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    • Clare43
    • By Clare43 7th Aug 19, 9:21 PM
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    Clare43
    Is it worth paying for missed NI years on my state pension ?
    • #1
    • 7th Aug 19, 9:21 PM
    Is it worth paying for missed NI years on my state pension ? 7th Aug 19 at 9:21 PM
    Hello,

    I would appreciate any advice on if it is worth me paying to cover some missed years in my NI record so that I get full state pension. I’m currently 46 and work in the NHS as a nurse. I am a member of the NHS pension and have special class status and at the moment plan to retire at 55 due to family circumstances. I also have a couple of other small private pensions
    My NI record shows I need to contribute for another 11 years to get full pension of £168.50. I have 27 years of full contributions currently . Currently would get £119.91 based on record up to April 2019. I have 4 years gap in my record.
    The 2 cheapest years to make up would cost me about £1400. These plus the 9 years left I plan to work would mean I should ( under current rules ) get the full pension. Is it worth it ? Would my state be much less if I was 2 years short of full amount ? Any thoughts appreciated. Thanks
    Last edited by Clare43; 07-08-2019 at 9:25 PM.
    Save 12K in 2019. Number 28
Page 2
    • Londonlisa12
    • By Londonlisa12 13th Aug 19, 8:51 AM
    • 86 Posts
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    Londonlisa12
    So assuming you have never been contracted out each year of NI credits pre April 2016 is worth 1/30th of £125.70 and this gives your 2016 starting point,but the £125.70 does go up with inflation?

    And each years credit post 2016 gives you 1/35th of £168.20.
    • p00hsticks
    • By p00hsticks 13th Aug 19, 9:50 AM
    • 7,062 Posts
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    p00hsticks
    So assuming you have never been contracted out each year of NI credits pre April 2016 is worth 1/30th of £125.70 and this gives your 2016 starting point,but the £125.70 does go up with inflation?

    And each years credit post 2016 gives you 1/35th of £168.20.
    Originally posted by Londonlisa12
    Not necessarily with inflation - the annual increase is currently based on the 'triple lock' - whichever is the highest of inflation, 2.5% or average earnings increase. In April 2016, when the 'starting amount' was calculated, the old basic pension amount was £119.30.

    And that calculation of 1/30 x pre-2016 years applies whether you were contracted out or not - under the old rules, if you were contracted IN you potentially got extra on top - S2P or SERPS - to add to that figure.
    Last edited by p00hsticks; 13-08-2019 at 9:53 AM.
    • Londonlisa12
    • By Londonlisa12 13th Aug 19, 11:12 AM
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    Londonlisa12
    It's very strange how on the gov.co website voluntary national insurance contributions- rates section it states for years 10/11 11/12 and 12/13 you can pay class 3 at the old rate until 5th April 2020 but if you go and check through government gateway it says you pay at the current rate of £15 per week for these years.
    I looked on the government gateway about 4 weeks ago and it then stated the the old rate was applicable .
    Just phoned them and they say it's £15 now so it's changed mid year without any warning although the website says there is no change.
    • molerat
    • By molerat 13th Aug 19, 11:46 AM
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    molerat
    It's very strange how on the gov.co website voluntary national insurance contributions- rates section it states for years 10/11 11/12 and 12/13 you can pay class 3 at the old rate until 5th April 2020 but if you go and check through government gateway it says you pay at the current rate of £15 per week for these years.
    I looked on the government gateway about 4 weeks ago and it then stated the the old rate was applicable .
    Just phoned them and they say it's £15 now so it's changed mid year without any warning although the website says there is no change.
    Originally posted by Londonlisa12
    I think there has been a !!!! up somewhere. All years 2006-07 to 2016-17 ended at the old rates in April 19. Gov Gateway continued moving the date along according to when you looked at it. I think they have sorted that one out and just the web site to correct now, probably different departments that have got to talk to each other, get things authorised and checked before they do anything about it as is usual in government circles.
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    • Londonlisa12
    • By Londonlisa12 13th Aug 19, 12:08 PM
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    Londonlisa12
    But someone has actually entered on gov.uk pay by April 5th 2020 for years 10/11-16/17 at the old rate after the update to new rate for the prior years,so at some point that would have been correct .
    Also my letter from June states the old rate and government gateway did also(now changed) ,what would happen if I had paid it at the time?
    • molerat
    • By molerat 13th Aug 19, 12:52 PM
    • 21,030 Posts
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    molerat
    But someone has actually entered on gov.uk pay by April 5th 2020 for years 10/11-16/17 at the old rate after the update to new rate for the prior years,so at some point that would have been correct .
    Also my letter from June states the old rate and government gateway did also(now changed) ,what would happen if I had paid it at the time?
    Originally posted by Londonlisa12
    A very good question The April 2019 cut off was a clearly stated policy decision in the original 2016 pension changes.
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    • Londonlisa12
    • By Londonlisa12 13th Aug 19, 4:52 PM
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    Londonlisa12
    So now we know all years from 06/07 to 15/16 are payable at current rates(£15) and assuming they go up around 2% per year if you put the cash in a bond paying 2% there is no reason at all paying until April 2023.
    Apart from the stamp weekly rate possibly going up more than the rate you can get in a bond can anyone see in any benefit in paying earler?
    • Clare43
    • By Clare43 13th Aug 19, 11:04 PM
    • 100 Posts
    • 244 Thanks
    Clare43
    So assuming you have never been contracted out each year of NI credits pre April 2016 is worth 1/30th of £125.70 and this gives your 2016 starting point,but the £125.70 does go up with inflation?

    And each years credit post 2016 gives you 1/35th of £168.20.
    Originally posted by Londonlisa12

    I have been contracted out as Iím in the NHS pension scheme
    Save 12K in 2019. Number 28
    • molerat
    • By molerat 14th Aug 19, 1:00 PM
    • 21,030 Posts
    • 15,265 Thanks
    molerat
    So assuming you have never been contracted out each year of NI credits pre April 2016 is worth 1/30th of £125.70 and this gives your 2016 starting point,but the £125.70 does go up with inflation?

    And each years credit post 2016 gives you 1/35th of £168.20.
    Originally posted by Londonlisa12
    Not as straightforward as that. Irrespective of your contracted out status each pre 2016 year was valued at 1/30th of £119.30 or 1/35th of £155.65. Any S2P was then added to the 30ths number and, if contracted out, COPE deducted from the 35ths number and you were given the higher of the two. Some may have been contracted out for a short period so the 35ths - COPE could still be greater than the 30ths + S2P. That number increases with the triple lock figure and can be added to at, currently, 1/35th of £168.60. If you have pre 2016 gaps filling them will force a recalculation of that 2016 figure using 2016 values and in some circumstances change which amount is used. Now all years cost the same and if you can make up your pension with years going forward you need to know which calculation is used for your starting amount as if you are on the 30ths a pre 2016 year will only add £3.98 whereas a 35ths year will add £4.45 so it may not be good value.
    Last edited by molerat; 14-08-2019 at 1:19 PM.
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  • jamesd
    Apart from the stamp weekly rate possibly going up more than the rate you can get in a bond can anyone see in any benefit in paying earler?
    Originally posted by Londonlisa12
    Another reason is the chance that the number of years needed might increase due o another change in the system. It's only possible for me to get to the single tier maximum because I bought more years than I strictly needed to when 30 years was enough.
    • Londonlisa12
    • By Londonlisa12 15th Aug 19, 12:52 PM
    • 86 Posts
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    Londonlisa12
    Just got off the phone with them.

    Your 2016 starting amount goes up each year, mine was £63.63 it is now £68.94 an increase of around 8.35% in 3 years thatís for 16 years so about £4.30 per year.I am relatively lucky and can buy 4 cheap pre 2016 years and pay voluntary for the next 11 and that gives me 35 years and also comes within pennies of the current £168.60.
    And in fact itís better under current rules to be pennies less since then you are entitled to pension credit and all the freebies that brings.
  • jamesd
    in fact itís better under current rules to be pennies less since then you are entitled to pension credit and all the freebies that brings.
    Originally posted by Londonlisa12
    That also means living in relative poverty for the rest of your life. That's not a desirable outcome, just sometimes least bad for those who have left it too late to do better.

    Depending on your household's income situation it may be possible to do a lot better by also making work or private pension contributions.

    The pension credit means test applies to household income and defined benefit pensions typically eliminate the potential for pension credit.

    Even if never working again there's the potential to make £720 a year by paying 2880 net into a personal pension until age 75 then from 55 withdrawing the 3600 after tax relief value. Don't withdraw the taxable part without more discussion if more work paying more than 4000 a year is possible.
    • metrobus
    • By metrobus 15th Aug 19, 8:18 PM
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    metrobus
    That also means living in relative poverty for the rest of your life. That's not a desirable outcome, just sometimes least bad for those who have left it too late to do better.

    Depending on your household's income situation it may be possible to do a lot better by also making work or private pension contributions.

    The pension credit means test applies to household income and defined benefit pensions typically eliminate the potential for pension credit.

    Even if never working again there's the potential to make £720 a year by paying 2880 net into a personal pension until age 75 then from 55 withdrawing the 3600 after tax relief value. Don't withdraw the taxable part without more discussion if more work paying more than 4000 a year is possible.
    Originally posted by jamesd
    But they are better off than living off basic state pension which millions are. also they get their housing paid for and council tax paid along with a host of other benefits by being just under basic SP allowance.Like we all know you are punished for being prudent in later life.

    Yes,not a desirable outcome but inevitable for millions in 2019 Britain unfortunately.
    Last edited by metrobus; 15-08-2019 at 8:33 PM.
  • jamesd
    But they are better off than living off basic state pension which millions are
    Originally posted by metrobus
    How? If someone only has the basic state pension they are also eligible for pension credit. Unless they choose not to claim it, which happens.

    Like we all know you are punished for being prudent in later life.
    Originally posted by metrobus
    Avoiding being stuck with what society decides the minimum is a reward for prudence, not a punishment for it.

    There are ranges where you can cease to qualify for things but if you're in those ranges you're on the edge of society's minimum still and it's not good to plan to be there if you can plan and avoid it.
    Last edited by jamesd; 16-08-2019 at 3:16 AM.
    • grnglide
    • By grnglide 16th Aug 19, 9:42 AM
    • 126 Posts
    • 41 Thanks
    grnglide
    If someone only has the basic state pension they are also eligible for pension credit
    But the nSP full rate is set above the rate of PC to minimise this happening.


    The Basic Pension of the old scheme is less than PC though.
    • metrobus
    • By metrobus 16th Aug 19, 11:24 AM
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    metrobus
    How? If someone only has the basic state pension they are also eligible for pension credit. Unless they choose not to claim it, which happens.

    Avoiding being stuck with what society decides the minimum is a reward for prudence, not a punishment for it.

    There are ranges where you can cease to qualify for things but if you're in those ranges you're on the edge of society's minimum still and it's not good to plan to be there if you can plan and avoid it.
    Originally posted by jamesd
    Wrong, you do not get PC if you get full SP
    • grnglide
    • By grnglide 16th Aug 19, 1:58 PM
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    grnglide
    That depends on you definition of "full SP".


    Technically jamesd was correct as the "Basic Pension" is part of the "old" pension (before nSP started) and this has never been anywhere the level of PC. Once GRAD and AP where taken into account the amount "could" excess the PC limit.
  • jamesd
    But the nSP full rate is set above the rate of PC to minimise this happening. ... The Basic Pension of the old scheme is less than PC though.
    Originally posted by grnglide
    metrobus wrote words which made the assertion about the basic state pension, not the single tier state pension.

    I expect that most recipients of just the basic state pension who aren't getting pension credit are single women in their 80s or older.

    But they are better off than living off basic state pension which millions are
    Originally posted by metrobus
    (my bold)
    Wrong, you do not get PC if you get full SP
    Originally posted by metrobus
    There's something called the basic state pension. The full basic state pension is currently £129.20 a week and this is well below the threshold for pension credit. If all a person is getting is BSP then barring capital rules they are likely to be eligible for pension credit.

    "Full SP" has no clear meaning. If it's intended to mean:

    1. "maximum state pension without deferral, accrued in their own name" then it's currently over £300 a week so eligibility for pension credit is unlikely. A person could get that much due to the earnings-related part of the old pension. The accrual constraint is there because under the old rules both earnings-related and deferred state pension increases can be inherited. I wouldn't be surprised to learn of state pensions over £400 a week without deferral increases or over £1,000 a week with lots of deferral.

    2. "maximum single tier state pension without transitional protection" then I think that pension credit is unlikely* given that the level was designed to be just above pension credit. Very few state pension recipients get this because most reached their state pension age before 6 April 2016 and are instead receiving a state pension made up of basic state pension plus additional state pension and graduated retirement benefit. Most of those from 6 April 2016 won't be on it for some time as well, because their old rules calculation ended up higher so they have a protected higher level.

    Given your reply you were probably thinking of something like 2 when you wrote "basic state pension". You may not even have known that there's something called basic state pension that most current state pensioners get as part of their pension.

    If you'd written anything close to single tier or new state pension it's unlikely that anyone would have disagreed with you. But you used the exact name of the thing most current state pensioners get. Which left readers choices including:

    1. believing that you meant what you wrote and wondering how 129.60 could stop someone getting pension credit
    2. believing you just didn't know what you'd written
    3. believing that you were trolling

    The kindest initial interpretation was 1, so I asked you how. Your reply then made it clear that it probably wasn't 1 so I took the kindest of the other two and explained what the basic state pension is so you'd understand why basic state pension got you a reaction that what you were probably thinking of wouldn't have got.

    (shrug) you seem to have just got unlucky with your word choice and missing the knowledge about the most common part of the state pensions being paid today that would have led you to catch the mistake.

    No big deal, you learned a bit more about the state pension and most here would probably agree with what you seem to have thought you were writing.

    *Alice Holt explained why I wrote just unlikely
    Last edited by jamesd; Yesterday at 1:48 AM.
    • Alice Holt
    • By Alice Holt 16th Aug 19, 7:50 PM
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    Alice Holt
    Wrong, you do not get PC if you get full SP
    Originally posted by metrobus
    Setting aside the definition of State Pension, which other posters have addressed, this simplistic statement fails to recognise that some Pension Credit claimants are eligible for additional amounts above the minimum PC threshold.

    Here is an extract from the Citizens Advice public site:

    " You might be able to get extra money if you get other benefits or youíre responsible for a child.
    If you get other benefits, such as Carer's Allowance, Disability Living Allowance, Personal Independence Payment or Attendance Allowance, your weekly Guarantee Credit amount can go over the minimum income threshold of £167.25.

    If youíre eligible you can receive an extra amount for severe disability of £65.85 a week. Check if youíre eligible for the severe disability addition on GOV.UK.

    The extra amount if youíre a carer is £36.85. Youíll get this if you or your partner receive Carerís Allowance or have claimed for it and meet its conditions. Check if youíre eligible for the carerís addition on GOV.UK.

    If youíre responsible for a child you can get an extra amount for them, as long as youíre not already getting child tax credits. You might also be able to claim child benefit."
    Last edited by Alice Holt; 16-08-2019 at 8:02 PM.
    Alice Holt Forest situated some 4 miles south of Farnham forms the most northerly gateway to the South Downs National Park.
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