New State Pension / Class 3 Contributions

Uplander1111 · 27 May 2018 at 5:36PM

My query concerns voluntary Class 3 NI contributions – I am sorry if this has been answered before but I cannot find anything on the Forum despite searching, so hope someone can help.

I was made redundant on my 60th birthday. At that time I started to claim an occupational pension and haven't worked since. I am now approaching state pension age (July this year).

My NI record shows full years for the years ending 5/04/70 to 5/04/14 (albeit some of my employment was contracted out). The record then shows 5/04/15 and 5/04/16 as no contributions and 5/04/17 and 5/04/18 as full years under the Government scheme giving Automatic pension credits for men born before 6 October 1953.

My state pension is £157.66 and the Government website states that this “is the most you can get - you cannot improve your forecast any more”.

However, looking at the Royal London document “Topping up your state pension: everything you ever wanted to know” this tells me that it is worth buying additional years.

I would just like to understand what is correct here and if it isn't worth buying them, why not?

Thanks for any help.

Dox · 27 May 2018 at 6:01PM

It's only worth buying additional years if you are not at the maximum state pension. You had some periods of employment when you were contracted out of the State Additional Pension (SERPS, later State Second Pension), which is why the maximum state pension you will receive may be lower than people of your age/earnings history who were never contracted out.

molerat · 27 May 2018 at 6:33PM

I fear you have misread the Royal London document, it is most likely pointing to 16-17 and 17-18 as the extra you could buy for which you are already entitled to credits anyway. As you already have in excess of 35 pre 2016 years then there is no way that purchasing any more pre 2016 years would add value.

Silvertabby · 27 May 2018 at 6:49PM

No point in paying for 2015/16 as it won't increase your foundation amount.

2016/17 and 2017/18 were freebies due to reaching pension credit age.

06/04/2018 to July 2018 is less than a full financial year.

So, the website forecast of a maximum £157.66 is probably correct.

Of course, this £157.66 is in addition to your occupational pensions.

xylophone · 27 May 2018 at 7:18PM

Remember that the state pension will be paid without deduction of tax - it is likely therefore that the tax code applied to your occupational pension will require adjustment.

Brynsam · 27 May 2018 at 8:58PM

xylophone wrote: »

Remember that the state pension will be paid without deduction of tax - it is likely therefore that the tax code applied to your occupational pension will require adjustment.

The above statement is entirely correct, but if read too quickly...tax isn't deducted from your state pension, but the state pension is taxable if your (taxable) income from all sources exceeds your personal allowance.

Uplander1111 · 14 June 2018 at 12:36PM

I feel rather guilty that I haven't responded to anyone. I thought I had "followed" this thread but presumably not as I have had no advices re postings. It was only when the postie brought a letter from HMRC today that it occurred to me to look at MSE. So apologies and thanks to you all for helping me on this point.

New State Pension / Class 3 Contributions

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