Why paying for gabs in NI years if I can get the same amount with Pension Credit?

BenTa

Hi,

I am reaching the State Pension age in about six months, and my forecast State Pension is about £82 a week (13 full years). I have the option to pay for another 12 gab years, about £10,000, to get my State Pension to about £160 a week.

I just wonder if it is worth to pay this huge amount of money, while I can get Pension Credit to top up my income (from the £82 a week State Pension) to £218.15 a week without paying a penny, am I missing something here?

Thanks

p00hsticks

BenTa said:

am I missing something here?

Possibly that Pension Credit is means tested and if you actually have the £11k + that you suggest you could use to buy voluntary NI contributions you wouldn't be eligible for the full amount of PC, as you would be expected to be using some of your savings ?

vacheron

Not a pension credit expert, but my questions would be:

• Wouldn't receiving this pension credit depend on only having ONLY the state pension to live off in your retirement?

• If you have any other kind of income / private pension now or in the future, wouldn't this be considered for means testing any potential pension credit?

• Are you sure you can still buy 13 years? That sounds like a lot. 

On the other hand, if you buy years, you will receive the increased pension for the rest of your life regardless of any other income, and that £11K outlay will pay for itself in 2.5 years.

BenTa

Thank you guys of your help.

Actually, I don’t have the £11K for paying for the gab years, not even a £1000, and due to personal circumstances, on and off work, and bad decisions over the past years, I been left with no private pension, hence the £11k is a huge amount for me, that's if I have to pay, I have yet to find a way to source it from friends and family or may be to take a loan.

The problem is, now that am convinced it it is worth it,  thanks to vacheron, is  that I been trying to call the Future Pension Centre for hours to discusses my options of paying for the gab years, but never managed to get through.

kimwp

Will you have any other source of income when you stop working? Do you have a private pension or a pension through work?

Famau

BenTa - I would not buy the extra years if I was in your situation.  You'd exhaust your savings, it appears.  And, as you asked earlier, you should be entitled to pension credit which will bring your pension up to around £201pw, so buying extra years is probably not the best decision in your circumstances.  Note that you may be entitled to other benefits too - such as council tax reduction etc.  Could I suggest that you ring up Citizens Advice - have your full details of income, housing costs etc to hand and they will provide the right steer.  Good luck.

molerat

If there is no other income then topping up would seem foolish as pension credit not only tops up the income but also opens the door to many other additions

https://www.ageuk.org.uk/information-advice/money-legal/benefits-entitlements/pension-credit/

kimwp

Famau said:

BenTa - I would not buy the extra years if I was in your situation.  You'd exhaust your savings, it appears.  And, as you asked earlier, you should be entitled to pension credit which will bring your pension up to around £201pw, so buying extra years is probably not the best decision in your circumstances.  Note that you may be entitled to other benefits too - such as council tax reduction etc.  Could I suggest that you ring up Citizens Advice - have your full details of income, housing costs etc to hand and they will provide the right steer.  Good luck.

I completely agree with this - except that you appear to not have savings, so you would go into debt for no additional benefit (and actually probably a loss given the other benefits with pension credit)

Womanabroad

I had a similar situation 10 years ago. I used my small pension from abroad to repay about 6 missing National insurance years. This leaves me with no savings and a just a few pounds over the threshold  for Pension credit. Pension Credit is a gateway - if you are eligible you are also eligible for many other discounts as Famau and Molerat said(council tax, mortgage interest, cheaper broadband, warm home). There is no sliding scale. I thought I was doing the responsible thing by topping up my pension but in reality it has left me much worse off and I have had to borrow money from family to feel secure.