Unable to assess whether I should backpay or not? 34 year old with otherwise stable finances

smipsy

Hi all,

Many thanks in advance for anyone reading / commenting. According to Martin's guide, it's likely not worth me making these payments, but I would still feel more comfortable if I could have some third-party comments on my situation.

I have 6 full NI years on my record, and this is my current NI gap situation:



Those years have mostly consisted of me partly living / working abroad (nothing that I can transfer into UK), caring for a family member (not official, was never paid for it or anything) and self-employment (where I never made more than 4-5k a year)

From my understanding, none of the above can be used to plug these gaps, so it would just be a matter of paying them.

Now my current situation is as below:

34 years old
52k a year. I can't be made redundant, and the chances of me losing my job are miniscule. I currently pay 13.5% pension contributions for a DB pension which is likely to be more than sufficient in my retirement. I can retire fully at 60, or take an early retirement at 55 if the numbers are kind to me.

My current pay progression looks like: 54k in 2026, 57k in 2027 and then 60k in 2028. As I enjoy my job as it is, from 2028 I will probably stop progressing and will remain at that salary + inflation rises until I retire. I might advance a bit (up to the equivalent of today's 75-80k) in my last 5 years or so for pension reasons, but this is not going to make a big difference.

My only debt commitment is a £430pm mortgage that will be paid off in about 3 years. I have no other debts and not planning any major expenditures. House is currently worth cca £325k.

I have ~30k in savings. I own a £250k house (no mortgage) on the Mediterranean that is currently used as a holiday let during summer, netting around £6-8k of profit per year. When I retire, I am very likely retiring to this property for the rest of my life. I will either sell or rent out my UK house at this point.

At some point prior to my retirement I am likely inheriting further ~£150k. If I were retiring today, under all these circumstances, I would assume a comfortable 30k income for life, not counting for any state pension.

Am I right in understanding, that all above things considered, it makes very little difference for me to plug the NI gap, as it will have a minimal impact on me? If I wanted to, after I retire, I will likely have an option for very minor part-time WFH work in my field (10-15 hours a week) that would easily keep paying the NI contributions for a couple of years to fill any gaps anyway. As I enjoy my work, I would very likely do this just to keep a bit busy.

I appreciate this is a lot to read, and I am very thankful for anyone replying.

Thank you

TheSpectator

What does your state pension forecast say in terms of pension accrued to date and how many years you still need to contribute to get full state pension?

smipsy

You can get your State Pension in 2058

Your forecast is £221.20 a week, £961.83 a month, £11,541.90 a year

Your forecast

is not a guarantee and is based on the current law

is based on your National Insurance record up to 5 April 2024

assumes that you’ll contribute another 29 years

does not include any increase due to inflation

You currently have 6 years on your record and you need at least 10 years to get any State Pension.

TheSpectator

So once 24/25 goes on your record you will need a further 28 years NI contributions to get full state pension - do you intend to?

smipsy

I will definitely work full time until either 55 and take an early retirement on my private pension, or 60 for a full private pension (depending how life / career treats me until then).

So that's a minimum of 21 more years working and a maximum of 26 more years. If I end up needing those 2 extra years, I will be able to easily fill that NI requirement with some minor part-time work.

TheSpectator

smipsy said:

I will definitely work full time until either 55 and take an early retirement on my private pension, or 60 for a full private pension (depending how life / career treats me until then).

So that's a minimum of 21 more years working and a maximum of 26 more years. If I end up needing those 2 extra years, I will be able to easily fill that NI requirement with some minor part-time work.

The minimum age to access a private pension is increasing to 57 in 2027 and who knows what age it will be by the time you get there.

Maybe an ISA to bridge any gaps?

smipsy

TheSpectator said:

The minimum age to access a private pension is increasing to 57 in 2027 and who knows what age it will be by the time you get there.

Maybe an ISA to bridge any gaps?

I was unaware of the 57 year requirement for private pensions. However, that is not a dealbreaker, I am happy to work an extra two years.