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  • Topping up NI contributions
  • Premier Icon breninbeener
    Free Member

    Mrs B is retired at sub 50 yrs. She has 31yr of NI contributions. She needs 35 yrs of contributions to be entitled to her old age pension.

    Assuming that this pension will still exist when she reaches 67 yrs of age, how does she pay the required 4 years to get to the 35 yr contribution record?

    Does anyone know how to do this and what the financial cost is?

    Thanks

    Ian

    Premier Icon Caher
    Full Member

    Go into your tax account via the dreaded government gateway. I’d check if it’s worth it though first.

    Premier Icon nickjb
    Free Member

    Will she be 100% retired between now and 67? Might be worth waiting and seeing if she ends with a casual or hobby job that will at least give some more contributions.

    Premier Icon breninbeener
    Free Member

    Ah, yes the 100% retired thing isnt certain, she may get another job

    Premier Icon footflaps
    Full Member

    Their website will give you a pension estimate with / without full contribution and quote you for the top up, so you can do the maths and work out how long she’d need to claim for to get the money back.

    Premier Icon BigJohn
    Full Member

    We had this decision to make a few months ago. It’s not quite as simple as it seems.

    Mrs BigJohn is one of those WISPI women – whose retirement age got put up from 60 to 66 and she left full time employment at age 61.

    We couldn’t get any sense out of the NI website – it said she had about 40+ years of full contributions but there was still a shortfall. We phoned the Pensions Helpline and they couldn’t have been more helpful. They made everything clear, told us which years we should top up, how much it would cost for each year and how much extra pension this would result in. It was quite a big amount so we took a day or two to decide. Yes, the answer was if she lived 5 years after her pension started she would be in profit.
    When we called back to say go ahead the guy on the phone said “hang on, has she got any self-employed or property income?” Well, yes, we rent out a couple of houses.
    It turns out that the voluntary contributions for self employed/property income are much (much) lower than for the standard ones but their effect on the pension is the same. What’s more, in the first tax year we only had about 1 month of qualifying income, so only 4 weeks of NI but it still counted to the full uplift.
    So, make sure that she gets self-assessment tax returns and make sure there’s a bit of turnover to qualify for NI contributions and get on the phone to the Pension Helpline. You won’t believe how helpful they are.

    Premier Icon poolman
    Free Member

    Yes i would wait a few years to buy the missing 4 years. If she bought them now and then got a job, she would have deducted ni for no extra pension benefit. If she did not buy them and remained with the 4 missing years, then got a job, she would accrue more paid up years.

    Be aware though the price of the missing years has gone up quite a bit, 10 years ago I think I was paying c 400 GBP per gap year, they are now c 750. That’s the higher rate they wouldn’t let me pay the self-employed rate, but thanks I will ask again.

    Premier Icon bigdugsbaws
    Free Member

    I wrote a blog on this a while back, basically if you are in good health it makes real financial sense and the premium is recouped in a relatively short period. Remember, it’s guaranteed income for life with a very generous (for now) rate of inflation proofing.

    https://expertpensions.co.uk/dont-forget-the-state-pension/

    Premier Icon dave661350
    Free Member

    Bren…..check that she has a full 31 years contributions. If she was in certain organisations she is likely to have been contracted out of full NI and her 31 yrs may be worth say 27’full time’ years.
    I went thru this a few years ago and found that ringing up and speaking to someone got me the answers I needed….they were very helpful.

    Premier Icon intheborders
    Free Member

    You just need to access her HMRC record online, it shows in detail everything you need.

    And one of my qualifying years cost me all of £5.56 in NI – Ltd Company Director.

    Th initial getting access is a faff – but then it should be as only she should have access. Once she’s got it though, easi-peasi.

    Premier Icon highpeakrider
    Full Member

    From my knowledge the 35 years is to get the full pension.
    I just helped a mate through the process as they are not good with tech.
    They only had about 21 years at pension age and was about £10 a week worse off.

    Premier Icon finbar
    Free Member

    Madness to give government extra money in this way for someone that is >17 years away from the state pension age IMO.

    I fully expect the state pension to be means-tested out of meaningful existence for new retirees within the next 2-3 decades – at least, for someone currently in a financial position comfortable enough to retire before 50 and consider buying extra NI contributions that is.

    Stick the cash in a low-cost index tracker in a SIPP instead.

    Premier Icon kelvin
    Full Member

    Someone’s given the advice I was going to… she should register as self-employed… I’m sure she’ll find something to do… even if it makes little money… and then pay the NI for a few years through her self-assessment.

    In addition, HMRC have a page that shows you your missing NI years and part years, and that is easy to get to once you’re set up for self-assessment (which initially can be pain).

    Premier Icon rilem
    Full Member

    Doesn’t the increased ‘new state pension’ require 40 years of contributions now? My understanding is that topping up to the full 40 years should be a no brainer given the potential return, assuming general expected life expectancy. Getting a telephone consultation with the Government service is worthwhile. (IANAE).

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