to pension years? Do you have a link?

molerat

https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

All contained in the MSE guide.

It is not a one size fits all scenario, it is very personal to your individual record.  If you want to post up some anonymous details one of us will talk you through it.  The 6 simple points below are all that is needed, pretty straightforward maths from there.

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

BattyJ

Thanks for the info. I was out of the UK for the years prior to 2016 that I am topping up so the ‘contracted out’ doesn't effect me, is my understanding.

molerat

If you have less than 30 pre 2016 years then making up to that amount must add value to the pension.  Going to more than that is very dependent on personal circumstances around COPE and S2P.  If you have no, or little, S2P and were never contracted out then you could likely safely go up to 35.   Answering the points posed above would give a definitive answer.

BattyJ

I called HMRC on 0800-7310175 and they told me it would be beneficial. I am fortunate in that it is Class 2 NI so it really is very cheap. Generally in the region of £163.80 a year for £5.20 a week.

molerat

HMRC would not be able to tell you that but checking that number it is in fact DWP FPC, the ones who do know