NI contributions & pension

thomasross20

One of the guys from our work found out he'd got the wrong number of NI years from our work so they had to help out in order to boost them. 

So I just checked mine. Looks ok. Doesn't matter how much you pay, as long as you pay it you get a "full year." 

Does anybody voluntarily pay to make up years? 

For some reason I got "credits" for a few years (some time ago), despite not working - maybe an error, I'll ring them to find out. 

Some years it says I only brought in under £1k income (working part-time years ago) but I'm too late to buy the additional years - which is a bummer as the top-up was very little. One year I can "buy" for £120 after earning £250 that year (again a year when I wasn't really working..) - wondering if I should do that. And another I can buy for £689 though it doesn't say what I earned. 

My thinking is that I want to maximise the number of years so that if I do ever want to work elsewhere, I wont be a year or two down on getting full UK pension (though I know everybody will say don't bother, you wont get pension when you retire etc...). I don't think private pension will affect state pension (regardless of how big or small your private pension is). 

Just curious! Would you buy the extra years? 

Moe_Zambeek

Find out how many full years you need for full entitlement and you may find that - given your age - you’ll reach full entitlement easily anyway. 

Guitar_Slinger

IIRC, ages 16 and 17 are called juvenile years and you get credit for both. 

If you can afford the cheap years, go for it. But if you're thinking of planning it to the year, the rules will probably change before you get there, so don't sweat it too much.   Since I started working, the retirement age has changed 3 times, as has state penson and NI contribution rules. They probably will again.

thomasross20

Thanks, chaps! 
I will consider.. and I never knew that about juvenile years..

TheBigDipper

thomasross20 said:

<snip>

Just curious! Would you buy the extra years? 

My wife did. She found out she was a bit short quite close to her retirement date. The maths worked in her favour - I think the cost could be recovered if she lived for 4 years or so.  She did and still is. But you're nowhere near retirement , are you. I'm sure you'll be able to catch up and I'm equally sure they'll change the rules if it suits them. 

EricTheWeary

I need to check mine at some point. I’m not yet near state pension age but if I retired early it’d be handy to know that ( at current rules) I’d get full pension at 67.
 Although if I was receiving a company pension as my source of income from say 60 to 67 I guess I’d still be paying tax and NI on that? 
I know that when I was unemployed for 6 months my NI contribution was paid what I don’t know is the four years I was a student and the months before and after I was doing unpaid work. 

So, if I understood how it worked better then maybe I might need to buy the years at some point  

ToneControl

it's probably more of an issue if you have long career breaks, as has been traditional with mothers. You probably have no need to worry. The £120 year sounds worth it.
As mentioned, they will change the rules, but face facts, you will need to be 68 or 70 before you can claim, so you have a long time left to get your NI contribution years in.

Nitefly

@EricTheWeary and @thomasross20 - if you go onto gov.uk you will find a pension calculator - put your NI number in and it will tell you what your pension will be under current rules.

It's probably more use to Eric, being closer to retirement, but it's based on your contribution record.

Also, Our Maud found that her State pension amount WAS affected by the fact that she gets a private pension, albeit she was only in that scheme for 15 years.

Also, Tigger, rules may well be different in Scotland.

bodhi

Checked on this not long ago, and discovered that I fell short on NI contributions during 3 years I studied and worked part-time, but it's too late to do anything about it now (can only top up within 6 years of the shortfall).  I would have done that if it was still an option.

But in theory I have enough time left to reach the required number of years of contribution.  Tempting fate by saying that...

Strat_a_tat_tat

Nitefly said:

Also, Our Maud found that her State pension amount WAS affected by the fact that she gets a private pension, albeit she was only in that scheme for 15 years.

The way the government works out your pension is very complicated. I could be wrong... but I don't think that having a private pension would necessarily affect your wife's state pension. What would affect the level of state pension is if your wife was contracted out while she contributing to the private pension.

Guitar_Slinger

I worked with someone a few years ago who was moaning because he was nearly 60,was fully paid up for state pension but was still paying NI.

Memo to self: check if this is the case.

EricTheWeary

Nitefly said:

@EricTheWeary and @thomasross20 - if you go onto gov.uk you will find a pension calculator - put your NI number in and it will tell you what your pension will be under current rules.

It's probably more use to Eric, being closer to retirement, but it's based on your contribution record.

Also, Our Maud found that her State pension amount WAS affected by the fact that she gets a private pension, albeit she was only in that scheme for 15 years.

Also, Tigger, rules may well be different in Scotland.

From looking it up if I start drawing my company pension although it’s taxable there is no NI contribution from it. I need to check at some point but it’s unlikely to effect me. MrsTheWeary is determined to start her company pension at 55 regardless of what it’s worth and she missed years of NI from when she was in the USA as well as having babies so her paying in extra years would make sense. 

thomasross20

Do you still have to pay NI when you get your pension if it's over the threshold? Crikey.
Yes, the £120 top-up may be worth it...

EricTheWeary

thomasross20 said:

Do you still have to pay NI when you get your pension if it's over the threshold? Crikey.
Yes, the £120 top-up may be worth it...

You don’t pay NI on any pension from what I was reading earlier. Although that does mean if you draw a private pension before you’ve paid in 35 years you’d need to pay the extra years to get a full state pension at 67. Of course every chance these goal posts will have moved before you get there Thomas. 

boogieman

There is no 35 year rule anymore as I understand it. Any years you don’t pay NI before you reach state pension age now get automatically deducted from your pension. Also if you’ve had any NI contracted out by your employer then that affects it too.

I fully expected to be getting the £150 a week pension at 66, in just over two years time. Turns out from looking at the gov.uk site that because a) I took early retirement and b) had some years contracted out, that despite paying over 40 years worth of NI contributions  I’ll actually get about £100 a week after tax. 

Nitefly

@EricTheWeary - if MrsTheWeary claimed child benefit aka family allowance while she was having babies, those years count as paid up.

@boogieman - the years you were contracted out, you were presumably paying in to some other scheme?

Nitefly

Strat_a_tat_tat said:

Nitefly said:

Also, Our Maud found that her State pension amount WAS affected by the fact that she gets a private pension, albeit she was only in that scheme for 15 years.

The way the government works out your pension is very complicated. I could be wrong... but I don't think that having a private pension would necessarily affect your wife's state pension. What would affect the level of state pension is if your wife was contracted out while she contributing to the private pension.

Yes, this was the case.  She contracted out of the state scheme in order to pay into a company scheme.

boogieman

Nitefly said:

@EricTheWeary - if MrsTheWeary claimed child benefit aka family allowance while she was having babies, those years count as paid up.

@boogieman - the years you were contracted out, you were presumably paying in to some other scheme?

Yup, company pension scheme and I realise you’re getting a saving at the time. What I didn’t realise until fairly recently was that any unpaid years of NI contributions knock down your final state pension. I’m pretty sure it used to be that once you’d paid in 35 years worth of NI  that you’d get a full pension. Not anymore. 

ToneControl

thomasross20 said:

Do you still have to pay NI when you get your pension if it's over the threshold? Crikey.
Yes, the £120 top-up may be worth it...

you don't pay NI on returns on investments generally

So not on pensions, and also not on stocks, shares, and rental income if you don't run it as a business yourself (i.e. you have a letting agent manage it)

ToneControl

I don't have the time now, but someone should clarify the difference between NI, state pensions, SERPS, second state pension 

http://www.moneyexpertise.co.uk/what-serps-what-was-contracting-out.html

uncledick

As someone said above, it's really easy to log on to the gov.uk pensions site and check your own record - not what some bloke in the pub or on a guitar forum said.