State Pension Uprating

blue.peter

I wonder if some kind soul could check my understanding and (if necessary) correct me, please?

I was made redundant and took early retirement several years ago. Since then, I lived for a year or so on my redundancy settlement and then my private pensions. I haven't paid any NI contributions since my redundancy, and don't intend to pay any more. I qualify for my state pension in November 2024 (age 66), and intend to draw it as soon as I can. My online state pension forecast looks like this:

So my current expectation is for £184.75 p.w.

This will increase by 8.5% in April (source), so my actual state pension from November will be:

£184.75 * 1.085 = £200.45 p.w.

Is this correct? If not, why not?

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Secondary question

I know that my pension won't actually start arriving in my bank account until a week or two after my birthday, and that it will then be paid on every fourth Wednesday (source). But what happens if the Wednesday on which it's due is a bank holiday or a public holiday? Will it be paid on the last working day before, or the first one after?

(Neither question is of massive practical importance to me; I just want to understand things.)

molerat

Yes your pension will be £200.45

If your pay day is a BH it will be paid on the working day before.

The big question must be why do you not want to increase the pension ? It is like buying a 30% annuity, something that is simply not available, and pays back the outlay gross in around 3 years.

Dazed_and_C0nfused

blue.peter said:

I wonder if some kind soul could check my understanding and (if necessary) correct me, please?

I was made redundant and took early retirement several years ago. Since then, I lived for a year or so on my redundancy settlement and then my private pensions. I haven't paid any NI contributions since my redundancy, and don't intend to pay any more. I qualify for my state pension in November 2024 (age 66), and intend to draw it as soon as I can. My online state pension forecast looks like this:

So my current expectation is for £184.75 p.w.

This will increase by 8.5% in April (source), so my actual state pension from November will be:

£184.75 * 1.085 = £200.45 p.w.

Is this correct? If not, why not?

------------------------------------------

Aren't you going to increase your entitlement?

The £203.85 will be replaced by £221.20 so you are £20.75 shy of your personal maximum.

If you can buy 3 additional (post 2016) years that will take you to £219.41/week so fantastic value for money.

A fourth year would only add the final £1.79/week so less of a bargain but probably still worth doing as you will recoup your money in less than 10 years.

blue.peter

molerat said:

Yes your pension will be £200.85

If your pay day is a BH it will be paid on the working day before.

Thank you.

molerat said:

The big question must be why do you not want to increase the pension ? It is like buying a 30% annuity, something that is simply not available, and pays back the outlay gross in around 3 years.

I simply have no need for the additional income - my private pensions plus £200 p.w. will be plenty. On the other hand, I don't want to deplete my savings by paying NI conts because I have (or hope to have in the near future) a need for as much capital as possible.

blue.peter

Dazed_and_C0nfused said:

Aren't you going to increase your entitlement?

The £203.85 will be replaced by £221.20 so you are £20.75 shy of your personal maximum.

If you can buy 3 additional (post 2016) years that will take you to £219.41/week so fantastic value for money.

A fourth year would only add the final £1.79/week so less of a bargain but probably still worth doing as you will recoup your money in less than 10 years.

The two of you (you and @molerat) have persuaded me to rethink my position on this.

It appears that voluntary NI conts are cheaper than I thought. I've just had a look at my record on GOV.UK. I don't know if voluntary contributions have to be used to fill years in any particular order, but it looks as if they would cost me between £795.60 and £824.50 each.

If I really can get my entitlement up to £219.41/week for three years' contributions totalling about £2,500, it's both much more affordable than I had realised and worthwhile. Perhaps I will do it after all.

It seems that my next step has to be to talk to the Future Pension Centre about it. I'll do that tomorrow - assuming that their waiting time isn't as bad as HMRC's!

Thank you both for your input.

Dazed_and_C0nfused

blue.peter said:

Dazed_and_C0nfused said:

Aren't you going to increase your entitlement?

The £203.85 will be replaced by £221.20 so you are £20.75 shy of your personal maximum.

If you can buy 3 additional (post 2016) years that will take you to £219.41/week so fantastic value for money.

A fourth year would only add the final £1.79/week so less of a bargain but probably still worth doing as you will recoup your money in less than 10 years.

The two of you (you and @molerat) have persuaded me to rethink my position on this.

It appears that voluntary NI conts are cheaper than I thought. I've just had a look at my record on GOV.UK. I don't know if voluntary contributions have to be used to fill years in any particular order, but it looks as if they would cost me between £795.60 and £824.50 each.

If I really can get my entitlement up to £219.41/week for three years' contributions totalling about £2,500, it's both much more affordable than I had realised and worthwhile. Perhaps I will do it after all.

It seems that my next step has to be to talk to the Future Pension Centre about it. I'll do that tomorrow - assuming that their waiting time isn't as bad as HMRC's!

Thank you both for your input.

You are spot on there.  

Only post 2016 years are likely to be beneficial and the cheapest of those will be the ones to go for, you can pick and choose whichever suits you best.

Also, you don't have to pay them now but personally I would pay sooner rather than later as that will give you the best opportunity of starting with the higher entitlement and avoid complications with being paid the smaller amount and and adjustments being needed by DWP.

ColdIron

If you phone the Future Pensions Centre (0800 731 0175) bang on 08:00 AM they are quicker than later. They will confirm your options and tell you the year(s) to be filled

You then need to phone the Payments people (0300 200 3500) and they are a bit easier to contact but I'd still try at 08:00 AM. They'll give you your 18 digit Payment Reference. Lots of ways to pay

It can take a long time to show up. After 8 weeks I phoned the payments people again who updated it while I waited

It's well worth doing

Stubod

Assuming you have some spare cash it's simply a no brainer to top up your SP to the max. Payback is only about 3 years...better than any savings / investements you can make, and it's "index linked" for life.....

pinnks

Payback (before tax) is even less than 3 years at the moment.  From April each year adds £328 per year to the pension at a cost of £795 to £824.  Do the maths...

blue.peter

Just in case anyone cares...

As recommended by @ColdIron, I phoned the Future Pension Centre on the dot of 08:00. Several menus to work through, but I got to a very helpful gentleman fairly quickly. He rapidly got to the same point as @Dazed_and_C0nfused did yesterday, recommended paying three years' NI conts, picked the three cheapest, and gave me the same total cost as I'd worked out. I said "yes, please". He then transferred me to HMRC, who gave me all the necessary payment details (so no need for me to make a second phone call). Card payments aren't accepted, which was a minor disappointment.

All done by 08:16.

I've set up the necessary transfer from building society savings to bank account, and will pay those voluntary NI contributions by bank transfer in a couple of hours or so.

Thank you all very much for your help and advice.

ColdIron

Once you get through they are genuinely helpful