Quick question on NI voluntary contributions - says "This shortfall may increase after 5 April 2025.

jpmurf

Hi,

I think I am 2 years short of a full state pension (I retired early in 2015 - pension age in 2035) and the cheapest years to buy are currently 20-21 and 21-22 (£795 and 800 whereas most years are 824). If I buy them now I am getting £450 extra a year for about £1600 so worth doing  BUT it says "This shortfall [presumably the amount I pay?] may increase after 5 April 2025."

• a) How much might in increase?
• b) How long have I got to pay this (does April 2025 deadline not apply to these later years?)

I obviously would like to hold off paying as long as possible but not if the price goes up too much. Any advice please!

Rodders53

You will be gambling on living 11 years to SP age in 2035 and then still have to live around another 3 years to get 'payback' of any purchase today.

Invest the same amount for 11 years and buy the two needed years at the last moment with more certainty you will live to SP plus 3 years (typical payback time)?

NI rates will increase with inflation etc.,. but so will the Pension Benefits.

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#class-3-national-insurance-voluntary

molerat

Years stay at the in year price for 2 years after the end of the year (the clock was paused at April 2023 and will restart in April 2025 for the 2 year rise) then increase to the current year price, increasing each year in line with that, for a further 4 years after which they cease to be available.  The April 25 price would be expected to be around £1K (if Sep CPI is around 3.4%)

jpmurf

Cheers Rodders53. I think, after further googling, that after this 2025 deadline you will still be able to buy the latest 6 years so common sense dictates I just buy the required 2 years of NI at the last moment possible before I reach state pension age. As you say have to assume all payments / pensions etc go up similarly but I can see no logic in buying early compared to keeping my required cash in the bank.

badmemory

With an expected change of government can you guarantee that none of the terms will change.