Buyin pension years

gesdt50

Martin hasnt metioned the buying pension years in a few months, last time it was in the email letter it said to buy years now; as its a couple of months into 2025 folk have to buy years back surely with interest rates a bit higher for savers presently it may be shrewd to get the higher interest rates from the banks savings accounts etc and buy a month before the scheme ends?

molerat

It is not as simple as that.  With the introduction of the 2016 pension a dispensation was made to buy years as far back as 2006-07 and many needed those extra years.  That dispensation ends on 5th April 2025 and the normal rule of buying back the previous 6 years comes back into into force so years 2018-19 and earlier, 13 years in all, will no longer be available.  So going forward yes it is likely sensible to buy nearer to retirement with the money put away, where possible, in an inflation beating account as that is where the annual increase in contributions is set.

Marcon

gesdt50 said:

Martin hasnt metioned the buying pension years in a few months, last time it was in the email letter it said to buy years now; as its a couple of months into 2025 folk have to buy years back surely with interest rates a bit higher for savers presently it may be shrewd to get the higher interest rates from the banks savings accounts etc and buy a month before the scheme ends?

Good thinking, but for a small amount of interest, or a larger but possibly taxable amount, it's probably not worth it, simply because too many people might overlook taking the necessary actions to buy the extra years if they need to 'backdate' more than the usual 6 years. Missing out on those would be far more damaging financially than missing out on a spot of interest.

p00hsticks

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

35har1old

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

bjorn_toby_wilde

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

Why do you say that?

NoMore

bjorn_toby_wilde said:

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

Why do you say that?

I assume because they think means testing is coming for the state pension

MetaPhysical

NoMore said:

bjorn_toby_wilde said:

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

Why do you say that?

I assume because they think means testing is coming for the state pension

I think that too.  However, the state pension is already means tested if you think about it since you pay tax on it at your marginal rate.
In terms of means testing to the extent that you may not receive it at all if your income is above a politically defined level then that's a massive political decision with huge ramifications for the UK pension industry.  It would destroy the incentive for many to save into pensions.  I cannot see that any government will break that unwritten social contract of NI contributions providing you with a state pension.

molerat

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

If state pension is going to be the only source of income, and you have little in savings, then buying years could be a very poor move at any time.

Dazed_and_C0nfused

molerat said:

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

If state pension is going to be the only source of income, and you have little in savings, then buying years is a very poor move at any time.

In the right situation maybe not a bad idea for one half of a married couple?

Silvertabby

Dazed_and_C0nfused said:

molerat said:

35har1old said:

p00hsticks said:

The original extension to the deadline was due to a last minute panic and people not be able to get the necessary information and make the payments - I know they have made it easier to pay online now, but as Marcon says it's a big gamble to take it to the wire and risk missing out for a small amount of interest.

If the state pension is going to be the only source of income yes it's a good idea to buy. It's now a big gamble if you have other income

If state pension is going to be the only source of income, and you have little in savings, then buying years is a very poor move at any time.

In the right situation maybe not a bad idea for one half of a married couple?

Yes - if the spouse's income takes them over the means test limit then buying added years will give them extra income.