Voluntary NI Contributions

EllieDog

Hi I retired in 2009 from the Civil Service with an opted out pension but I had 30 years NI contributions for full state pension. However I have not worked since due to a number of operations and nearly from the outset caring for my Mother who suffered from Alzheimer's and later my Father who was terminally ill. In 2016 I became aware that the NI contributions had increased to 35 years. As a result I applied for Cares Allowance in order to receive the NI contributions but was advised that as my Father was receiving Attendance Allowance for my Mother which he would lose and they would be losing more than I was gaining so I withdrew my claim. Only after my Father passed away did I apply for Cares Allowance which I received for 2 years before my Mother was taken into care, which is a whole other story. 
Through Moneysaving Expert I became aware of being able to pay for voluntary NI contributions and contacted Department of Work and Pensions for a forecast which was provided but no indication of years I could pay for but that I was short by 6 years. I then wrote to HMRC outlining some of the reasons why I had been unable to make NI contributions from 2009 except for the 2 years from Cares Allowance. This was more in hope than any realistic chance of HMRC increasing my contribution record.
As I was due to receive my pension in October and not having received a reply from HMRC I contacted Work and Pensions who gave me the costs for the most recent 6 years back from 2023/24. A few days after paying the amount required I received a very helpful letter from HMRC which indicated that they had read the evidence I had supplied but could not increase my contributions record but they did supply a record of my NI contributions back to 75/76 including the payment need by 5/4/2025 for the years I had not made contributions. One of those years 9/10 I had a part year contribution and the amount to purchase was only £317.00. 
I contacted W&P again and asked them why I was given only the figures for the most recent 6 years as this had cost me an nearly an addition £600. I was told that any voluntary payments for years before 2016 would not count towards increasing my pension/ NI contributions. 
Does anyone out there know if this is correct as the record from HMRC seems to indicate otherwise.
Sorry to have gone round the houses to ask this question but it shows how circumstances can have an affect on your finances.  

Dazed_and_C0nfused

EllieDog said:

Hi I retired in 2009 from the Civil Service with an opted out pension but I had 30 years NI contributions for full state pension. However I have not worked since due to a number of operations and nearly from the outset caring for my Mother who suffered from Alzheimer's and later my Father who was terminally ill. In 2016 I became aware that the NI contributions had increased to 35 years. As a result I applied for Cares Allowance in order to receive the NI contributions but was advised that as my Father was receiving Attendance Allowance for my Mother which he would lose and they would be losing more than I was gaining so I withdrew my claim. Only after my Father passed away did I apply for Cares Allowance which I received for 2 years before my Mother was taken into care, which is a whole other story. 
Through Moneysaving Expert I became aware of being able to pay for voluntary NI contributions and contacted Department of Work and Pensions for a forecast which was provided but no indication of years I could pay for but that I was short by 6 years. I then wrote to HMRC outlining some of the reasons why I had been unable to make NI contributions from 2009 except for the 2 years from Cares Allowance. This was more in hope than any realistic chance of HMRC increasing my contribution record.
As I was due to receive my pension in October and not having received a reply from HMRC I contacted Work and Pensions who gave me the costs for the most recent 6 years back from 2023/24. A few days after paying the amount required I received a very helpful letter from HMRC which indicated that they had read the evidence I had supplied but could not increase my contributions record but they did supply a record of my NI contributions back to 75/76 including the payment need by 5/4/2025 for the years I had not made contributions. One of those years 9/10 I had a part year contribution and the amount to purchase was only £317.00. 
I contacted W&P again and asked them why I was given only the figures for the most recent 6 years as this had cost me an nearly an addition £600. I was told that any voluntary payments for years before 2016 would not count towards increasing my pension/ NI contributions. 
Does anyone out there know if this is correct as the record from HMRC seems to indicate otherwise.
Sorry to have gone round the houses to ask this question but it shows how circumstances can have an affect on your finances.  

Yes it sounds correct.

You are getting confused between having years available to purchase and years which will increase your State Pension.

And 35 years is of no relevance to you whatsoever.  Those rules apply to people who first start building up an NI record from 2016 onwards.

As you already had 30 years by 2016 you couldn't increase your starting amount.  Fortunately you are in the lucky position to be able to purchase sufficient post 2016 years to change your expected State Pension of ~£169.50/week to the standard new State Pension of £221.20/week.

Even though it probably seems a big outlay the return on your "investment" is excellent.  You may have paid ~£5k out but will then probably be receiving £35-40/week (pre tax) extra State Pension for as long as you live.  And that will be inflation proofed by the triple lock.

A clear winner under the new system 🙂

EllieDog

Thanks for your reply. However after having posted my comment I  was looking through the documentation that HMRC had sent me I found a Form C1CW67 Additional Information. Part A shows in columns the tax year, amount to be paid, date to be paid by, given as 5 April 2025 and tick years to be paid. This includes back to 2009/2010 the part paid year. Over the page it tells me how to pay to enter the amount and to whom to make the cheque payable to and what additional details to include on the cheque but more importantly there is a statement "I understand the year(s) I've paid for will only count towards my State Pension.". Having read through all of the documents I cannot find any reference to the years I would be paying for not being credited to my pension contributions. Confusing.

Dazed_and_C0nfused

EllieDog said:

Thanks for your reply. However after having posted my comment I  was looking through the documentation that HMRC had sent me I found a Form C1CW67 Additional Information. Part A shows in columns the tax year, amount to be paid, date to be paid by, given as 5 April 2025 and tick years to be paid. This includes back to 2009/2010 the part paid year. Over the page it tells me how to pay to enter the amount and to whom to make the cheque payable to and what additional details to include on the cheque but more importantly there is a statement "I understand the year(s) I've paid for will only count towards my State Pension.". Having read through all of the documents I cannot find any reference to the years I would be paying for not being credited to my pension contributions. Confusing.

Again, you are conflating two different things.

If you want to pay for 2009/10 you can do.l and that year will be filled  But that doesn't mean it will change your State Pension entitlement.

I suspect you don't believe me but if you phone the Future Pension Centre they will tell you the same.

Blue_Butterfly

"I understand the year(s) I've paid for will only count towards my State Pension."

This is a general statement from HMRC that Voluntary class 3 NI only counts towards State Pension and not other benefits such as SSP and ESA that class 1 NI does. Its not an indication of an individuals SP entitlement.

The State Pension system had a "reset" in 2016 where each individual had their pre 2016 NI entitlement as a their Starting Amount. The old system was complex and everyone's work history is different so that is why different people need very different numbers of years to reach the full NSP.

My entire career was in the NHS and had 43 NI years in 2016, I needed another 7 to reach the full NSP. Those of us with a lot of contracted out years can only count 30 of them, because we were only paying towards the basic state pension before 2016. As others have said we are the winners through being able to get more pension than we expected pre 2016.

EllieDog

Thanks for your replies. Its not that I don't believe you I just don't understand why HMRC do not make it clear that payments for years before 2016 will not add to your pension amount.

Dazed_and_C0nfused

EllieDog said:

Thanks for your replies. Its not that I don't believe you I just don't understand why HMRC do not make it clear that payments for years before 2016 will not add to your pension amount.

Because for lots of people they will.

It's just that for you they don't.

molerat

EllieDog said:

Thanks for your replies. Its not that I don't believe you I just don't understand why HMRC do not make it clear that payments for years before 2016 will not add to your pension amount.

How NI affects your pension is not in the remit or knowledge of HMRC, they are merely tax collectors, that is down to DWP who provided you with accurate information.

When we filled gaps MrsM filled 6 pre 2016 years and increased her pension but my 7 pre 2016 gaps would not add to my pension so I had to fill post 2016 years.

EllieDog

Thanks again for all your replies. It puts my mind at rest that I haven't overpaid and good luck to all of you who have retired and have managed to fill gaps in there NI for pension. Special thanks to Martin and his team that made us all aware of this.