Would you catch up a year (pensions)

Doodledog

I do realise the implications. What I probably did not realise when working was that if I hadn’t bothered I might have been as well off in older age.

I wasn't aiming it at you but as a general observation. I suppose it depends on the pension scheme you were in, I think I would have been better off as I was in a very good scheme but due to circumstances I couldn't continue, disabled husband and 4 kids meant every penny counted and pensions were a long way off.

You have to be fair to yourself though, you couldn't have known what the changes were going to mean even if they had been thought of then. I get about £3 a week more than I'd get with the new pension.

I think we'd probably need an actuary to work out exactly who gained, who lost and how much the difference was. I'm just glad I do have a reasonable state pension and have my work pension from before DHs accident.

I do realise the implications. What I probably did not realise when working was that if I hadn’t bothered I might have been as well off in older age.

I do think the issue with being contracted out of the old pension and what it means needs to be better publicised. Lots of people now regretting they were opted out but they don't realise their private/work pension is higher because of it.

I retired and could have had the old or new pension, my old pension was higher than the new one as I had a lot of years when I wasn't contracted out. I don't think it would be terribly fair if people who benefitted from contracting out now got the full new pension.

ceejayjay

Re the above I mean 4 more years of contributions in order to have a full pension in 15 years

I wouldn't, you've got 15 years to make 4 years payments. If you are too sick to work you'd get credit anyway and if something else stops you working you'd still have the opportunity to pay for the year. I can't see the point.

I was a teacher and worked part time for most of my career, due to caring issues. You do get some credit for the years when you were raising children. However, I discovered via Radio 4's Money Box programme that the teachers' pension was "opted out" without us being properly informed of the change. I left mainstream teaching eight years before reaching SPA at 66. I worked from age 58 until retirement as a self employed tutor. I didn't earn enough to pay tax or need to pay compulsory NI contributions, but a very helpful person at the DWP advised me to make voluntary contributions from the age of 58 until the end of the tax year before my 66th birthday. It cost me about £150 a year to make the voluntary contributions, but I now get the full state pension. In my case, it was well worth it. Ring them and ask for specific advice. I found them very helpful!!

35 years is a minimum to get the full pension. If you work all your life you pay a lot more for no extra money. My forecast says I will now get a full pension after buying back 6 years, but I still have to pay NI until my 66th birthday, as it contributes to the NHS and other benefits. I have paid in for 47 years, as well as the extra six, as they were contracted out.

It is infuriating that this is the case when those who don't contribute can get as much or more than those who do.

Have you checked how many years you have already contributed to NI payments? You can check them here - www.gov.uk/check-national-insurance-record. You can also request a written statement from here, too. I received several letters telling me I had missing years but chose not to pay them. I checked them in later years to make sure I had enough contributions and I had 45 years. I would say check your contributions first and if you're on target for the minimum number of years (was 35 but don't know if it's been changed) I wouldn't. Plus you are credited until your youngest child is 16. I was really surprised I had 45 years when I checked. I retired when I was 67.

Ceejayjay. Thanks for clarifying. I regularly check my forecast and it states I may have to pay more each year even when the extra has been paid. Looks like I’ll be paying in until return age, but I’ll stay hopeful that I need to pay no more. Can’t help but feel that the 15 or so years of additional NI payments I’ve made is more than the benefit of contracting out (I wasn’t consulted on that). Fortunately I have a private pension too.
I found the person at state pension department very helpful so maybe discuss your situation with them.
BTW I’m going to apply for grandparent carer and hopefully that will mean my missing year(s) will be credited with the GCs parent’s NI contribution paid through the family allowance. That way I don’t need to pay the additional sum.

Pearl30

Looks like my original response has not arrived so briefly this is what I was trying to say.

If you don’t pay the £285 this financial year it will very likely be more expensive to pay for that missing year. The cost does go up. This is what I was told by the lady at the state pension department earlier this week as I’m in a similar situation.

I’d suggest paying it as you are very likely to be better off in the long run and will break even after just a few years.

I’m interested to know how you know you only have 4 years left to pay to qualify for a full state pension. In my case I always understood that I needed to contribute for 35 years to qualify for a full pension. I’ve been contributing for 45 years (not including my one ‘missing’ year which doesn’t qualify until I pay £370 for it) and even then I still won’t qualify. I shall have to top up for this year and possibly the one after). That’s because I was ‘opted out’ by my employer’. You may like to see that the same hasn’t happened to you.
It could be that rules have changed and you come under those. I’m a decade older than you.

Thankyou. You can get your forecast on the government site and it tells me how many more years I must contribute before I will have a maximum pension benefit

Have you have been “contracted out” by your employer, so you will get some pension from that employer ? If so then to get full state pension you have to continue to pay contributions until your actual retirement age.
I didn’t realise. I had well over the required number of years to get a full pension, or so I thought (43 full years).
Left work at 60 with a tiny works pension (for various health and caring reasons) only to find at 66 I was at least 5 full years contributions short. They don’t seem to count years if you’re contracted out, they expect full contributions every year until retirement age.

I would definitely top up your pension. I did several years ago and am feeling the benefit of it now with a full pension.

Lyn57, I hadn’t realised those figures. It seems especially unfair as I think pension credit opens up other benefits (if I am right about this).
Doesn’t apply to me as I have a work pension as well but for those that do your post is a consideration.

I wish I had topped up my missing years as I feel aggrieved every time ii see DH’s full pension and mine on the bank statement! I always feel especially aggrieved as unlike my best friend who had her children later my early child rearing years didn’t count.

If the state pension is to be your only source of income and you will have very little in savings once you reach retirement age I’d think carefully about paying extra years to make up a full state pension. At the moment a single pensioner with a pension less than £218 a week has their income topped up by pension credit to the full state pension level and also receives free dental treatment and pays no or very little council tax a saving of roughly £3000 a year. A full new state pension is £221 a week but if you receive that you are not eligible for any pension credit. If you are married the weekly income is set at approximately £341 for a couple. It seems very unfair for someone who has maybe struggled to pay for a full state pension only to find that claiming pension credit would have topped up their pension to the basic state pension level. Although it’s probably nicer not to be on the pension credit benefit, but it is strange that for the sake of an extra £3 a week in state pension you then lose entitlement to the £3000 help from pension credit.

Looks like my original response has not arrived so briefly this is what I was trying to say.

If you don’t pay the £285 this financial year it will very likely be more expensive to pay for that missing year. The cost does go up. This is what I was told by the lady at the state pension department earlier this week as I’m in a similar situation.

I’d suggest paying it as you are very likely to be better off in the long run and will break even after just a few years.

I’m interested to know how you know you only have 4 years left to pay to qualify for a full state pension. In my case I always understood that I needed to contribute for 35 years to qualify for a full pension. I’ve been contributing for 45 years (not including my one ‘missing’ year which doesn’t qualify until I pay £370 for it) and even then I still won’t qualify. I shall have to top up for this year and possibly the one after). That’s because I was ‘opted out’ by my employer’. You may like to see that the same hasn’t happened to you.
It could be that rules have changed and you come under those. I’m a decade older than you.

I’m glad I did.
I paid just over £600 to make up contributions around 18 months ago and have already had my money back!

I never regretted "topping up". It made life much easier when I was finally able to claim my state pension! It was a bit of a struggle to manage it as DH had to wait an extra 5 years before he could claim his state pension, but 16 years on, I know it's been a very good investment!

I'd recommend strongly "topping up" as many years as you possibly can. People I know who did this, are very glad that they did! Martin Lewis (money expert) recommends this. It's worth looking at this on his website. (You need to act soon; its my understanding the "window of opportunity " for making these additional contributions is closing soon.)

Pay it.

Re the above I mean 4 more years of contributions in order to have a full pension in 15 years

Brahumbug

What is your current pension forecast? You need to check that to see if you need to pay the missing year or whether you will have enough years by the time you retire.

I’ve 4 more years to work after this one. If all goes to plan I will work them but who knows what the future holds

Brahumbug

What is your current pension forecast? You need to check that to see if you need to pay the missing year or whether you will have enough years by the time you retire.

Yes, Definitely do this.

I made up my missing years. For about 3 reasons.

1. I could afford to do so at the time. Never a guarantee that I could always.

2. I am always concscious that a government can change rules at any time. So wanted to top up while it was still financially worth while.

3. A vain reason! I didnt want to have a less pension, even if £2 a week, for the rest of my life, than someone else I know!

I was in a similar position to Doodledog, had 5 years shortfall to make up but I reckoned it would take about 3 - 3.5 years to break even. I guess it is a gamble but I don't regret it at all. If you can afford to do it, you will certainly benefit in the long run.

What is your current pension forecast? You need to check that to see if you need to pay the missing year or whether you will have enough years by the time you retire.