State pension letter

Be careful here. I have a Teacher’s s pension and pay tax. The personal tax allowance is £12,500. All your pensions count as income.
I’ll get a reduced state pension in September. I have missing NI years since I left work 8 years ago (personal choice) when I took my occupational pension. I decided not to buy extra years as it would eat into my capital and the extra few pounds a week on which I would pay tax are not needed to maintain my standard of living.

The questions you perhaps could consider are
Do I want to use my capital as it’s hard to replace?
Do I need the extra £xx a week?
How much extra will I get if I have to pay tax on it?
How long will it take to break even?

Do you have someone to talk it through with?

I have only just started to receive my SP and had to apply online for it as no letter arrived telling me when I would be eligible. The online process was easy to complete.
I had been regularly looking at the Gov Gateway to find out how much I was entitled to. Having retired at 58 I was able to make up the missing years up to my official SP retirement through childcare credits which made quite a difference to my eventual payout.
My Teacher's Pension included contracted out years so on balance the childcare credits really helped to give it that extra boost in the end.
On the negative side I now pay more tax, but that's only to be expected as my income is greater. I'm happy with what I've accrued after waiting those extra six years.

It depends whether you have income from other sources Shandy. If you only have your teachers pension and state pension and don't work, you won't pay any tax.

The Old Age pension in UK is less than the Income Tax allowance, so you should not pay Tax on it, and still have some Allowance left over for any other occupational Pension.
The pension will increase annually by,now, the Retail Price Index.
And even better news, when you reach 80, it will increase again!
By 25p per week! Don't spend it all at once

I've spent a sleepless night thinking about this, as I'm not sure how much of the increased pension I'll lose to tax, and whether it is worth spending savings.

I don’t think they’ve been widely publicised until recently, Berylsgranny. My first claim, in 2012, was knocked back as my daughter wasn’t claiming Child Benefit and hadn’t registered her eligibility for it, though clearly she would have been entitled to it. The fact sheet at the time just stated that she had to be eligible for it - I remember quoting this in my appeal letters. The appeal went as far as the Ombudsman with no luck. As you can’t actually submit the claim until the October after the end of the tax year in which you’ve done the childcare, I missed out on the whole year plus the time I’d done to December, when they told me, so 20 months of credits. All DD had to do then was ring a certain number and say she was calling to register her entitlement to Child Benefit, but did not want to claim it. After that it all went smoothly.

Good luck with your claim.

Maggiemaybe - Thanks. It is a bit annoying but I suppose I only have myself to blame. In fact it was something on GN that prompted me a couple of months ago, hopefully I will be considered for a refund. I have to say though I had a full 39 years of NI's contributions and still did not get the full state pension. You can only trust them I suppose.

I check my pension forecast regularly on gov.uk with a Government Gateway login. I retired at 60, and I have enough qualifying years paid in that my forecast predicts I will get a full amount of pension at 66.
I am concerned that government will raise the qualifying years - in which case I will not get a full pension - and anything is possible after them raising the SP age for women by a fast sliding scale from 60 to 66 - but what you see on the Pensions forecast is just that.
I am not scaremongering. I just think we need to be aware.

That’s a shame, Berylsgranny. The Specified Adult Childcare Credits are getting more publicity these days, but many still don’t know about them.

www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12-fact-sheet/specified-adult-childcare-credits-fact-sheet

I had 42 years worth on NI contributions but I don't get the full pension amount as I think this was due to working with Local Government. Just before I received my state pension I was offered to pay 3 years worth of NI's so my monthly pension would increase which I chose to do the amount being £2,300 approx. I have just found out that these extra 3 years paid up front could have been paid for me as I am the carer of two grandchildren every week and could have been paid through Specified Adult Childcare Credits. I was rather annoyed at not knowing this information before I actually paid the addition myself. I have now sent a letter to N.I. trying to claim my money back - not holding my breath through.

I am 64 in a couple of weeks, have 37 years of pension credited so far, I got my pension forcast, and I will not get the full state pension due to being contracted out and having a occupational pension. (COPE)
I rang DWP about this, and decided it was not worth paying anything extra.
It really is about exploring what is best for you, I think it works out at the moment I will get a £160 something per week. I can get another £5 something if I stay at work until I am 66.
It is just about looking at what is best for you. I will check my pension forcast again after the 6th of April.

PS. I don't know how old you are, but if you are a few years below state pension age, you could become self-employed. Even if you don't earn anything, you then become eligible to pay voluntary Class 2 NICs, which are cheaper than Class 3. I have a feeling they're changing soon, but currently you can pay £159 a year, which then means you receive about £4.50 a week extra pension for each year paid. You only have to live for a few months after SPA for it to be worthwhile.

BTW Shandy If your prediction is £150, you've done well. I will be getting just over £160pw and I have 10 more years contributions than you.

Shandy57

Thanks for your feedback everyone, I haven't worked for ten years now, my late husband supported me.

I did phone Future Pension service and the young man said if I purchased the years from 2016 I would get the full state pension. I said I was worried if I paid now I might not live to see the benefits, and he said I would have the option of paying just before my SPA date.

@growstuff what sounds odd? If it's my forecast figure it was calculated on the old rules, I was contracted out with my Teacher's Pension. My COPE is £40.20.

I'm dithering over doing it, and buying Premium Bonds instead.

Shandy The fact that you were contracted out when you paid Teacher's Pension has affected your pension. That's what was odd.

I have paid NICs for 47 years, but was contracted out for some of that time and won't receive a full state pension. You've answered my query, because I suspected there were further details.

In my case, I couldn't possibly buy extra years to make my pension up to the full amount, but everybody's situation is different.

Pantglas2

Are you still working and paying NI Shandy? If so you’ll be credited for each year since 2016.

If you’re claiming a benefit, you’ll also be credited.

If neither of the above, any chance you can claim child care for grandchildren while your son/daughter works? Again you can claim a credit.

That is not totally correct under the 2016 those of us who have already paid in have what they call a starting amount, if that starting amount is already more than the new full pension amount (currently £175.20) then we have what is called a protected payment which is added to the basic and paid at the same time, any NICs/Credits accrued after 6th April 2016 will not increase the amount of pension we get.

If our starting amount is lower than the new full pension then additional NICs/Credits accrued after 6th April 2016 will increase our pension until we get the basic amount or reach pension age which ever comes sooner, again once the basic amount has been reached (if still working or getting benefits) then any additional NICs/Credits will not increase the pension amount you get. This makes it clearer www.gov.uk/new-state-pension/how-its-calculated

I can't really understand the maths of it Maggiemaybe, spending £800 to add £5 per week, an increase of £250 over the year - but as you say I should recoup it over three years. I'm just always nervous of making a mistake, thanks for the reassurance.

And as my saga above shows, you can buy in the extra years even after you start getting your pension. There’s no rush to decide.

It’s difficult, isn’t it, Shandy? But I worked out that buying up my couple of incomplete years would pay for itself if I’m spared for just over 3 years. Fingers crossed it’ll pay off.

Thanks for your feedback everyone, I haven't worked for ten years now, my late husband supported me.

I did phone Future Pension service and the young man said if I purchased the years from 2016 I would get the full state pension. I said I was worried if I paid now I might not live to see the benefits, and he said I would have the option of paying just before my SPA date.

@growstuff what sounds odd? If it's my forecast figure it was calculated on the old rules, I was contracted out with my Teacher's Pension. My COPE is £40.20.

I'm dithering over doing it, and buying Premium Bonds instead.

Hindsight is a great thing, but I have been wondering, would it have made things easier for us and a lesson for the future, if much earlier, we had looked at the predictions and the implications of missing years. This is definitely not a dig at anyone, just a thought in my head.

When I ran out of sick pay, before I was forced to retire on ill health, the DWP contacted me and informed me that although I was still employed, but I was no longer receiving a salary, my NI contributions were not being paid. Naively, that thought had never occured to me.
However, the DWP (pre-Covid) were most helpful and I did eventually receive credits for the missing payments, as I was deemed unfit to ever work again. It took months and was very stressful, but it was eventually sorted.

It's all a bit of a minefield.

Your first port of call, Shandy, to find out what’s best for you, is the Future Pension Service. They liaise with the HMRC and the Pensions Service and you eventually get a letter detailing what you could pay and what difference it will make to your entitlement.

I finally reached my state pension age a few months back (hurrah!) and the process has been challenging. Yes, claiming is easy, I did it online in a few clicks. But....the Specified Adult Childcare credits I applied for in early October weren’t credited till February, well after my SPA. Until they were I couldn’t get the details of what payments I could make to buy up incomplete years. Getting that figure (you have to wait till they send it in writing) took another four weeks. Thank goodness I didn’t jump the gun and pay what I thought I should from my Government Gateway account - please don’t rely too heavily on that information. Paying for one of the years wouldn’t have increased my entitlement at all and I wouldn’t have had the overpayment refunded.

I’m told it could be 6 weeks before the payment I’ve now made will be credited.

It’s been frustrating. I have been proactive. I’ve sent emails and letters that dropped into a black hole. I’ve hung on telephone lines for 40 minutes at a time, I’ve spoken to a lot of people (all of them, I must say, polite and friendly and keen to help, even if some of the advice they gave me was completely wrong ). I sympathise - like so many they’re under pressure and working from home. But getting anything out of the ordinary sorted isn’t easy at the moment.

Shandy Have you actually spoken to anybody from the DWP or Citizens Advice? There's something not quite right about what you've written and I'm wondering if there are other factors involved.

I received a letter a few months ago, went online, filled in a few details and all sorted. My first payment is on 14 April. This is two weeks paid in arrears and then payments will be every four weeks. The payment is exactly what I was expecting.

Are you still working and paying NI Shandy? If so you’ll be credited for each year since 2016.

If you’re claiming a benefit, you’ll also be credited.

If neither of the above, any chance you can claim child care for grandchildren while your son/daughter works? Again you can claim a credit.