UK Pensions - Is it worth catching up on NI Contributions before April 2016

[sometimewoodworker]

4 hours ago, partington said:

What is being discussed is whether it is worth topping up incomplete years before 2016 by retrospectively paying NI contributions for those past years.

As I pointed out FOR THE BASIC PENSION yes it is, if you were contracted out you need to talk to DWP for the answer.

 

Though if you have additional pension under the old pension scheme it may not be.

[sometimewoodworker]

18 hours ago, topt said:

No he isn't.

Suggest you read the Money Mail articles mentioned and earlier post from @partington

 

None of those articles relate to the basic ( no SERPS or other extras) pension only.

 

 

[mikosan]

9 hours ago, Mike Teavee said:

You might want to consider making 1 more years payment to take it up to the full 35 years.

 

It will cost about £780 but will give you an extra £250 pa so will for itself in 3 years or so

Thanks, I have already checked that out and I will do so.  I have until 5th April 2024 to make the payment, so I'll wait a couple of years, given that I don't want to pay them any money if I'm not going to make it to my pension and one never knows!

[BritManToo]

1 hour ago, sometimewoodworker said:

As I pointed out FOR THE BASIC PENSION yes it is, if you were contracted out you need to talk to DWP for the answer.

No point, I tried and they said they didn't know.

I think they did know, but were instructed not to say.

[sometimewoodworker]

3 hours ago, BritManToo said:

No point, I tried and they said they didn't know.

I think they did know, but were instructed not to say.

Did you submit a written request for a pension forecast? They may not be equipped to give the answer on the phone but should be able to do it by mail.

[magicroundabout]

With regards to contracted out element I think the forecast they give you is confusing. It includes the amount that will be paid by your works pension. Therefore, you will not get the forecasted amount paid by the UK govt.

When you check your forecast on Hmrc website at the bottom of page it will tell if you have contracted out (pic below). Click on the link and it will tell you the COPE amount. This amount needs to be deducted from the pension forecast to give you the actual payment. 

 

 

[partington]

19 hours ago, sometimewoodworker said:

None of those articles relate to the basic ( no SERPS or other extras) pension only.

 

 

Yes they actually do.  

 

SERPS/contracting out also results in less than expected pensions, but this is not the issue here. Even if you were contracted out, voluntary NI payments you make for past years are full payments, and should result in increases in your pension amount.

 

To explain again, in case I wasn't clear: it is retrospective payments of incomplete years that is creating the problem. If you accumulated 35 years or more of NI payments up to 2016 you will get the full basic pension. If you accumulated 30 years of NI payments up to 2016 you will not get the full basic pension so you must make more contributions. However if you make these contributions by paying for incomplete years before 2016 you will under most circumstances not increase your basic pension amount.

 

Here is a quote from one of the articles mentioned confirming this, and that it applies to the basic pension.

Note that individuals are checking a pension estimate (which already includes estimated deductions resulting from past contracted out years when reduced NI payments were made), then contributing more years retrospectively (not reduced contracted out payments obviously, but full NI payments) and still not seeing an increase in their forecast:

 

 

https://www.thisismoney.co.uk/money/pensions/article-5470181/Savers-wasting-money-trying-boost-incomes.html

 

"But a quirk in the system means savers are able to pay into the scheme even if it doesn't boost their state pension.

The confusion has arisen due to the arrival of the single-tier state pension, worth £159.55 a week, in 2016. 

To qualify for this amount, savers need 35 years of full NI contributions. By comparison, they only required 30 to get the full basic £122.30-a-week pension under the old scheme. 

To ensure no pensioner loses out, the Government works out if you would have been better off on the old scheme. If it finds you would have been, and you already had the full 30 years of NI contributions by April 2016, any attempt to boost your pension will be futile.

However, if you have a gap from April 2016 and anticipate future gaps, such as if you have recently stopped working, it is possible to buy these additional years and boost your state pension. But you should still check before paying.

Savers denied refunds by HMRC 

Savers say the risk of payments failing to boost pensions is not being explained by the DWP and HMRC officials or on their websites. Often, they only realise something is wrong when they check their projected state pension and find it has not increased.

 

Lynne Pilcher, 60, found three years of gaps in her NI record after checking her state pension forecast on the DWP website last July. 

 

It said she would get about £120 a week, rather than the £159.55 maximum. The retired customer service manager, who lives in Valencia, Spain, with husband Terence, says she wasn't warned that her £2,067 payment might not improve her income.

When she logged on a few months later, her forecast was unchanged. She spent six months battling with the taxman, before winning a payout in January."

 

[evadgib]

A related post in the pinned topic:

 

[sometimewoodworker]

7 hours ago, partington said:

To explain again, in case I wasn't clear: it is retrospective payments of incomplete years that is creating the problem. If you accumulated 35 years or more of NI payments up to 2016 you will get the full basic pension. If you accumulated 30 years of NI payments up to 2016 you will not get the full basic pension so you must make more contributions. However if you make these contributions by paying for incomplete years before 2016 you will under most circumstances not increase your basic pension amount.

Then I was not "most circumstances" as of April 2016 I had not got 35 full years I made up 35 full years by making payments for years as far back as I could (because earlier years were cheaper to pay) all the years I paid were before April 2016, some of those years were paid after April 2016. I have a full pension.

 

Moreover there is nothing official published (that I have seen) that supports your statement.

 

The conversion I had ( you can be certain that I did talk before sending thousands of pounds) with DWP was that 35 years were 35 years whenever I paid, whichever years I paid.

 

My situation could have been less than usual as during the 1980s my employer offered me the opportunity to contract out I declined as the benefits were not clear and the reduction in NI small. 

 

So I was never contracted out, this made calculations of my pension simple.

 

7 hours ago, partington said:

To ensure no pensioner loses out, the Government works out if you would have been better off on the old scheme. If it finds you would have been, and you already had the full 30 years of NI contributions by April 2016, any attempt to boost your pension will be futile.

The only way to be better off under the old system than the new at April 2016 is if you had paid into one of the additional pensions, and/or contracted out.

 

The basic pension under the old system at april 2016 was about £40 pounds a week lower

 

So contracted out years make a considerable difference as they will reduce the BASIC pension amount you will/are paid, while adding to that basic amount.

 

No, it isn't split up for you, you are just told how much you will get in total.

 

I have specifically said that if you have ever contracted out I can't/don't comment, similarly if you paid into one of the additional state schemes I can't/don't  comment.

[blackcab]

How far back can you top up partially paid or wholly unpaid years?

[topt]

On 6/27/2019 at 4:21 AM, blackcab said:

How far back can you top up partially paid or wholly unpaid years?

See here - https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

But bear in mind depending on circumstances if topping up before 2016 it may not be worth anything. 

Also see the initial comments about what to do if you live abroad.

[Mike Teavee]

On 6/27/2019 at 4:21 AM, blackcab said:

How far back can you top up partially paid or wholly unpaid years?

6 Previous Tax Years then you can carry on making AVCs up to retirement age.

 

Unfortunately they stopped the payment at Class 2 rates for expats this year so it's the full Class 3 I'm afraid ???? 

[Andrew Dwyer]

A couple of years ago I decided to top up my missing years as I would get £138.08 in 2028 and required 6 years to make up the shortfall.

As I had contributed 40 full years ( no gaps ) I called DWP and they explained it all ( contracted out making the shortfall ), forget the details.

Soo, paid roughly £720 for first of the 6 years.
My forecast increased by £5.36 (£278.72 a year) and I now pay monthly on a DD.

Another 4 years to reach max of £164.35 , and then I’ve got to survive till I’m 70 to start to benefit !!

Anyone interested in this should call the DWP with NI number handy to get the full story, as stated they are very helpful.
NOTE: have to remember to stop the DD or you will continue to pay with no increase !!

[elliss]

On 6/19/2019 at 9:02 AM, sometimewoodworker said:

It is almost certainly because you were contracted out for some of your working life. 

 

There has has been some significant miss information posted in this thread. Some is completely false.

 

you need 35 years of full contributions for a full pension. Which years they are is not relevant.

 

 

   Good info thank you .

        What occupation , could  you expect to achieve 35 years of contribution ,

         certainly not in the trades / manufacturing industry . 

          Public Servant in the Civil Service , is the only route .

             Thank you ,  UK taxpayers ..

 

 

Edited July 9, 2019 by elliss

[sometimewoodworker]

4 hours ago, elliss said:

 

   Good info thank you .

        What occupation , could  you expect to achieve 35 years of contribution ,

         certainly not in the trades / manufacturing industry . 

          Public Servant in the Civil Service , is the only route .

There is no requirement to have 35 years of continuous employment. Any job/jobs or even getting unemployment benefits where you receive NI credit is enough as long as you have a total of 35 years. 

[Chazar]

On 6/20/2019 at 1:02 PM, BobBKK said:

I paid up before coming here but have to wait until 67 to get my pension. Outcomes vs inputs it's a risk how long you will live. Pay it is my view.

and no  guarantee  they  wont  raise 67 to 70 then  75 until  they  soon  wont  pay  anyone

[UKresonant]

8 hours ago, elliss said:

 

   Good info thank you .

        What occupation , could  you expect to achieve 35 years of contribution ,

         certainly not in the trades / manufacturing industry . 

          Public Servant in the Civil Service , is the only route .

             Thank you ,  UK taxpayers ..

 

 

It is difficult these days to build a full record, if not in that type of continuous employment, I'm always at the Daughter to keep on top of making up full years as She is self employed mainly. Not only is it more difficult to make a decent pension, but they keep putting the age up! The Life expectancy increase thing has stopped, or maybe even slide now, as the transition from Heavy to Light industry has run its course. The politicians really need to ditch that stupid "were all living longer" rubbish, it also depended what area you stayed!

But being in pensions of a similar format as the Civil Service, you are likely to have been contracted out.

e.g. I've got 40 full years to April 2018, and still need to pay 6 more years to get the full "New State Pension" (this addl 6 years seems to be a recurring theme), just thinking about doing the 2018-2019 year as a voluntary. Then I've still got 11 years to add 5. So then i have to balance if I'm likely to go back to work in the UK for 5 in the next 10 2020-2030. Thing is, I can't touch my private DC pensions until I resolve that, or it would have potential tax problems.????

[Andrew Dwyer]

There is no requirement to have 35 years of continuous employment. Any job/jobs or even getting unemployment benefits where you receive NI credit is enough as long as you have a total of 35 years. 

Some might feel safe knowing they contributed 40 years or more !!
But you really need to go online and do a forecast to get your pension situation.

I contributed 40 full years ( no gaps ) yet needed another 6 years of contributions to achieve full SP.

[keithsimmonds]

Hmrc online forecast is just a guide so i found out last week. I have 43 years of full contributions and 3 years that are not full and 4 more years where "i could" make further contributions. My forcast is for 162.01 per week as it stands,but i was told by HMRC (when phoning from LOS)that, that figure was not what she was looking at on her screen and that i should get a pension forecast from the DWP to get the exact figure,(she would not say what was on her screen,only that the forcast was higher than the 162.01 figure that i was seeing),I am in the process of doing exactly that.

Luckily for me i will be in the UK in 2 weeks time to hopefully get the up to date forcast then settle (if i can) any short full years if needed.

[strikingsunset]

Hmrc online forecast is just a guide so i found out last week. I have 43 years of full contributions and 3 years that are not full and 4 more years where "i could" make further contributions. My forcast is for 162.01 per week as it stands,but i was told by HMRC (when phoning from LOS)that, that figure was not what she was looking at on her screen and that i should get a pension forecast from the DWP to get the exact figure,(she would not say what was on her screen,only that the forcast was higher than the 162.01 figure that i was seeing),I am in the process of doing exactly that.
Luckily for me i will be in the UK in 2 weeks time to hopefully get the up to date forcast then settle (if i can) any short full years if needed.

i had the same experience, in my case the “ actual” forecast was around 10 per cent less ( when i called them) than the online forecast.
it’s imperative to call them and discuss in detail if one is aiming to maximize state pension.



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[stament]

On 6/19/2019 at 6:02 AM, sometimewoodworker said:

It is almost certainly because you were contracted out for some of your working life. 

 

There has has been some significant miss information posted in this thread. Some is completely false.

 

you need 35 years of full contributions for a full pension. Which years they are is not relevant.

 

Contracted out years are not the same so should be disregarded.

 

Class 2 years are incredibly good value for money.

Class 3 years are extremely good value for money.

 

You would have to be a genius level investor to get a better return than Class 3, and a super genius to beat Class 2.

 

 

 

Interesting topic. I checked my pension forecast and it says I have 26 years contributions and need another 9 in the remaining years until my retirement in 2038.

 

One Q I do have is that I did opt out into Serps so how can I tell if my 26 years of contributions are full years contributions as the NIC record only shows gap years.

 

Currently it says my contributions entitle me to £127 per week.

Edited July 21, 2019 by stament

[stament]

On 6/29/2019 at 7:48 AM, Mike Teavee said:

6 Previous Tax Years then you can carry on making AVCs up to retirement age.

 

Unfortunately they stopped the payment at Class 2 rates for expats this year so it's the full Class 3 I'm afraid ???? 

Did they? Not what the government website says. Where are you getting this info from? 

[stament]

On 7/10/2019 at 7:54 AM, strikingsunset said:

 

i had the same experience, in my case the “ actual” forecast was around 10 per cent less ( when i called them) than the online forecast.
it’s imperative to call them and discuss in detail if one is aiming to maximize state pension.



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That is worrying I thought the online forecast in your gateway account was supposed to be correct. ????

[Andrew Dwyer]

That is worrying I thought the online forecast in your gateway account was supposed to be correct. [emoji848]

I called them after my forecast and they gave me the exact same results, plus it was on track when I checked it again a year later ( after starting to pay missing years ).
But it doesn’t do any harm to call them to check .

[sometimewoodworker]

12 hours ago, stament said:

 

Interesting topic. I checked my pension forecast and it says I have 26 years contributions and need another 9 in the remaining years until my retirement in 2038.

 

One Q I do have is that I did opt out into Serps so how can I tell if my 26 years of contributions are full years contributions as the NIC record only shows gap years.

 

Currently it says my contributions entitle me to £127 per week.

Regrettably the only real way is to submit the form and get a written forecast, the online forecast has provided not to be reliable and you have no proof of what it shows you (no a screen print will not be enough) 

 

if you get the written information directly from the pensions office if it is not correct (written information is checked) then you have a good chance of holding them to the letter of the written forecast.

[strikingsunset]

I agree with the above the online forecast is not reliable -it’s dare i say ambiguous- i think it assumes one will pay the outstanding years NIC,s.


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[cleopatra2]

On 7/21/2019 at 9:22 PM, stament said:

 

Interesting topic. I checked my pension forecast and it says I have 26 years contributions and need another 9 in the remaining years until my retirement in 2038.

 

One Q I do have is that I did opt out into Serps so how can I tell if my 26 years of contributions are full years contributions as the NIC record only shows gap years.

 

Currently it says my contributions entitle me to £127 per week.

I will try to give a simple explanation

Full year NiC does not equate to a specific amount of money. It refers to a full year of contribution i.e 52 weeks.

 

[stament]

10 hours ago, cleopatra2 said:

I will try to give a simple explanation

Full year NiC does not equate to a specific amount of money. It refers to a full year of contribution i.e 52 weeks.

 

So are all full year 52 weeks the same in terms of pension benefit?

[Mike Teavee]

9 hours ago, stament said:

So are all full year 52 weeks the same in terms of pension benefit?

Yes... Every full year (52 weeks or 12 months or however you pay it) gives you 1/35th of the pension entitlement, irrespective of how much NI you pay 

[stament]

1 hour ago, Mike Teavee said:

Yes... Every full year (52 weeks or 12 months or however you pay it) gives you 1/35th of the pension entitlement, irrespective of how much NI you pay 

Thanks for confirming what I thought.