Opting out of SERPS and state pension

misty6

Hi I’ve just found out I only have until 5th April to pay 7 years missing NI contributions. I remember opting out of serps years and years ago. I don’t remember ever opting back in. I’m not even 100% sure what serps is. On gov.uk I’m forecast to receive £183.07 per week state pension at the moment. It says if I pay approx £5700 I can have the full amount of £221.20. My question is will the serps thing have any effect on this please? I haven’t worked since 2014 and no longer pay any NI contributions. I’ve been living on my local government medical retirement occupational pension for the the last 10 years or so. Thank you for any replies. 

molerat

When do you reach state retirement ?

Contracting out only affects your starting amount at 2016.  You were able to add to that with post 2016 years.  Adding 6 years will take you to £220.99 so it is not worth buying a seventh to get only an additional 21p.  You need to buy the cheapest 6 years from 2016-17 and later.

misty6

Thanks for replying. Sorry I don’t know what you mean by starting amount. I stopped paying NI in 2014 so haven’t been able to add anymore since. I’m 60 if that helps at all. 

DRS1

and contracting out means you have an occupational or personal pension scheme on top of the state pension.  So don't forget about that one.

molerat

At April 2016 you were giving a starting amount of the higher of old or new schemes and you were able to add to that after 2016.  You have the option of paying past years or contributing in the future, what you do is down to you.

misty6

My retirement is 2032 so I’ve still got to live for 7 more years to reach it!

QrizB

misty6 said:

My question is will the serps thing have any effect on this please?

Your current forecast includes any effects from having previously contracted out.

misty6 said:

On gov.uk I’m forecast to receive £183.07 per week state pension at the moment. It says if I pay approx £5700 I can have the full amount of £221.20.

So, you can buy extra years and increase your state pension. Or you can choose not to.

Typically, it takes from ~2.5 years to ~3.5 years to get back the cost of extra years once you start receiving your state pension.

misty6 said:

I’ve just found out I only have until 5th April to pay 7 years missing NI contributions ...

I’m 60 if that helps at all. 

You only need 7 years (will get most of the benefit from 6), and you have several years before you reach state pension age, so you don't have to buy them all in a hurry right now. There's no rush.

molerat

You could drip feed year by year going forward if you wish, more expensive than buying past years but you keep that money until closer to the time or you could opt for the current 2 cheapest now, which will be 20-21 and 21-22 at £795.60 and £800.80, and pick up the rest going forward.  Your choice as you are not in urgent need of those past years.

misty6

Thank you all for the help. I really appreciate it. Especially for the bit where I can get away with paying for 6 years instead of 7 years. 6 years was one of the options they gave me but I didn’t pick up on the 21p difference so thank you for that. I love how helpful these forums are.