Am I understanding this?

dreaming

I took early retirement in 2013 aged 58 and lived on my company pension until 2021 when I was 66. I now receive state pension of £172.63/week (£8,876.76/year). Is it correct that making up years pre-2016 gives a lower annual benefit than post-2016? I can afford to pay all years (cost £5,455.50), or I debated topping up 5 years (2014-2019 cost £3,835.70) with a view to possibly topping up the remaining years later and leaving me a buffer in savings. Does this make any sense? I feel as if I am going round in circle in my head (and on paper) but can't work out what the benefits per year or week would be. If anyone can give me any pointers I would be grateful - I have been unable to get through to the pension service (understandably). Looking at my gaps I have -

Gaps	Cost of filling gaps
2020 to 2021	£795.60
2019 to 2020	£824.20
2018 to 2019	£824.20
2017 to 2018	£824.20
2016 to 2017	£824.20
2015 to 2016	£824.20
2014 to 2015	£538.90

molerat

A pre 2016 year can give £6.32, £5.65 or even £0 depending on your personal circumstances.  If your company pension was contracted out it is probable that any pre 2016 years would be the third option, £0, only years 2016-17 and later would add value.  How many full years do you have ?

If 35 or more then you definitely cannot add more, if 30 to 34 then you may be able to add more up to 35, if below 30 you can definitely make up to 30.

dreaming

Thank you for replying. I have 43 full years  - last year 2013/14. I'm pretty sure I was contracted out for part of that but can't find my original paperwork which detailed my pension breakdown from 2016 and I think I remembered seeing 'contracted out' mentioned. Unfortunately, despite working in banking for many years pensions are like a foreign language to me but I have been trying to get my head round it. So it looks as if paying any pre 2016 voluntary contributions now would have no benefit - which is what I originally thought a couple of years ago when I was first aware of this but managed to tie myself in knots trying to make sure. Is it worth 2016 onwards do you think (total 4092.40)?

QrizB

dreaming said:

I took early retirement in 2013 aged 58 ...

So you could potentially have 42 full pre-2016 years, and won't have any post-2016 ones.

Was your employment pretty much continuous from when you left school?

When in 2021 did you reach state pension age, before or after 6th April?

Edit: OP posted while I was writing this, and has answered most of my questions!

p00hsticks

QrizB said:

dreaming said:

I took early retirement in 2013 aged 58 ...

When in 2021 did you reach state pension age, before or after 6th April?

I surmise that it must be on 6th April 2021 or later, as if it was earlier then they wouldn't be given the opportunity to pay for NI year 2020-21. 

molerat

With 43 years pre 2016 you definitely cannot add more so only years 2016-17 and later can add to your pension at £6.32 per week each, the available 5 taking you to £204.23.  18-19 and earlier need to be purchased before April and the other two will increase to £923 from then.

dreaming

QrizB said:

dreaming said:

I took early retirement in 2013 aged 58 ...

So you could potentially have 42 full pre-2016 years, and won't have any post-2016 ones.

Was your employment pretty much continuous from when you left school?

When in 2021 did you reach state pension age, before or after 6th April?

My record shows I have 4 full years pre-1975, then 1975-2014 are all full (part of that time I didn't work but received child benefit). I retired in Aug 2013 on my 58th birthday.

p00hsticks

dreaming said:

Thank you for replying. I have 43 full years  - last year 2013/14. 

dreaming said:

. Is it worth 2016 onwards do you think (total 4092.40)?

Each of those years from 2016-17 and later would all £6.32 to your state pension - so all five years would increase your weekly pension by £31.60. 

Note that the earliest two won't be available to buy after 5th April this year, and as you have already reached State Pension Age, each additional purchase of years will require a manual recalculation of your pension which will take some time, and it will only be backdated to the time when you make the payment, not when you reached State Pension Age. 

dreaming

Thanks very much. I had got quite close to those figures so will park it for tonight and look at it again tomorrow and consider it, although as I will only have to live two and a half years to break even. Obviously with my company pension it will bump up my income tax a bit as well but I really ought to switch off technology and read a good book instead.