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Paying voluntary NI contributions - pros v cons


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3 hours ago, benbobailey said:

Hello harrycatcat1, you should really carefully reconsider your decision. In return for your £4800 one off payment, you have stated you will receive an extra £17 pounds per week state pension (£890 per year appx).After appx 5 years the extra is all profit, and don't forget it will have increased in amount annually. Regards 

I'm going to ring them up tomorrow and just clarify everything just in case I've got it wrong.  Thanks for the advice.

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18 minutes ago, Lloyd90 said:


Huh? I thought his maths was right. 
 

He owes 5 years of NI payment, the payment costs £800 per year that was missed.  
 

5 years x £800 = £4000 payment. 
 

You need to pay out this £4,000 to get an increase or £250 per year in pension. 
 

£4000 divided by the £250 you benefit by = 16 years to recover the initial outlay of the £4,000. 
 

 

He will get £250 per year for each £800 he pays. If he pays the full 5 x £800 = £4000. In return he will receive 5 x £250 per year = £1250 per year. Therefore it will take 4000 divided by 1250 to recoup monies.(3.2 years)

Edited by benbobailey
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1 minute ago, benbobailey said:

He will get £250 per year for each £800 he pays. If he pays the full 5 x £800 = £4000. In return he will receive 5 x £250 per year = £1250 per year. Therefore it will take 4000(3.2 years ) divide by 1250 to recoup monies.


I was under the impression (from his post) he would pay out the £4,000 but only receive £250 PA increase.

 

If it is £250 increase for every £800 repaid then yes that will be a lot better, and the original maths would be off. 
 

Apologies for the mixup. 

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3 minutes ago, benbobailey said:

He will get £250 per year for each £800 he pays. If he pays the full 5 x £800 = £4000. In return he will receive 5 x £250 per year = £1250 per year. Therefore it will take 4000(3.2 years ) divide by 1250 to recoup monies.

Correct.  See Step 4 here https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

and use the calculator provided.

Edited by JohnfromUK
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3 minutes ago, harrycatcat1 said:

I'm going to ring them up tomorrow and just clarify everything just in case I've got it wrong.  Thanks for the advice.

When you eventually get through on phone they are very helpful. Ask explicitly which years will benefit you to pay. Regards 

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3 hours ago, JohnfromUK said:

It may be worth you browsing this as "in general" it is a worthwhile thing to do.  Of course you may well not be in the "in general" category!

https://www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

 

Many thanks for posting that link. According to this I would be a fool not to pay contributions 🤔

Edited to say the trick is to live as long as possible 🤣🤣🤣🤣

 

Screenshot_20220626-200207_Samsung Internet.jpg

Edited by harrycatcat1
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5 minutes ago, harrycatcat1 said:

Many thanks for posting that link. According to this I would be a fool not to pay contributions 🤔

Edited to say the trick is to live as long as possible 🤣🤣🤣🤣

 

Screenshot_20220626-200207_Samsung Internet.jpg

I have tried to emphasise in my answers that this is a great offer, although some think otherwise. You pays you money.....!

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1 hour ago, benbobailey said:

I have tried to emphasise in my answers that this is a great offer, although some think otherwise. You pays you money.....!

 

I think I read that the option to pay off old missed payments is only available until 2023? 

 

I have just checked mine, I am currently 32 and in full time employment. #

Its says: 

You have:

  • 15 years of full contributions
  • 35 years to contribute before 5 April 2057
  • 2 years when you did not contribute enough
2022-23
Your record for this year is not available yet
2021-22
Full year
2020-21
Full year
2019-20
Full year
2018-19
Full year
2017-18
Full year
2016-17
Full year
2015-16
Full year
2014-15
Full year
2013-14
Full year
2012-13
Full year
2011-12
Full year
2010-11
Full year
2009-10
Year is not full
2008-09
Year is not full
2007-08
Full year
2006-07
Full year
2005-06
Full year
 
 
 
 
 
Is it worth me repaying those 2 missed years?
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7 minutes ago, Lloyd90 said:

 

I think I read that the option to pay off old missed payments is only available until 2023? 

 

I have just checked mine, I am currently 32 and in full time employment. #

Its says: 

You have:

  • 15 years of full contributions
  • 35 years to contribute before 5 April 2057
  • 2 years when you did not contribute enough
 
2022-23
Your record for this year is not available yet
2021-22
Full year
2020-21
Full year
2019-20
Full year
2018-19
Full year
2017-18
Full year
2016-17
Full year
2015-16
Full year
2014-15
Full year
2013-14
Full year
2012-13
Full year
2011-12
Full year
2010-11
Full year
2009-10
Year is not full
2008-09
Year is not full
2007-08
Full year
2006-07
Full year
2005-06
Full year
 
 
 
 
 
Is it worth me repaying those 2 missed years?

Put it into the calculator it might come up with an answer, it did for me but I'm near pension age.

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14 minutes ago, Lloyd90 said:

Is it worth me repaying those 2 missed years?

If you really want to top up you need to check how far back you are allowed to 'top up'.  I think it may be 6 years back only See https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

As things stand now, you have 15 years already complete.  You need 35 years complete before you retire.  So you have to add another 20 years.  You have until 2057 to do that (for 'normal' retirement age) which is 35 years, so you have 35 years to do this

So in summary, you have 35 years in which to complete another 20 years of full NI.  That should not be a problem - and I would also guess the rules will not stay the same for that long anyway!

As an aside I will be 100 if still alive when you retire!

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16 minutes ago, harrycatcat1 said:

Put it into the calculator it might come up with an answer, it did for me but I'm near pension age.

 

Thank's mate,

 

Just did a check on HMRC website, it says: I am on track to received the £185.15, and that's the most I can get. 
So seem's the two missed year's won't have an impact and tgherefore aren't worth me paying. 

 

thank you.... mind you, by the time I am 68+ it will all have changed!! 

 

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022

£87.24 a week

Forecast if you contribute another 19 years before 5 April 2057

£185.15 a week

£185.15 is the most you can get

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5 minutes ago, JohnfromUK said:

If you really want to top up you need to check how far back you are allowed to 'top up'.  I think it may be 6 years back only See https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

As things stand now, you have 15 years already complete.  You need 35 years complete before you retire.  So you have to add another 20 years.  You have until 2057 to do that (for 'normal' retirement age) which is 35 years, so you have 35 years to do this

So in summary, you have 35 years in which to complete another 20 years of full NI.  That should not be a problem - and I would also guess the rules will not stay the same for that long anyway!

As an aside I will be 100 if still alive when you retire!

 

John I hope you make it mate, If you do, you can come to my retirement do and I'll buy your drinks all night!! :D

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1 minute ago, Lloyd90 said:

 

John I hope you make it mate, If you do, you can come to my retirement do and I'll buy your drinks all night!! :D

Thank you.  I will endeavour to hold you to that, but I think your bar tab is fairly safe.  I think I have only ever met one person who was over 100.

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45 minutes ago, JohnfromUK said:

If you really want to top up you need to check how far back you are allowed to 'top up'.  I think it may be 6 years back only See https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

As things stand now, you have 15 years already complete.  You need 35 years complete before you retire.  So you have to add another 20 years.  You have until 2057 to do that (for 'normal' retirement age) which is 35 years, so you have 35 years to do this

So in summary, you have 35 years in which to complete another 20 years of full NI.  That should not be a problem - and I would also guess the rules will not stay the same for that long anyway!

As an aside I will be 100 if still alive when you retire!

 

45 minutes ago, JohnfromUK said:

If you really want to top up you need to check how far back you are allowed to 'top up'.  I think it may be 6 years back only See https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

As things stand now, you have 15 years already complete.  You need 35 years complete before you retire.  So you have to add another 20 years.  You have until 2057 to do that (for 'normal' retirement age) which is 35 years, so you have 35 years to do this

So in summary, you have 35 years in which to complete another 20 years of full NI.  That should not be a problem - and I would also guess the rules will not stay the same for that long anyway!

As an aside I will be 100 if still alive when you retire!

The 35 yrs contributions are not relevant in lloyd90 situation. The  new 35 yr rule only applies to anyone commencing employment and NI contributions from 2016 onwards. Anyone ( most of us)who were employed before 2016 come under a completely different system which takes into account various scenarios.( Contracted in/out, salary, serps , additional payments etc)

52 minutes ago, Lloyd90 said:

 

Thank's mate,

 

Just did a check on HMRC website, it says: I am on track to received the £185.15, and that's the most I can get. 
So seem's the two missed year's won't have an impact and tgherefore aren't worth me paying. 

 

thank you.... mind you, by the time I am 68+ it will all have changed!! 

 

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022

£87.24 a week

Forecast if you contribute another 19 years before 5 April 2057

£185.15 a week

£185.15 is the most you can get

Congratulations for being on track for maximum state pension. If you do have any spare cash each month you could increase contributions to your company pension or start a sipp( personal pension). Regards 

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5 minutes ago, benbobailey said:

 

Congratulations for being on track for maximum state pension. If you do have any spare cash each month you could increase contributions to your company pension or start a sipp( personal pension). Regards 

 

I am in the local government pension scheme, I therefore don't have a "pot" to pay into as such, but can make overpyaments which the scheme will open up as a seperate SIPP if I want to. 

 

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10 hours ago, Lloyd90 said:


Huh? I thought his maths was right. 
 

He owes 5 years of NI payment, the payment costs £800 per year that was missed.  
 

5 years x £800 = £4000 payment. 
 

You need to pay out this £4,000 to get an increase or £250 per year in pension. 
 

£4000 divided by the £250 you benefit by = 16 years to recover the initial outlay of the £4,000. 
 

 

Correct as I said,going by the information given.

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2 hours ago, TOPGUN749 said:

Correct as I said,going by the information given.

Regardless of interpretation, the fact is that the correct calculation is 4000 divided by 1250 = 3.2 The initial outlay is recovered in 3.2 years. Not 16. (£250 yearly is awarded per £800 payment.) It is best to give correct answers and if in any doubt contact the pension centre, rather than strangers on internet.

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12 hours ago, harrycatcat1 said:

Edited to say the trick is to live as long as possible 🤣🤣🤣🤣

Oh so true.

A longtime friend, a lifelong bachelor, enjoyed his job and worked into his late 60’s. He deferred claiming both his employment and state pensions for higher income when he retired. Three and 1/2 years ago he retired, set up his pensions and looked forward to the next phase of his life. Last year he was diagnosed with cancer. This year we held his funeral. You never know what’s around the corner.

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13 hours ago, Lloyd90 said:

 

Thank's mate,

 

Just did a check on HMRC website, it says: I am on track to received the £185.15, and that's the most I can get. 
So seem's the two missed year's won't have an impact and tgherefore aren't worth me paying. 

 

thank you.... mind you, by the time I am 68+ it will all have changed!! 

 

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022

£87.24 a week

Forecast if you contribute another 19 years before 5 April 2057

£185.15 a week

£185.15 is the most you can get

Very good 👍 

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12 hours ago, Lloyd90 said:

 

I am in the local government pension scheme, I therefore don't have a "pot" to pay into as such, but can make overpyaments which the scheme will open up as a seperate SIPP if I want to. 

 

Local government pension is one of the best available, and combined with full state pension you should be reasonably comfortable in retirement. I would still investigate buying extra years in Lgps or start a sipp, even for a small amount. Contrary to common belief, bills and expenditure do not  decrease in retirement unless you dramatically change your lifestyle. Good luck.

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Not adding much, but I was in just this position. Made redundant at 59, which left me 5 years short. I did the sums and I need to receive state pension for 4 years to make the voluntary payments worth it. I'm 64 now.

It's a simple calculation (total additional payments compared to annual pension increase) and will probably be worth doing.

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20 hours ago, benbobailey said:

I have tried to emphasise in my answers that this is a great offer, although some think otherwise. You pays you money.....!

I phoned them this morning and I only need to pay three years to top up to 53p less than the top whack.

He said I would get the top rate if I pay another full year but for 53p per week it wasn't worth it 👍👍👍

Edited by harrycatcat1
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