Buying extra NI years?

QrizB

boco803 said:

The partially filled year will cost around £650, but I've a couple more years to pay that off.  However, as it'll increase by 2027, it's probably best if I settle this now?

So with all things being equal, with years 2 & 3 increased to £923, and year 4 to increase to £923 too - interest matching inflation which in turn is what HMRC uses to increase voluntary NI, then I'll be around £200+ worse off from the off?

Hope the above makes sense?

I'd buy the £650 year, you're unlikely to be able to turn that into £923 without investment risk.

If the cash was in a savings account, earning 3-4%, I'd probably buy the £824 years too.

I'd leave the £907 for now.

boco803

Thanks again @QrizB- appreciate your insight and clarity.

I suppose I'll have wasted ~£2300 if I do work in future?

Any ideas what HMRC asks to determine whether or not voluntary NI could be paid via online account?

 

p00hsticks

boco803 said:

I suppose I'll have wasted ~£2300 if I do work in future?

Yes, that's the point I've been trying to make. 
You've indicated that you don't reach State Pension Age for another 15 years, but unless I've missed it haven't really expanded further or whether you are currently working, intend to work in the future or are on any benefits. 

You only need a few more years credited to reach the full State Pension and have quite a few years ahead to do it. There is no urgency to make voluntary contributions now. 

If you have a job that earns you at least £123 a week you'll get credits without paying any NI or tax.
If you take up some form of Self-employment then you'll be eligible to pay the Class 2 rate which is much cheaper than the Class 3 rate you are being quoted for past years .
You'll also get credits if you claim certain benefits such as Universal Credit, Carer's Allowance, ESA or JSA.
And if you have working children  you may in future be able to claim Specified Adult Childcare credits for looking after grandchildren while they work.

So there are a number of ways to get those missing years going forward without having to spend any money at all. 
And if it gets to 2039 and you still haven't filled them, then you can go back and buy them then, at hopefully the same or little more than you'd pay now in real terms if you put the money aside in a decent savings account. . 

boco803

Yes, thanks @p00hsticks - I have previously noted your point re. potentially wasting the outlay now.

I appreciate your insight and advice too.

Not working or receiving benefits and not sure if will be back in employment, but as you say, no urgency as there's still a long road ahead.  Thanks for pointing out weekly earnings requirements (perhaps part-time) to earn credits.

Would you settle the £650 now or by 2027 (in my eyes 'year 1')?

Years 4 and 5 will always be £907 (£923) and increase YOY, but years 2 and 3 (if paid now) would save me over £200 as they'll be unlocked and increase from April 2025?  So I guess at worse, I'd be down £200+ come ~2039 (if I don't work) or at best will have saved £1600+ (if I did work) - is this the best way to look at it?

Thanks again.