Top up to 34 or 35 years costing £910 for additional 9p per week, £5.2 per year.

Buddie29

To topup from 34 to 35 years contribution would cost £910 and would only increase weekly payment by 9p per week. Is there any down side by going for the 34 years option instead of full 35 years when weekly payment increase is so low?

Dazed_and_C0nfused

Buddie29 said:

To topup from 34 to 35 years contribution would cost £910 and would only increase weekly payment by 9p per week. Is there any down side by going for the 34 years option instead of full 35 years when weekly payment increase is so low?

Even with triple lock inflation and you living till 120 I can't see that being a good use of your £910!

p00hsticks

No, I don't believe so.
I've made the same decision, although in my case the shortfall was just over a £1. 

If your only income is going to be the State Pension, then in fact it may be beneficial not to make additional voluntary contributions, if in doing so you increase the amount to above that which would qualify you for Pension Credit. not only would Pension Credit top up the amount for you, but it also passports you to a whole host of other benefits such as Winter Fuel Payment, TV licence etc

Buddie29

Thank you both for feedback, very helpful. Confirms my view that paying extra for 35 years does not make financial sense. Only concern if government change how they calculate payments in the future based on number of NI contribution years. Would need a crystal ball to try and work out what might happen depending on government of the day.

p00hsticks

Buddie29 said:

Thank you both for feedback, very helpful. Confirms my view that paying extra for 35 years does not make financial sense. 

On the contrary, paying extra very much makes financial sense for anyone who will have any other income in retirement, as the resulting boost in State Pension for the outlay will see you in profit before your 70th birthday and is a very good investment for anyone expecting to live that long.

 As per my previous post, It's only those with no other pensions or savings who might otherwise qualify for Pension Credit that need to be wary of purchasing additional years.

 Also, picking up on your reference to 35 years, which you've made twice now. For other readers, I just want to reiterate that this figure only applies to people with NI records falling only under the new system. If your were born earlier than that, you might need anything from 29 to 50 years to reach the maximum.

squirrelpie

p00hsticks said:

On the contrary, paying extra very much makes financial sense for anyone who will have any other income in retirement, as the resulting boost in State Pension for the outlay will see you in profit before your 70th birthday and is a very good investment for anyone expecting to live that long.

In general I agree, but in the case where the top-up is for the last year to make up a full new state pension, I disagree. Whether this special case is worthwhile depends on how much the year's NI payment will add to the state pension, and that can be different for everybody. So it needs to be assessed in each individual case.

p00hsticks

squirrelpie said:

p00hsticks said:

On the contrary, paying extra very much makes financial sense for anyone who will have any other income in retirement, as the resulting boost in State Pension for the outlay will see you in profit before your 70th birthday and is a very good investment for anyone expecting to live that long.

In general I agree, but in the case where the top-up is for the last year to make up a full new state pension, I disagree. Whether this special case is worthwhile depends on how much the year's NI payment will add to the state pension, and that can be different for everybody. So it needs to be assessed in each individual case.

True - I was responding in more general terms to the OPs latest comment, and forgot that in his particular case from the first post, the final years top up would add only 9p to his state pension amount. 

supersezzie

p00hsticks said:

Buddie29 said:

Thank you both for feedback, very helpful. Confirms my view that paying extra for 35 years does not make financial sense. 

On the contrary, paying extra very much makes financial sense for anyone who will have any other income in retirement, as the resulting boost in State Pension for the outlay will see you in profit before your 70th birthday and is a very good investment for anyone expecting to live that long.

 As per my previous post, It's only those with no other pensions or savings who might otherwise qualify for Pension Credit that need to be wary of purchasing additional years.

 Also, picking up on your reference to 35 years, which you've made twice now. For other readers, I just want to reiterate that this figure only applies to people with NI records falling only under the new system. If your were born earlier than that, you might need anything from 29 to 50 years to reach the maximum.

Add to that just for the benefit of anyone browsing in this position (not the OP), if you have a younger partner or are in a couple, you need to both be under the threshold to qualify for pension credit, and until you are both pension age, it would actually be Universal Credit you would have to apply for. So anyone in a couple, there is a high chance you won't qualify for pension credit at all even if your state pension is half the amount as long as your partner has even a modest basic income. You can look up the thresholds online. I'm just posting to say it is worth paying out in most cases I think for the guaranteed income rather than means tested income in this situation, but maybe not so much for the OP!