Just stumbled across FP's link above: www.gov.uk/check-national-insurance-record
It says on this page "Signing in to the ‘Check your National Insurance record’ service activates your personal tax account. You can use this to check your HMRC records and manage your other details."
I've always been on PAYE, with my current employer for around 30 tears. Would activating my personal tax account result in me receiving Tax Returns? Obviously I'd rather not receive any, as I'm just a run of the mill employee.
No, it just means you can see and do things. I have mine set up and it hasn't caused me any issues.
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Just stumbled across FP's link above: www.gov.uk/check-national-insurance-record
It says on this page "Signing in to the ‘Check your National Insurance record’ service activates your personal tax account. You can use this to check your HMRC records and manage your other details."
I've always been on PAYE, with my current employer for around 30 tears. Would activating my personal tax account result in me receiving Tax Returns? Obviously I'd rather not receive any, as I'm just a run of the mill employee.
No, it just means you can see and do things. I have mine set up and it hasn't caused me any issues.
Thanks Adampr
Have now set up my account. Also corrected my address info, been meaning to correct it for years, but they made it so difficult to contact them. Was still receiving their correspondence anyway.
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I set my online account up years ago when I was at work and a higher rate taxpayer. Since retiring, I've unfortunately only had to pay basic rate. I never hear from HMRC, but of course, the onus is on the individual to contact them if circumstances change.
Circumstances will change in the next year or two as the proposed threshold reductions in savings interest and dividend allowances take effect. TBH, I found submitting a return online very straightforward as the system leads you through. Still a chore:(
Edited by Chris M on 27/11/2022 at 15:28
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I paid two or three years ago to make up for some contracted-out years. It costed in very clearly for me.
The govt help desks were really good. They even tell you the exact number of years to pay to ensure you don’t overpay. The only hiccup was that they quoted a lump sum to cover several years which I paid online as advised. The trouble was their system couldn’t deal with a payment covering several years. They had to reallocate it manually and this took several weeks. It’s such an obvious problem they may well have addressed it by now but worth checking when you get to making payments.
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The Internet pension checker confirms you have sufficient qualifying years, your on the maximum pension that your ever going to get. Yet you've got several years before you retire. So realise that all the contributions you're now making will ultimately mean absolutely nothing for you.
Motivation
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The Internet pension checker confirms you have sufficient qualifying years, your on the maximum pension that your ever going to get. Yet you've got several years before you retire. So realise that all the contributions you're now making will ultimately mean absolutely nothing for you.
I'm not sure that's correct, if as the OP and I both were, you were contracted out of the pre 2016 State Pension as you were enrolled in an Employer's scheme, in my case that's the Civil Service pension.
The reason is that there is a reduction in the starting figure for the New (ie post 2016) Pension to reflect the reduced pre 2016 NICs. If you're still working then you can reduce/eliminate that reduction by continuing to pay NICs. As I'm still in paid employment I'm doing that.
My predicted pension, were I to stop paying NICs now, is less that the £185.15 Standard Amount. If I work another 3 years until 66 then I'll get the full £185.15.
That's what my own prediction says and is consistent with Richard's account above.
Edited by Bromptonaut on 03/12/2022 at 08:58
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I have not followed all the above but the calculation may be more complicated than you think. I took my state pension at 65 while still working so paid NI until then (when it stops for employees). Was also contracted out for a long time (20 years?) while a civil servant. This is their annual calculation from my latest statement:
HOW YOUR BENEFIT IS MADE UP
Basic State Pension £l41.85
Pre 97 additional State Pension £125.26 less Contracted-Out Deduction (COD) of £108.87
Total payable £16.39
Post 97 additional State Pension £20.36
Graduated Retirement Benefit £7.16
The amount each week is £185.76
Edited by misar on 03/12/2022 at 11:34
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One pension forecast from the DWP (as of April 2022) states that I have to pay another five years to get weekly £179.60 but the Contracted Out forecast states another eight years. But eight years will take me over the 35 qualifying years. That's the bit I'm struggling with. My understanding is you can't go above 35 years. I don't want to pay an addition three years for no benefit.
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I take it you haven't spoken to HMRC again yet Xileno.
I think you are getting too hung up on the 35 years. Those of us who were contracted out paid lower NICs whilst we were working. I stopped working 7 years ago after effectively almost 37 with one employer. I recall I have 41 qualifying years because you get credits from your 16th birthday whilst in FT education. I can now pay voluntary NICs until my state retirement age (3 years) and backfill the last 5 (might be 6?) years. I haven't spoken to HMRC to check how many years I need to pay but voluntary NICs work out to around £800 per year.
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I haven't yet I'm afraid, had a very busy week with work and one of my key staff went down with Covid just to compound things. Hopefully this coming week I will get time to call them.
I'm sure you are right. I'm not too good with this sort of thing. I don't plan doing more than another 3 years and I don't mind paying some voluntary NICs if needed. It's actually quite a good return - as long as one makes it to retirement and more...
One of the best things I did was backfill some voluntary NICs. Due to dithering and idleness, I had a couple of gaps back in the late 80s that I backfilled in the early 90s. I think it's six years you can go back.
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Reading this thread has resulted in me investigating my pension which becomes payable in June next year. Worked full time from being 18 to retiring at just short of 59 during which I worked 5 months as a Consultant (contributions made). I also worked full time for 2 months when I left school aged 16 but those 2 months made me realise that being a mechanic in a hosiery factory was not what I really wanted so I returned to do my A levels. My calculations showed I had made contributions for 40 years and 8.5 months of which 27 year 4.5 months were at the contracted out rate. This seemed to be far more than the 35 years required for a full pension so after retiring I have done nothing.
Yesterday I rang the Pension Service and they went through my current position. To say I was a bit surprised is an understatement.
Good news for me was that for people of my age the years from 16 to starting work full time were equal to full contributions meaning that I actually have 43 contributory years.
Bad news was I need 46 years to get a full pension. The person on the line claimed to know nothing of the 35 year rule saying everyone is different but on the wifes papers (she was 66 last year) it states that since she has over 35 years she gets a full pension.
Now awaiting Pension forecast in the post and more research required.
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skidpan, unless things have changed in the last year then be aware that the default forecast will assume you were always contracted in. I've been down this road about a year ago. You need to specifically ask for a contracted out forecast.
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My on line forecast clearly refers to me having been in a contracted out scheme.
I have 42 full years of NI contributions. Two are credited contributions while over 16 but not working then 36 which would have been at contracted out rate as I was in the Civil Service Scheme. There follow 2 years where I did not make full contributions following early retirement (redundancy) then 6 years in my current charity employment. They are post 2016 so contracting out was not an option.
If I stop contributing now my pension will be £174.30/week. If I pay until I'm 66 in three years time I get the full amount.
The significance of 35 years it that it's the period required in the new post 2016 regime to qualify for the max pension of £185.15.
Nominally there's a benefit in paying employed contributions after you hit max pension as the count for 'New Style' (ie contribution based) Job Seekers Allowance or Employment and Support Allowance (for ill health). However both are eroded where an occupational pension is in payment. In my case the pension is enough to eliminate either benefit.
What we do need to check is Mrs B's as she did not pay NI for a period while studying for a PhD.
Edited by Bromptonaut on 07/12/2022 at 11:14
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I'm still working, past retirement age, because i still enjoy my work and the terms/conditions are quite honestly too good to give up whilst i'm still fit and hearty.
During the years as the goal posts have variously shifted i've been contracted in, apart from about 18 months in the 90's when self employed, so have something like 50 years in contributions, including the years of 'serps', i was earning good wages during the serps years so one might have expected some enhancement on the pension as a result, no doubt that won't be the case.
I've deferred my pension, would be daft to draw it and pay the extra tax involved, the question will be when is the sensible time to claim pension and make the roads safer for everyone else ;-)
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GB,
AIUI if you were born after 06/04/1951 then, as a man, you will get the New State Pension. Whether that, at its max, is worth more than the old Basic Pension + Additional (SERPS etc) I don't know.
If there are losers then I'd be surprised if there's not been legal action.
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Bromp.
Just been having this chat on the phone with my fair sister, some 10 years older then me who's basic pension plus additional pension (serps plus deferred extra over several years and even more years at work than i) adds up to her state pension being a fair bit more than the new state pension.
Loser wise, if there's a cut off date i can miss out, then sods law has dicated all throughout my life i'll be on the wrong side of every one, such is life eh.:-)
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There's an explanation here as to how the 'New' State Pension is calculated:
www.gov.uk/new-state-pension/how-its-calculated
It looks as though the start point is what you'd have got under the pre 2016 scheme including Additional Pension etc. You'll get the better of that or what would have been paid if the new scheme were in force for the whole of your working life.
If you've not done so recently it's probably worth getting a prediction. You need to register for the government gateway which is a bit of a faff but once done the process is easy.
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Bromp, have taken your advice, thankyou, and contacted the pension service, they'll send me a forecast in due course, very nice people to deal with personable and with a sense of humour when dealing with this old fool.
It does indeed look like, from your link, that whichever of the two systems benefits the pensioner is awarded.
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Set up a Government Gateway account and printed off all my NI info, looks spot on.
The Pension Forecast is exactly what the lady told me over the phone so its just a personal decision now as to whether I want to pay approx £800 a year for 2 or 3 years to get a maximum pension.
Got a few months to think about it.
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"My on line forecast clearly refers to me having been in a contracted out scheme."
I've just logged on to mine (first time for ages) and my forecast clearly states I've been in a Contracted Out scheme as well. It used to be a lot more confusing so that's good improvement at the DWP. I was told over the phone about a year ago they were going to improve the software.
As from April 23 mine states I need to contribute another six years to get the full pension. I'm only going to work for another three years by April 23 so I will make up the remaining three years voluntarily. That will be about £2400 at today's rate so probably worth doing. Alternatively I might take on a part-time job doing something completely unrelated to IT.
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Myself and Mrs BJ are both affected by being contracted out.
Mrs BJ has 40+ years NI but stopped working a decade or so ago. Unfortunately the contracted out badly affected her potential pension but NI contributions post 2016 have brought her much closer to the maximum amount although there aren't quite enough years post 2016 before state retirement age to achieve that. Effectively though she'll get back the amount invested within three years. In fact she's just applied for her state pension!
I early retired last year (from IT as well) but am a bit younger so still have just a few more years and my state retirement age will be 67 instead of 66 for Mrs BJ. I also had a reduced state pension because of contracting out but as I was still working post 2016 I'm only a few years short that I will pay class III NI contribution for, presuming I don't work in some capacity - I might consider part time / consultancy, trouble is I'm enjoying being retired. Whilst still working I supersized additional pension contributions for a while to try and save a bit to help plug the gap before state pension. Recent events haven't helped but at least I got tax relief on it.
I'm not grumbling about the new contracted out rules as originally we would have only got the old basic pension out of the state - much less. I never had any SERPs etc. If you are short just because of being contracted out it's only contributions post April 2016 that will improve the figure until you hit the maximum.
My advice for anyone thinking of jumping off the retirement cliff (that's what it felt like) is don't think of income as gross, look at it with net monthly eyes on. It may be more than you think, you don't pay for NI with pension income(ignoring the class III above for state top up!) , or pension contributions , no car parking fees, no commute costs(considerable in my case) etc.. Also with a few pensions here and there - all the bits net monthly add up! Think of it as a reverse credit card bill where all the bits add up to an 'ow much! total - but this time it's in your favour. If there are two of you involved remember you have a tax code each!
Edited by Big John on 20/12/2022 at 00:04
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Martin Lewis, Money Saving Expert, covers added years in his online newsletter issued today. It tantalises with a passing reference that there is a possibility of going back for a longer period but I can’t find that in the actual Added Years info in the website itself. I am at the max anyway so it’s not of interest to me personally but it may be of interest to others.
Typical of MSE the general info on Added Years is clear and unbiased. Worth a look for anyone still unclear.
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Yes I read that somewhere, I don't think it's been widely publicised but until April 23 you can go back to 2006 and fill in any gaps. Normally I think it's only six years. I'm not sure why there is this temporary arrangement but it might be something to do with the change in pension in 2016. My gaps go back to the late 80s early 90s so no use to me unfortunately.
www.gov.uk/voluntary-national-insurance-contributi...s
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Normally I think it's only six years. I'm not sure why there is this temporary arrangement but it might be something to do with the change in pension in 2016.
Yes it's to do with the transition to the new pension regime in 2016. Two key things were changed SERPS and contracting out were effectively abolished but a higher "normal" state pension were introduced. In addition the number of years required for a maximum pension was increased from 30 to 35 years. You should have had a letter circa 2016 advising you of the state of play re your future state pension as of April 2016 - you would have received a valuation / letter then but basically it would have been the highest between the old or new regimes, It reverts to going back only 6 years for class III NI in April.
The opportunity of purchasing additional NI contributions back dated to 2006 was introduced to allow people to make up shortfalls especially with the number of years required increasing from 30 to 35 years - However don't rush to pay earlier pre 2016 years, check first, if your valuation was lower because of being contracted out the post April 2016 are the years to contribute towards. It's all very complex and can be different depending on your circumstances - if not sure get advice.
The figures re class III NI - if paying a particular year makes a difference to get you towards the max of £185.15/week (will go up in April by 10.1%) then for each year you'd get £185.15/35 extra per week - currently an extra £5.29/week, which is about £276/year. As Class III is about £800 ish (depending on the year) you'd get it back within three years of receiving state pension. HOWEVER don't forget you could get NI contributions in other ways eg caring, child care etc...
Edited by Big John on 21/12/2022 at 21:17
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Re getting advice the gov helplines were very good when I was looking into it. Crucially they will tell you exactly how many years you can add to avoid over paying. You don’t need the maximum possible years just the optimum number of years.
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Got all my details now.
To get a full pension from June 2023 I need to top up my NI contributions by a total of £2420.68 before the end of March.
Based on 2023 to 2024 pension rates that will give me an extra £14.94 a week extra. Deduct 20% tax results in £11.95 a week or £621.50 a year.
So it would take just under 4 years to recoup the additional NI payments after which I would be in pocket (presuming I live that long - who knows). In reality it would be less since the pension increases with inflation every year, its 10.1% for next year. if that happened for the next few years that 4 years could fall to less than a couple of years.
Suppose its a bit of a gamble but since I have the £2420.68 sitting in the bank it seems like a good bet to me. Better than getting about 2% interest on the money.
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If you have no other priorities for that money then yes, it is a good deal. I will be doing the same when the time comes, I'm on target to be four years short due to contracting out so will be about £3200 at today's prices.
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Suppose its a bit of a gamble but since I have the £2420.68 sitting in the bank it seems like a good bet to me. Better than getting about 2% interest on the money.
Saving into something to get triple lock (hopefully) secured income for life paying back in 3-4 years (depending on your post retirement tax situation) - bargain in my eyes. Nothing you can save into get's anywhere near those returns, ignoring those dodgy emails that say you can!
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There are mutterings about making the state pension means-tested though.
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There are mutterings about making the state pension means-tested though.
Who is muttering about this?
Its been bad enough for the wife having hers delayed 6 years with little warning. To contribute for 43 years (in my case) to be told that since I also have private pensions (which I contributed into) and savings mean I get less than some low life scrounger (and that is from a life long socialist) who has never worked would be a disgrace.
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Here is an example
uk.news.yahoo.com/pensions-triple-lock-could-be-me...l
Andrea Loathsome - If she said tomorrow was Christmas Day I'd be getting a second opinion.
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Here is an example
uk.news.yahoo.com/pensions-triple-lock-could-be-me...l
Andrea Loathsome - If she said tomorrow was Christmas Day I'd be getting a second opinion.
Hopefully they will be long gone before they are allowed to put such a nasty piece of cost cutting into place.
And hopefully a replacement Labour Government will then tax the proper "rich" rather than those who have simply been prudent whilst working to ensure a comfortable retirement.
But its the "ordinary" tax payer (like me) who is an easy target. The rich employ specialists in "tax avoidance".
Richie Rich, the current PM and ex Chancellor was a perfect example of this until he was outed.
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I don't think "they" ever could. It'd upset too many Mail and Express readers.
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The Tory-aligned Adam Smith Institute discussed the idea in this paper:
www.adamsmith.org/s/Boomer-and-Bust-FINAL-Version-...f
Setting an asset level of under £1M would save the treasury £25 billion. Another criterion could be excluding higher tax band pensioners.
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Have now done something about my shortfall.
Retired in 2015 at 55 and despite 41 years of contributions, I'm 8 years short having been in a final salary pension and paying reduced NICs. 63 now and will get state pension in just under 3 years.
A couple of points which may help others. I only have 9 years in which I can make up the shortfall so next year would be the last chance to act before missing the boat. If you think you may be in a similar situation, don't delay checking. The Future Pension Service is very busy at present. I rang around a dozen times before I even got in the queue and then it rang for around half an hour before getting through to a (knowledgeable) chap. The final point is that at present past years can be purchased at c£825 (most recent two years are slightly less) but NICs generally rise in line with the state pension, so it's likely to be a little over £900 from April.
Edited by Chris M on 07/02/2023 at 12:20
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I found the web pension checker very useful as an alternative to hanging on the phone. My account shows how many years more I have to pay including the extra for having been contracted out for part of my career. The DWP used to write soon after the end of a financial year to warn if there was a shortfall in contributions to count towards a 'qualifying year'. I don't know whether they still do that.
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The web pension checker is very good, but you have to phone up if you are thinking of parting with cash. They confirm the years/amount and "fast track" you to HMRC who in turn give you the banking details and create a 16 digit reference to quote for online banking.
"Fast track" means you get through to HMRC straight away and don't have to explain it all again.
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