National insurance buyback question

Dazed_and_C0nfused

Beeblebr0x said:

As I stated previously, I can only relate what happened to myself, my wife, and various friends all employed in public sector.

Well your NI records must be wrong then as a contracted out year most definitely wouldn't result in a gap.

Blue_Butterfly

Beeblebr0x said:

As I stated previously, I can only relate what happened to myself, my wife, and various friends all employed in public sector.

Were the NI gaps the years between retiring from work on a public sector pension and reaching SPA? 

p00hsticks

Beeblebr0x said:

Digressing slightly, what I've found speaking to friends is those who's pensions were contracted out are mostly unaware that their NI records are likely to have gaps

Being contracted out doesn't result in any gaps in a persons NI record - provided they they reached the lower earning limits for NI a  'full year' is earned regardless of whether a person was contracted in or out. 

The effect of someone having been contracted out prior to 2016 is that they many need more years in total to reach the new maximum than the headline figure of 35 that applies to those born this century (or may not be able to reach it at all if reaching SPA soon after 2016), as the transitional rules for calculating a persons 'starting amount' on 6th April 2016 make adjustments to allow for the fact that they will have paid a lower rate of NI. We've had reports of people needing everything from 29 years (if contracted in with a relatively high SERPS/S2P figure) to 50 (if contracted out, when their starting amount would have just been equivalent to the old style basic pension amount).

The transitional rules ensured that everyone will receive at least the amount that they would have expected to get under the old system. Many of those contracted out are winners as if they have enough post-2016 years they get a chance to increase that amount further. 

The most likely cause of any gaps occuring in the record of someone who was contracted out would be down to the retirement age of their private pension being potentially earlier than SPA and so they stopped working and paying NI before they reached sPA. 

QrizB

Beeblebr0x said:

As I stated previously, I can only relate what happened to myself, my wife, and various friends all employed in public sector.

Those three things are largely independent.

You might have friends who have contracted out. This doesn't mean they have gaps in their NI record or that they will necessarily get less than the full New State Pension.

You might have friends with gaps in their NI record. This doesn't mean they contracted out and doesn't necessarily mean they will get less than the full New State Pension

And you might have friends who will get less than the full New State Pension. This doesn't mean they have contracted out and doesn't necessarily mean they have gaps in their NI record.

People who have all three things - contracted out, gaps in their NI record and less than the full New State Pension - are a relatively small proportion of the population, although it's possible that they're over-represented in your circle of friends.