Retirement & State Pension
Options
valio247
Posts: 30 Forumite
Good afternoon, I wonder if anyone can clarify a State Pension question. The GOV.UK website summary shows to date the following for my NI contributions:
43 years of full NI contributions
2 years when I did not contribute enough
5 years to contribute up to April 2022
My current forecast shows a State Pension estimate of £137.74 per week and the maximum of £159.55 per week if I continue contributing until April 2022.
I am considering early retirement (likely to be within the next 6 months) and assuming I go ahead and retire, my questions are:
1. When I reach State Pension age will I get the maximum £159.55 based on the fact that currently I have 43 full years of contributions which is more than the 35 years required for the maximum - or does it not work like that?
2. In which case, will I get the lesser £137.74 amount if I make no further contributions from April 2018 to April 2022?
I realise that you can ‘buy years’ to gain extra State Pension but I want to clarify the situation just based on scenarios above.
Thanks in advance for any advice.
0
Comments
-
I believe you will need to contribute more to get to the maximum.
The most cost effective way is to pay up any partial years and to look into going "self employed" for a few years. The self employed rout can be just getting paid as little as few hundred via ebay or for odd jobs etc. but it allows you to pay up missing years NI at a very advantageous rate.0 -
There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.
Be careful about making contributions for years pre-2016 as some people have done this and it has made no difference to their pension calculation - by the sound of it, you already have plenty of years pre-2016 anyway.
To get the full amount, I think you would need to buy extra years, but as you can do this for up to six past years, you may as well wait until shortly before state pension age to do so.0 -
The most cost effective way is to pay up any partial years
In some cases this would provide no benefit.
The OP has four DB pensions payable at age 60 and his state pension forecast has taken account of the fact that for a number of years he contracted out of SERPS/S2P.
At 6/4/16 this calculation was done and his starting amount was the higher of the two.
£119.30 + (SERPS/S2P - Deduction for Contracting Out)
£155.65 - Contracted Out Pension Equivalent.
Only post 2016 contributions will have increased the starting amount.
If he ceases to contribute, the only increases on the amount achieved as at 5/4/18 will be those for inflation.0 -
-
There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.
While this is factually correct, the Treasury Secretary has said the Government are looking at the Class 2 NI route as they have realised that the greyish vote, those say over 50 are doing small self employed works, say ebay trading or tutoring and they are worried about losing this voting age group. They are large user's of Class 2 NI for protecting their state pension.
It appears from his comment that there may be a last minute reprieve that will not be called Class 2 NI but may well be similar with a new name. I would look out for something being announced in November 2018.0 -
Can you explain that.winspiration wrote: »There's only one year left that you can do the self employed thing, as Class 2 contributions are being abolished from April 2019 - was going to be this year, but has been deferred now.
I am self employed so that is the only NI I pay. Up to now I have got a full years NI credit each year.
So what exactly is going to happen after April 2019 and how will I pay the remaining 7 years I need to get he full state pension?0 -
Can you explain that.
I am self employed so that is the only NI I pay. Up to now I have got a full years NI credit each year.
So what exactly is going to happen after April 2019 and how will I pay the remaining 7 years I need to get he full state pension?
This should explain:
https://www.gov.uk/government/publications/abolition-of-class-2-national-insurance-contributions/abolition-of-class-2-national-insurance-contributions0 -
-
So I have to "make sure" (cough) that I earn enough to pay class 4 NI to continue building up my state pension entitlement?0 -
Yes either that or pay voluntary class 3 contributions.0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards