Taking early retirement - how to get maximum pension?

Scott1512

My wife has taken early retirement this month, and won't get her state pension until 2037 (12 years from now).

Her current projected pension for 2037 is £158 a week, a current shortfall against full pension (£221) of £73 a week.

Can she continue to make National Insurance contributions to increase her pension, even though she is not working?

If so, how might this be done?

Thanks!

QrizB

If she's been employed up until now, I'd suggest waiting a month or two before doing nything since HMRC are being swamped by people trying to get things done befor the end of the tax year - things that your wife won't need to worry about.

Between now and 2037 she needs twelve more years of NI contributions. 2024/25 is likely to count from her employment; if not, she might have a small top-up payment to make.

p00hsticks

Probably the simplest way is to set up a direct debit to pay voluntary contributions in monthly installments for years as and when they arise - just remember to cancel the Direct Debit and let HMRC know when she's reached the maximum amount possible. 
Pay voluntary Class 3 National Insurance: Set up regular payments - GOV.UK

Dazed_and_C0nfused

Scott1512 said:

My wife has taken early retirement this month, and won't get her state pension until 2037 (12 years from now).

Her current projected pension for 2037 is £158 a week, a current shortfall against full pension (£221) of £73 a week.

Can she continue to make National Insurance contributions to increase her pension, even though she is not working?

If so, how might this be done?

Thanks!

Your calculator has tricked you 😳

If she has already accrued £158 then that is a current shortfall of just £63.20.  Which exactly 10 post 2016 years will fill.

One of which may well be filled from her earnings in the current tax year.

Scott1512

Thanks for the input - yea I made a mistake her shortfall is approx £63 per month. What I don’t grasp is how much / minimum NI would she need to pay per month / year for the next 12 years to ensure she gets to the maximum pension level, or whether it would be better for her to simply put money into an ISA instead, if the pension contributions required don’t make financial sense.

molerat

Scott1512 said:

Thanks for the input - yea I made a mistake her shortfall is approx £63 per month. What I don’t grasp is how much / minimum NI would she need to pay per month / year for the next 12 years to ensure she gets to the maximum pension level, or whether it would be better for her to simply put money into an ISA instead, if the pension contributions required don’t make financial sense.

Class 3 voluntary contributions make excellent sense except when you would be reliant on pension credit.  They currently cost £907.40 per year and give a pension of £328.74 per year so pay back that capital outlay gross in under 3 years - that cost increases each year in line with CPI but the pension purchased increases in line with the triple lock which is often in excess of CPI.  That is the equivalent of buying a single life index linked annuity at 36% - where else could you buy that ?