State Pension Forecast Query

njb55rtd · 17 January 2019 at 5:40PM

Hi. I've just downloaded my latest State Pension summary. On one hand it says that I have 37 years of full contributions (I thought 35 entitled you to full State pension). It then goes on to say that I need to contribute another 4 years to get the full pension. It lists 2014-15 as an option as I made a partial contribution that year and says I "can make up the shortfall" by a "voluntary contribution of £389.20 by 5 April 2023".
I spoke to the helpline. They said (1) the reason I had to contribute 4 more years was that some years I was contracted out and (2) I could not make up the shortfall as stated for 2014-15 but only 2016 onwards (which require higher shortfall amounts).
I can't help thinking that the summary, therefore, was quite misleading.
If I was contracted out (and I was) then why were those years added to the number of "years of full contributions"?
Further, why can't I just pay the shortfall as shown on the summary for 2014-15?
I have to trust that I was given correct information by the helpline, but I'd appreciate if someone here could explain the reasons.
NB

molerat · 17 January 2019 at 6:05PM

35 years for a "full" pension is only 100% applicable for those starting their NI accrual after April 2016. Those with a history pre 2016 are on a hybrid scheme requiring more or less than 35, those who have a contracted out history will generally need more and may still end up with less than the full new pension amount. If you have in excess of 35 pre 2016 years then filling any pre 2016 years will have no effect on your pension entitlement so a waste of money.

At April 2016 you were given a starting amount which was the higher of the new accrued amount of x 35ths - COPE or x 30ths + S2P for the old amount. Whichever calculation was used you could only use the maximum number of years applicable for that system. The good news is that you can add to that 2016 amount up to the maximum new pension.

Silvertabby · 17 January 2019 at 6:17PM

For some unknown reason, DWP insist on using the term 'full NI contributions' for full financial years, and not - as it should be - 'full financial and non-contracted out/didn't pay lower rate of NI' years. Doesn't half cause confusion!

njb55rtd · 17 January 2019 at 7:34PM

Confusion, to put it mildly!
Seems little point saying on the Pension summary which, after all is tailored for me personally, that I can make up the shortfall for the 2014 year when I can't!

MK62 · 17 January 2019 at 8:09PM

njb55rtd wrote: »

Confusion, to put it mildly!
Seems little point saying on the Pension summary which, after all is tailored for me personally, that I can make up the shortfall for the 2014 year when I can't!

I would double check that.....even the government websites say you can usually make up any shortfall within six years of the end of the tax year in question (which for TY14/15, would be 5/4/21).
https://www.nidirect.gov.uk/articles/voluntary-national-insurance-contributions
https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

They are normally pretty good imho, but it's not unheard of for HMRC telephone assistants to make a mistake. If they still say you can only go back to 2016, ask for an explanation in writing, and direct them to their own website.

I read somewhere (can't find it now though) that to cope with anomolies in the New State Pension system, that up to 2023 (IIRC) you can go back as far as TY06/07......though whether that extension is still valid I'm not sure. After that the usual six year rule would once more apply...

molerat · 17 January 2019 at 9:09PM

It is not a question of if you can make it up - you can currently make up years back to 2006-07 - it is whether making it up will add value to the pension. In the op's case it will not add value due to them already having 35 or more pre 2016 years (or probably more than 30 according to circumstances).

GunJack · 18 January 2019 at 10:03AM

Silvertabby wrote: »

For some unknown reason, DWP insist on using the term 'full NI contributions' for full financial years, and not - as it should be - 'full financial and non-contracted out/didn't pay lower rate of NI' years. Doesn't half cause confusion!

Am I odd that I don't find it confusing? It's a full year's NI under whichever system applied at the time, whether that be the old with or without any contracting-out, the new (post-2016 exclusively) or the hybrid (combination of the two).

So, where think the confusion comes in is that people generally just don't get that there are different systems in operation, and that the majority of people are currently in the third, hybrid system which is a combination of the two, and it's the misunderstanding of that combining of the old & new that causes the confusion....

greenglide · 18 January 2019 at 11:06AM

.... And of course the NI record matters for more than just pensions.

Having a full year matters (or mattered in the past) for entlement to JSA and others which where contributions based.

Having said that it would be a good idea the word it better but that would require funding for the change (and testing, of course). In the past such changes required ministerial sign off as well!

max11 · 28 March 2019 at 5:12PM

molerat wrote: »

Those with a history pre 2016 are on a hybrid scheme requiring more or less than 35

Hi,

and how do we know if require more or less than 35 ?

Thank you

drumtochty · 28 March 2019 at 5:28PM

Buy reading your state pension forecast, do you have one!

That advises advises how many further years NI you have to pay to get a full "new style" state pension and if you have enough years left before state retirement age to contribute. It may be possible to pay voluntary contributions for previous missed years.

Linton · 28 March 2019 at 5:38PM

max11 wrote: »

Hi,

and how do we know if require more or less than 35 ?

Thank you

It can get quite complicated depending on the balance between contracted out and contracted in and your payments to SERPS/S2P/ASP. The safest way of finding out your options is to talk to the Future Pensions Centre - https://www.gov.uk/future-pension-centre. They are very helpful.

State Pension Forecast Query

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