Topping up SP - do it now or wait?

tigerspill

Hi,

My wife is 58 and retired.  She has no plans to work in the future (at least, not paid work as she volunteers at a local charity).
She is three years short in NI contributions to receive a full state pension. 

On the HMRC portal, there are three options.  The following are the costs for the option to pay for all three years -

Tax year gap Cost

2021 to 2022 - £693.00

2022 to 2023 - £824.20

2023 to 2024 - £907.40

Total cost - £2,424.60

These costs are around what we expected and I believe that some NI was paid in 2021/2022 which I think explains the lower cost for that year.

The question I am trying to answer is whether we should 

1. just bite the bullet and so this now?  

 - Advantage is that it gets it out of the way and locks this in against any potential legislation change that may block purchasing these years later.

 - Disadvantage is if anything bad should happen and she doesn't make it to SPA, then it is wasted money

Or 

2. to wait until nearer the time (advantages and disadvantages are effectively reversed).

Ant thoughts on how to proceed?  Or other things I should consider in this decision.

I am tempted just to pay and get it done just to have it out of the way and I don't need to think about it again - a warm feeling type of reason rather than logical.

Flugelhorn

does the forecast say that she can get a full state pension IF she continues to contribute for the next 7-8 years ? or is full regardless of doing that?

molerat

Each year is CPI increased. I would put it in a savings account, the extra cost being the price of insuring against losing it all. Who knows what is gong to happen in the future.  She could receive benefits that give credits.  Look after grandchildren ?  Just pay the required final years before the 2 year increase point.

tigerspill

Flugelhorn said:

does the forecast say that she can get a full state pension IF she continues to contribute for the next 7-8 years ? or is full regardless of doing that?

It says the following -

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2024

£202.89 a week

Forecast if you contribute another 3 years before 5 April 2033

£221.20 a week

£221.20 is the most you can get

squirrelpie

"Disadvantage is if anything bad should happen and she doesn't make it to SPA, then it is wasted money"

I would have thought that the main disadvantage would be that she is dead. Against that I would expect I and everybody else would not care one way or the other about a few thousand pounds in the grand scheme of things.

comeandgo

Your wife has ten years before she actually gets her state pension.  I retired early and thought I’d never do paid work again but I’ve started part time and hit the lower ni bands so have another year to add to my state pension, ( I’m 3 years short, or was).  She may become your carer and claim allowances and get ni credits.  I would not pay yet as I think 10 years is just a bit too long to be certain you will have no other option to gain the missing 3 years.

tigerspill

squirrelpie said:

"Disadvantage is if anything bad should happen and she doesn't make it to SPA, then it is wasted money"

I would have thought that the main disadvantage would be that she is dead. Against that I would expect I and everybody else would not care one way or the other about a few thousand pounds in the grand scheme of things.

Well, obviously!  But I was asking about the financial aspects!  Thank you anyway.

Pat38493

Similar position here - I am waiting till a few years before my OH SPA.  (Initially I was waiting because you could only do it on the phone and the lines were always jammed, but now I am more just waiting because we are probably making a better return on that money than the cost increase to fill the years each year).

From what we’ve seen in the past, if there are any legislation changes in this area, you will have plenty of advance notice to fill them up.  Just check every year to make sure nothing is proposed.

tigerspill

Pat38493 said:

Similar position here - I am waiting till a few years before my OH SPA.  (Initially I was waiting because you could only do it on the phone and the lines were always jammed, but now I am more just waiting because we are probably making a better return on that money than the cost increase to fill the years each year).

From what we’ve seen in the past, if there are any legislation changes in this area, you will have plenty of advance notice to fill them up.  Just check every year to make sure nothing is proposed.

I think this is the sensible and logical option.  Its like many decisions - the human element of having comfort of having it done.  

DRS1

When does 21/2 expire?  That is an obvious candidate for topping up but if you wait until 2030 it may not be available.

molerat

DRS1 said:

When does 21/2 expire?  That is an obvious candidate for topping up but if you wait until 2030 it may not be available.

Increases in price in April, delayed by a year, and expires April 2028.