Not needing 35 years of contributions to get close to full state pension

kissanpoika

I just spoke to a helpful chap at the Future Pension Center because I was a little confused. I currently have 30 years of contributions, but in my forecast it says I only need four more years to qualify for the full state pension. I thought I needed 35.

He explained that each year's contributions add about £6.89 to your projected weekly total, at today's rates. My forecast shows me currently on £220.53, so actually three more years of contributions would take me to around £241.20/week, just 10p shy of the full amount.

As I now live overseas, I'm making the voluntary contributions each year, so a £950 payment to get 10p/week doesn't add up as a good move in that fourth year.

I'm not really clear on how some years counted for more than others, which has resulted in me not needing the full 35 years. That's the one part where he wasn't really clear.

Is there a way I can replicate that, perhaps by making a larger contribution, to also get that 10p? I'm guessing that's what I did in some previous year to somehow not need 35 years?

Even though the sums don't make sense financially, I'm still somewhat suspicious that being 10p short will somehow come back to bite me as a bad decision later if the policies are changed and being short actually means a larger chunk is deducted. I suppose there's no way to predict that.

My wife also has something similar, except in her case she has 22 years of contributions but only needs to make 11 more. However, that 11th year of contributions would only add £1.06/week. I'm not sure the sums add up there either.

TadleyBaggie

35 years is only applicable to those who started their working life after April 2016. Those who started working before that may need less than 35, or in many cases more than 35.

Rodders53

You will have been paying into the state second pension NI as well as the basic Old State Pension NI as a high earner in the pre 2016 years —- so will have amassed an amount under that that is used in the calculations of the Pension payable.

Thus, fewer post 2106 NI years are needed to get the max allowed New State Pension sum.

Some Old State Pensioners get more than the max New State Pension due to their second state pension (SERPs).

molerat

In April 2016, going into the new scheme, you were given the higher of the old or new pension calculations so you received no less than already entitled. These were old scheme X (max 30) x £119.30 / 30 +S2P or new scheme X (max 35) x £155.55 / 35 - COPE. The old scheme gave £3.98 per year but you also received earnings related additional pension. The new scheme gave £4.45 per year but there was a deduction for contracting out. Due to the additional pension there are some that reached the new pension amount, and even more, pre 2016 with as few as 28 years of contributions.

p00hsticks

I'm not going to go into all the detail, but when the new State Pension was introduced in 2016, there were transitional rules put in place for those who already had some NI record under the previous system. Everyone had a 'starting amount' calculated for them at that point that depended not only on the number of years they already had, but whether they had been contracted in or out under the old system, and how much SERPS or S2P they had built up if contracted in and so peoples starting amounts were all different.

As you have been told, since then, every post-2016 year creditted simply adds 1/35th of the new state pension amount to that starting amount until the maximum is reached. The effect is that people born last century may need anything from around 29 to 49 years to reach that maximum, depending on their individual records.

As everyone's starting amount is different and you can't go over the maximum (apart from in the case where your starting amount was already over it), most people will find that the final year would only add an odd amount of anything from 1p to £6.89.

QrizB

As I now live overseas, I'm making the voluntary contributions each year, so a £950 payment to get 10p/week doesn't add up as a good move in that fourth year.

You'd need to live and claim you pension for ~180 years to get your £950 back. You're rght it's probably not worthwhile buying that final year.

My wife also has something similar, except in her case she has 22 years of contributions but only needs to make 11 more. However, that 11th year of contributions would only add £1.06/week. I'm not sure the sums add up there either.

In her case, it's only 17 years. Most retirees make it to their late 80s so it's likely to be worthwhile for her unless she expects to die early.

kissanpoika

Thank you everyone for the explanations. It helps a lot.

I think I'll pass on that 10p, and can wait until closer to the time to consider my wife's final year's contributions.