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  • FIRST POST
    • Munzee
    • By Munzee 9th Nov 19, 2:14 PM
    • 12Posts
    • 1Thanks
    Munzee
    Should I Buy Year 2018/19?
    • #1
    • 9th Nov 19, 2:14 PM
    Should I Buy Year 2018/19? 9th Nov 19 at 2:14 PM
    I reached State Pension Age in July 2019. After getting some extremely helpful advice on this forum back in February 2019, I purchased a number of years Class 3 Vol Contributions to increase my State Pension, which I am now receiving. This pension is based on 17 years contributions, the most I could top up to at the time. I now see that year 2018/19 is now available to buy for 761.80 and on my NI record is says I can buy this anytime up to 5 April 2025. The question is should I buy it? Will it increase the pension I am currently receiving? If so, by how much and when will it start being paid?
Page 1
    • Marcon
    • By Marcon 9th Nov 19, 3:13 PM
    • 1,350 Posts
    • 1,058 Thanks
    Marcon
    • #2
    • 9th Nov 19, 3:13 PM
    • #2
    • 9th Nov 19, 3:13 PM
    Excellent clear info at https://www.royallondon.com/media/good-with-your-money-guides/topping-up-your-state-pension/

    Most relevant bit for you (and possibly other readers) is:

    If you have less than 30 qualifying years of NICs you will get a reduced basic State Pension. For example, if you have 29 years of NICs you’ll get 29/30 of the full pension, if you have 28 years you get 28/30 of the full pension and so on.

    The amount you have to pay for an extra qualifying year depends on how much you have already paid for that year. If you made no NICs for that year then you will have to buy enough Class 3 contributions to cover the whole year. If you have already made some contributions for that year, you only have to top up for the missing contributions. For example, if you have paid 38 weeks’ worth of NICs you only need to buy another 14 weeks’ worth of NICS to make that up to a qualifying year.

    The cost of voluntary Class 3 NICs is currently 15 per week.

    This means it costs up to 780 to buy an extra qualifying year of NICs. This would boost your State Pension by 1/30 of the full rate so you’d get around an extra 4.30 of State Pension every week or 224 a year.

    Given that it costs a one-off lump sum of no more than 780 to buy extra pension of 224 a year, it would take less than four years of receiving higher State Pension to recoup this cost and you would continue to receive this extra pension for the rest of your life. Provided that you can afford to do so, you can in principle buy back more than one missing year, and each additional year will boost your State Pension by the same amount.
    Last edited by Marcon; 09-11-2019 at 3:15 PM.
    • Linton
    • By Linton 9th Nov 19, 3:18 PM
    • 11,384 Posts
    • 11,811 Thanks
    Linton
    • #3
    • 9th Nov 19, 3:18 PM
    • #3
    • 9th Nov 19, 3:18 PM
    For authoritative information on what your options are and the effect they will have talk to the Future Pension Centre https://www.gov.uk/future-pension-centre.


    My non authoritative answer is that buying the NI year will increase your pension by 168.60/35=4.82/week. This means that it will pay for itself in 761.8/4.82=158 weeks or about 3 years assuming no tax. After then for as long as you live it's all profit.
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