Ni contribitions

RaiRai25

Hello I'm new! 

I have a few questions as I have noticed the NI top up ends in a month. 

I have gone online and checked I have around 15 years contributions 
I have around 15. More years I can work I have the following questions. 

1. The site has listed. 35 options for tops ups in a combination of different years. These range from 1 to 14 year! 
Can I pay for one year say today and then return to the site and pay another year next week? Or is a one off decision that must be made and paid in one go? 

2. Is it worth always leaving enough unfilled qualifying years as you have years remaining as you can always fill them each year

3. If you are doing top up is it always sensible to leave the last 6 years till just prior to reaching pension age as you can backdate them and have use of the money before then? 

4. Does the year you reach pension age count as a year for your pension contributions.
Lets say your birthday is 1st Feb. That is nearly 10 months into the tax year does paying contributions till then make it a countable year. Can you pay the full year or top up? 

5. I notice at random point the amount to buy an extra year increase. How is this decided and calculated

6. In the options for years buying question 1 the website keep listing the most recent years as purchase option rather than the older one. I would obviously prefer to pay for the older ones and keep the last 6 years available to pay for in furute years. How can I do this? 

7. If you have the money and have years to fill is there any situation where purchasing extra years is not worth it? 
From my rough calculation even if you are a higher rate tax payer and could get a post tax return of say 6% if you kept the money I think I would probably brake even after around 6 years of drawing my pension

Many thanks in advance

molerat

1) Probably but if using the automated system it may throw a wobbly because it would unlikely have processed the earlier payment.

2) That is your decision to make. See 3) & 5)

3) Years increase in price after 2 years so you would be paying the new price - for instance the 21-22 year currently costs £800.80 but will be £923.00 from 5 Apr.

4) No, the tax year you reach SR cannot count.

5) Years stay at the in year price for 2 years after the end of the year then increase to the current year price each year until 6 years after the end of the year when they cease to be available.  The increase each year is usually CPI. See 3)

6) I believe that is one of the quirks of the on line system

7) IMO the only reason for not purchasing is if you will be on a very low income and extra years could disqualify you from pension credit and all the extras that come with it.

Linton

NI top-ups dont end in a month.  What happens from the start of the 2025-2026 tax year is that you can only top up for the previous 6 years. Prior to then you can top up from 2006. To answer your queations:

1.  You can top up any eligible previous year at any time.
2.  It may be worth topping up previous years earlier as the price increases each year. Depends on what else you would do with the money.
3. As (2)
4. The year in which you reach State Pension Age does NOT count towards your SP.
5. The government announce a new price ready for the next tax year.  I dont know whether it is index linked.
6. You state for which year you want to pay.
7. For some people extra pre 2015 years may not provide any benefit even though you can buy the NI years.  In the past you would need to talk to the Future Pension Centre - https://www.gov.uk/future-pension-centre. Wether this problem has been resolved in the latest forecasts I dont know.

Some people still believe that 35 NI years is both necessary and sufficient for a full SP.  This is often not the case so check your forecast: https://www.gov.uk/check-state-pension.

I assume you are no longer working and so will not receive NI years through employment.

RaiRai25

molerat said:

1) Probably but if using the automated system it may throw a wobbly because it would unlikely have processed the earlier payment.

2) That is your decision to make. See 3) & 5)

3) Years increase in price after 2 years so you would be paying the new price - for instance the 21-22 year currently costs £800.80 but will be £923.00 from 5 Apr.

4) No, the tax year you reach SR cannot count.

5) Years stay at the in year price for 2 years after the end of the year then increase to the current year price each year until 6 years after the end of the year when they cease to be available.  The increase each year is usually CPI. See 3)

6) I believe that is one of the quirks of the on line system

7) IMO the only reason for not purchasing is if you will be on a very low income and extra years could disqualify you from pension credit and all the extras that come with it.

Thanks for the reply

Just one question regarding point3

You say that the price for the years increases after two years. You say 2021-22 will go up from april 2025 - but it is already in its third year so i am confused? 
You also say it will increase from £800 to £923 - I am assuming the £923 is how much the 2024-25 year will cost to buy?

Thanks

molerat

The clock was paused at April 2023 so all past year increases were held until April 2025.

£923 is the 25-26 price, 24-25 is £907.40 and will stay at that until April 2027

RaiRai25

molerat said:

The clock was paused at April 2023 so all past year increases were held until April 2025.

£923 is the 25-26 price, 24-25 is £907.40 and will stay at that until April 2027

I am currently being quoted 824.2 for 2022-23 and 907.4 for 2023-24

Will the 2022-23 increase from 824.2 to £923 from 5th April 2025? or will I have another year at the low rate?

molerat

Yes, 22-23 will increase to £923.  The cycle is returning to normal.

RaiRai25

molerat said:

Yes, 22-23 will increase to £923.  The cycle is returning to normal.

thanks for all your help

i think doing 2006-7 and 2017-23 is clearly the best option

RaiRai25

from what I can gather before 2016 you only get 5.65 for each NI pear and post you get 6.32 as of now...

molerat

RaiRai25 said:

from what I can gather before 2016 you only get 5.65 for each NI pear and post you get 6.32 as of now...

Not necessarily.

If your 2016 starting amount is based on the new rules further pre 2016 years will be at £6.32

If your 2016 starting amount is based on the old rules further pre 2016 years will be at £5.65

When you purchase pre 2016 years the starting amount calculations are done again.

Purchasing further pre 2016 years could switch the starting amount from old to new rules revaluing all pre 2016 years.

RaiRai25

molerat said:

RaiRai25 said:

from what I can gather before 2016 you only get 5.65 for each NI pear and post you get 6.32 as of now...

Not necessarily.

If your 2016 starting amount is based on the new rules further pre 2016 years will be at £6.32

If your 2016 starting amount is based on the old rules further pre 2016 years will be at £5.65

When you purchase pre 2016 years the starting amount calculations are done again.

Purchasing further pre 2016 years could switch the starting amount from old to new rules revaluing all pre 2016 years.

I have to be honest I didn't understand that

From what I have calculated all the years they have offered me on the site pre 2016 are at 5.65 and post at 6.32