Help with state pension top up (from being living abroad)

hewittinspain

I'm 52 and I have 22 qualifying years of NIC's and my forecast is the full pension when I contribute another 13 years of NIC's which will take me to the age of 65/66.

I did work and live in Spain from 1998-2010 so In January this year I applied to HM government to see if I can fill in any gaps on my NIC.   Today I've received a letter saying they have "accepted" the application and have given me a breakdown which reads what I've sent in a screenshot.

Now you might be asking yourself why do I want to pay voluntary contributions when my forecast is the full pension in 13 years time. My reason of thinking of adding some voluntary contributions now is if I want to pack in work in 10 years from now then I'll only have 32 qualifying years and there will be a shortfall of 3 years to get the full state pension.If I pay on 3 years of voluntary now it will boost my contributions from 22 years to 25 years meaning I can quit work in 10 years not 13 years. Paying the government 3 voluntary years will cost me about £400.

This is the reason I was thinking of adding a few more qualifying years under my belt now incase I want to retire in 10 years time not 13 years time (as I only have 22 qualifying years as it stands). Then live off savings until the state pension kicks in.

The way I see it is if I pack in work in 10 years time and I don't pay any voluntary now then I won't hit the forecast unless there is a way of paying in contributions in years to come when I quit work!.

What's the best advise please?!

molerat

Does your forecast actually state you need to contribute for all the next 13 years to reach he full amount ?  How much is your amount up to April 2025 ?

You will be able to pay voluntary contributions if you stop work early but a year is currently £923 increasing roughly with CPI each year, those 3 full class 2 years seem to be a reasonable insurance for a cost of around half a current year.

hewittinspain

molerat said:

Does your forecast actually state you need to contribute for all the next 13 years to reach he full amount ?  How much is your amount up to April 2025 ?

You will be able to pay voluntary contributions if you stop work early but a year is currently £923 increasing roughly with CPI each year, those 3 full class 2 years seem to be a reasonable insurance for a cost of around half a current year.

Currently Upto 2025 it's £146 and another 13 years of contributions will take it to £230.

That's what I'm thinking. If I pay 3 years voluntary now then it will cost me around £400 which I'm guessing will not only increase my current pot but will enable me to reach the 35 years in 10 years time not 13 years time and would give me more options if I wanted to give up work a bit sooner.
If I wait for 10 years and pay for 3 years going forward then that could cost me over £3000 which is why I'm asking if it makes sense to pay now if I plan to quit work in 10 years not in 13 years time?!

p00hsticks

I'd say it's certainly worth paying to fill the years where you are eligible for the cheaper Class 2 rate while you were living abroad (2006-7 to 2009-10). If you pay the class 2 rate for 2009-2010 make sure you also pay the Class 3 week to fill the year, as partial years don't count and you will soon lose the opportunity to pay this far back. 

hewittinspain

p00hsticks said:

I'd say it's certainly worth paying to fill the years where you are eligible for the cheaper Class 2 rate while you were living abroad (2006-7 to 2009-10). If you pay the class 2 rate for 2009-2010 make sure you also pay the Class 3 week to fill the year, as partial years don't count and you will soon lose the opportunity to pay this far back. 

Thanks, I never thought of that.

I might just pay the 3 x class 2 years and forget about the 2009/10 payment as that will cost me nearly £700 for that year alone.
3 years of voluntary payment will probably be enough for me and at £163.80 a year it's decent value.

QrizB

hewittinspain said:

I might just pay the 3 x class 2 years and forget about the 2009/10 payment as that will cost me nearly £700 for that year alone.

That seems a sensible compromise to me.