confirm some details on SP please!

Brie

OK so I'm checking the pension forecast for him indoors who is set to receive his starting in November.  There are gaps and we won't be plugging most of those but there is one I'm considering.  It's for 2022-23 where they want £284 to top up the year.

Now am I right in assuming that because 22-23 isn't full there's no credit given at all for that year?  And if it's topped up how much would that add?  Or is it too late now to add anything as it's within the tax year for his SP to start?

No we won't be paying anything for 23/24/25.  There were no NI contributions for those years. 

badmemory

It is not too late to top it up but are you sure you/he need to.  You need to look at the details, such as the max you can get.

p00hsticks

Brie said:

OK so I'm checking the pension forecast for him indoors who is set to receive his starting in November.  There are gaps and we won't be plugging most of those but there is one I'm considering.  It's for 2022-23 where they want £284 to top up the year.

Now am I right in assuming that because 22-23 isn't full there's no credit given at all for that year? 

Yes,, a partial year won't count.

Brie said:

And if it's topped up how much would that add? 

£6.38 a week , unless his current forecast is within that amount of the maximum £230.30, in which case it'll take him up to the maximum.

Brie said:

Or is it too late now to add anything as it's within the tax year for his SP to start?

not too late but I'd do it quickly so that it get's registered before they start doing the pension calcualtions for him (typically a few months before he reaches SPA)

molerat

Why would you not be filling a full price gap year if it would add value ?  Payback time is £907.40 / £6.58 = 138 weeks gross.  £342.16 pa for £907.40 is equivalent to 38% single life increasing (at a better rate than most) annuity - where else could you get that ?  How much per week is the current forecast ?

Brie

molerat said:

Why would you not be filling a full price gap year if it would add value ?  Payback time is £907.40 / £6.58 = 138 weeks gross.  £342.16 pa for £907.40 is equivalent to 38% single life increasing (at a better rate than most) annuity - where else could you get that ?  How much per week is the current forecast ?

His current forecast is for £212 a week and there's no way he'll get the max as there were some years that weren't topped up and can't be now.  So only 3 that can be.  I wasn't considering topping up the full years (23/4 & 24/5) because his health isn't grand and, to be blunt, I didn't know if it would be worth it.  Presumably it would be £907 for each of those so we'd be looking at over £2k to get an total extra £19 a week.  Actually thinking about it that would get him pretty close to the max wouldn't it?  Hmmmmmm......something more to think about.

molerat

So it looks like £2098.80 will give around £18.25 pw / £949 pa so a payback in 115 weeks, a 45% return rate.

badmemory

Approx 2 years & 3 months payback, although tax could make it longer.  Under 3 years 3 months payback at 40% tax.  Put it in a savings account & over 3 years you won't even get £500 interest.

Brie

badmemory said:

Approx 2 years & 3 months payback, although tax could make it longer.  Under 3 years 3 months payback at 40% tax.  Put it in a savings account & over 3 years you won't even get £500 interest.

40% tax!  Don't make me laugh!!!  Neither of us come even close to that!!!