Author Topic: National Insurance contributions  (Read 1003 times)

road-runner

  • is in Slovakia.
National Insurance contributions
« on: January 04, 2020, 11:36:10 am »


Looking at my NI record on the HMRC web site I am a bit unsure by the first two lines under You have:

My brothers both say that one only needs to pay 35 (full) years of NI contributions. By itself it would seem that I have overpaid, except that line two is telling me that I have 5 years still to contribute.

If context helps, since 2015 I have no earnings through PAYE - my income comes from letting my house -  so I pay the voluntary contribution each year that you can see listed for the year 2018-19 in the image above.

I know Adam and some others here are knowledgeable about these things. What does YACF know? Have I paid enough and should stop? Should I continue for the next 5 years?

Edited to add: Aha, there seems to be a difference between full years of NI contributions and qualifying years. My decade working in the NHS doesn't count as I remember it was called contracted-out and I have just discovered that contracted-out years do not count as qualifying years. My maths tells me that my 42 full years count as 32 qualifying years. If so, I need to keep paying voluntary NI contributions to get up to 35 qualifying years.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #1 on: January 04, 2020, 01:21:39 pm »
The impression I gained was that stuff was only partially contracted out. My civil service pension was such. My last pay slip, dated May 1995, shows some £140 being paid out in NI, but it is that scheme which is demonstrating that I was "contracted out".. I have requested a full breakdown from the Civil Service Pension Scheme, showing me why I've suddenly had my proposed pension reduced by about £38 a week. That hasn't arrived yet.

In my case, I smell a great big Tory rat. https://yacf.co.uk/forum/index.php?topic=114362.0 refers.

By way of comparison, my dear wife, who was in paid employment for under 3 years in her entire career, has a full pension of >£160 a week. Her NI was paid by dint of her being the named recipient of child benefit from 1979 to about 2004. From 2001 to 2018 she was also in receipt of carer's allowance, which also meant her NI was paid. Whereas my pensions forecast was originally for a similar amount to Jan's, once I had applied for the start date, miraculously the forecast dropped to <£130 a week. I was only "contributing" to employees' pension schemes for just short of 20 years (11 years for teaching, 8 years 11 months for the civil service) yet I have the full 35 years' worth of NI contributions. It makes no sense to me that my pension is being reduced to the very basic amount when Jan's isn't.
Oh, Bach without any doubt. Bach every time for me.

FifeingEejit

  • Not Small
Re: National Insurance contributions
« Reply #2 on: January 04, 2020, 01:56:28 pm »
It used to be that you could pay lower NICs by being contracted out of the "Second State Pension"; now that there is no longer a two tier state pension contracting out has ceased.
However that's doesn't appear to be the same as this, as I have listed as "Full Year" for that period.

20 years of full contributions
30 years to contribute before 5 April 2049
2 years when you did not contribute enough


road-runner

  • is in Slovakia.
Re: National Insurance contributions
« Reply #3 on: January 04, 2020, 03:43:27 pm »
Thanks, Wow, I missed your COPE topic but I will read it this evening.

20 years of full contributions
30 years to contribute before 5 April 2049

My question in your case is: do you need to pay 50 years of full contributions to get 35 qualifying years or are the remaining 30 years there simply beause 2049 will, under current legislation, be your retirement year?

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #4 on: January 04, 2020, 04:13:37 pm »
https://www.gov.uk/new-state-pension/how-its-calculated

is one of a number of fairly labyrinthine GOV.UK pages about the topic. It's remarkably vague about the "contracting out" bit.
Oh, Bach without any doubt. Bach every time for me.

FifeingEejit

  • Not Small
Re: National Insurance contributions
« Reply #5 on: January 04, 2020, 06:26:24 pm »
Thanks, Wow, I missed your COPE topic but I will read it this evening.

20 years of full contributions
30 years to contribute before 5 April 2049

My question in your case is: do you need to pay 50 years of full contributions to get 35 qualifying years or are the remaining 30 years there simply beause 2049 will, under current legislation, be your retirement year?

The infographic indicated I'll have contributed enough for the full state pension in 15 years time; however as my public sector pension includes something like 30 quid a week for a number of years that would otherwise have been in the 2nd state pension I presume there will be a deduction similar to Wowbaggers because of COPE.

Adam

  • It'll soon be summer
    • Charity ride Durness to Dover 18-25th June 2011
Re: National Insurance contributions
« Reply #6 on: January 09, 2020, 06:53:38 pm »
It is a tad complicated!

Due to the fact that anyone who retired prior to the State pension revamp in 2016 got what was called the basic old age pension plus a top up (which some employers schemes provided instead of the State), the Government decided that anyone retiring now has to undergo a check to see if they're better off under the old accrual system, or the new combined State pension, and then they get the higher.

However, you have to have paid 35 years at full rate NI to get the highest amount of State pension.  If you were contracted out, meaning you paid a slightly lower amount of NI, then there's a deduction (the COPE referred to above).

Personally I wouldn't trust them to have worked it out correctly, so insist on seeing full calculations.
“Life is like riding a bicycle. To keep your balance you must keep moving.” -Albert Einstein

MikeFromLFE

  • Previously known as Millimole
Re: National Insurance contributions
« Reply #7 on: January 09, 2020, 09:46:32 pm »
I'd rather not clutter up the Cope thread with what seems to be a trivial question - but the gov.uk site fails to answer :
I'm due to get my state pension in 18 months and I've got about 8 empty years, each of which will cost me £780 to buy back.
I might be able to afford to buy two, maybe three years, but I cannot for the life of me see how to do this. Any help or advice?
Too many angry people - breathe & relax.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #8 on: January 09, 2020, 09:55:42 pm »
I was told today that you contact HMRC, who will do teh necessary. In fact, IIRC there was an option during the lengthy phone preamble to be able to do this.

If I've got this right, it is indeed about £780 a year and that buys you an extra £4 a week in pension. If you are intending to live more than 3 years, it's worth doing. I think there's a time limit for buying back years, and I think that you might be limited to 3 of them.
Oh, Bach without any doubt. Bach every time for me.

road-runner

  • is in Slovakia.
Re: National Insurance contributions
« Reply #9 on: January 09, 2020, 09:56:33 pm »
Mike, from memory, because I did this last week: login to the HMRC web site - https://online.hmrc.gov.uk/login - and then find the NI section and select the option to see missing years. On that page you will see whether you can pay for each missing year or whether it is too late.

Somewhere on that page will be a link to pay voluntary contributions (called Class 3, IIRC). It gives you the details to set up a recipient on your online banking.

Go to your online bank, set up a new recipient and pay the NI voluntary contribution. Wait a few days or longer and call 0191 203 7010 which is the NI centre in Glasgow, where you will need to request that they link the payment you made to your NI record. Why this manual steop I do not know but I have been doing this each year since 2015. A few days later your NI record on the HMRC web site will show that you have paid that year's contributions.

Re: National Insurance contributions
« Reply #10 on: January 09, 2020, 10:12:48 pm »
Last year I "bought" a couple of extra years.

I looked at my NI record and some years were cheaper to buy than others so I thought I would just buy the cheapest years. As suggested on the gov.uk site, I rang the Future Pension Centre and I was told it wasn't that simple and I needed to buy particular years. I needed a certain number of years before 2016 and another number of years after 2016.

If I had bought the wrong years then they would not have added anything to my pension. So I would suggest caution and a call to the FPC.

hellymedic

  • Just do it!
Re: National Insurance contributions
« Reply #11 on: January 09, 2020, 10:15:25 pm »
[Phone Geekery] 0191 Glasgow? I thought 0191 was Newcastle and 0141 was Glasgow...

Re: National Insurance contributions
« Reply #12 on: January 09, 2020, 10:31:00 pm »
Topping up your state pension isn’t at all straight forward and you have to be careful as to whether you fall under the old or new state pension. If you fall under the new state pension topping up some specific missing years will not increase the amount of the pension. A guide that I have used is highlighted below. There is a useful flowchart to work through which gives options.

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

road-runner

  • is in Slovakia.
Re: National Insurance contributions
« Reply #13 on: January 10, 2020, 06:28:29 am »
[Phone Geekery] 0191 Glasgow? I thought 0191 was Newcastle and 0141 was Glasgow...

You are quite right but I telephoned the number yesterday and I was told that I have come through to John at the Glasgow centre. There must be some clever call forwarding trickery going on. Anyway, it worked.

FifeingEejit

  • Not Small
Re: National Insurance contributions
« Reply #14 on: January 10, 2020, 09:14:41 am »
[Phone Geekery] 0191 Glasgow? I thought 0191 was Newcastle and 0141 was Glasgow...

You are quite right but I telephoned the number yesterday and I was told that I have come through to John at the Glasgow centre. There must be some clever call forwarding trickery going on. Anyway, it worked.

To nick of The Flying pigs

"Hello HMCR this is Bobby from Glasgow how can I help you"
"Ye dinnae soon like a weegie!"

https://www.youtube.com/watch?v=m1832rkuNis

MikeFromLFE

  • Previously known as Millimole
Re: National Insurance contributions
« Reply #15 on: January 10, 2020, 04:10:17 pm »
 :thumbsup: Thank you YACF!
Thanks to the advice on here I now have all the information I need - and have successfully* set up a mandate to pay for one of the missing years.
*Well - I've given my bank all the details the call centre gave me. I'll know if it's successful when my pension forecast changes.

It was instructive to learn that although the gov.uk site shows I have 8 'empty' years, it is only beneficial to me to pay back 3 of them - and the amounts to buy each of those years was less than the .gov.uk website was initially quoting me.

The other nugget I garnered from my phone call to NI (wherever they were) was that for payments going forward (ie future voluntary Class 3 payments of £15/week) I had filled in the correct form (ca5063) but the start date needs to be the date at the start of the tax year, not any random date that suits my own purposes. The form does not make this clear.
Too many angry people - breathe & relax.

MikeFromLFE

  • Previously known as Millimole
Re: National Insurance contributions
« Reply #16 on: January 10, 2020, 04:15:43 pm »
Mike, from memory, because I did this last week: login to the HMRC web site - https://online.hmrc.gov.uk/login - and then find the NI section and select the option to see missing years. On that page you will see whether you can pay for each missing year or whether it is too late.

Somewhere on that page will be a link to pay voluntary contributions (called Class 3, IIRC). It gives you the details to set up a recipient on your online banking.

Go to your online bank, set up a new recipient and pay the NI voluntary contribution. Wait a few days or longer and call 0191 203 7010 which is the NI centre in Glasgow, where you will need to request that they link the payment you made to your NI record. Why this manual steop I do not know but I have been doing this each year since 2015. A few days later your NI record on the HMRC web site will show that you have paid that year's contributions.
The process seems to have changed (maybe just for new payments?)
First you ring the 'Future Pensions Service' on the 0800 number from gov.uk
They then give you the years that benefit you
You then ring the National Insurance number 0300 200 3500
Once you have confirmed that you have definitely spoken to Future Pensions they give you the amount you need to pay for each year plus the account details and most importantly the 18 digit reference number
Apart from the interminable waits to get an answer, I found the folk on the ends of the lines friendly and helpful.
Too many angry people - breathe & relax.

road-runner

  • is in Slovakia.
Re: National Insurance contributions
« Reply #17 on: January 10, 2020, 04:37:42 pm »
That is interesting, Mike, as I have been doing it the way I described for the last 5 years. 2nd January was my most recent payment and yesterday was my most recent phone call.

There must be different ways to skin a cat or our circumstances require a different method or something.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #18 on: January 10, 2020, 06:00:42 pm »
Topping up your state pension isn’t at all straight forward and you have to be careful as to whether you fall under the old or new state pension. If you fall under the new state pension topping up some specific missing years will not increase the amount of the pension. A guide that I have used is highlighted below. There is a useful flowchart to work through which gives options.

https://www.royallondon.com/siteassets/site-docs/media-centre/good-with-your-money-guides/topping-up-your-state-pension-guide.pdf

Thanks. Mine's the new State Pension. I will read that carefully. I have to say that the impression I gained - nay, I was specifically told yesterday that handing over about £1700 to cover my last 3 years would increase my state pension by about £12 a week -  so it would pay for itself in under 3 years. I shall await my written breakdown with interest.
Oh, Bach without any doubt. Bach every time for me.

Jaded

  • The Codfather
  • Formerly known as Jaded
Re: National Insurance contributions
« Reply #19 on: January 10, 2020, 06:14:23 pm »
After a ridiculously easy registering session (I thought I was already registered, but they had no record of it - like they have used my passport photo on my driving licence... so I just gave a few basic details and was able to access everything...) I'm in and find that

41 years of full contributions
4 years to contribute before 5 April 2023
5 years when you did not contribute enough

2 of those years are way back when I was a student, and of the three remaining ones, one is £270 and the others are £780 to top up.

I intent to carry on paying in, so will have 45 years - surely that's enough?


edit to add:

digging around shows this

Quote
£184.36 is the most you can get

You cannot improve your forecast any more.

So it doesn't look like I need to do anything.
If you don't like your democracy, vote against it.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #20 on: January 10, 2020, 07:23:52 pm »
I had the "You cannot improve your forecast any more" linked to my £129.98.

I think Adam is almost certainly correct in that people in charge of the system don't really understand it. They clearly got it wrong when they worked out my CS pension in 2006 (mind you, it was Crapita running the show then so I'm not surprised) and anyone working in the public sector at the moment is probably snowed under with enough work for 2 people and the pay of half a person.
Oh, Bach without any doubt. Bach every time for me.

Re: National Insurance contributions
« Reply #21 on: January 11, 2020, 10:27:08 am »
digging around shows this

Quote
£184.36 is the most you can get

You cannot improve your forecast any more.

Mine shows £168.60 as the most.
If I click through to the info pages it says "The full new State Pension is £168.60 per week". Where does the extra in your forecast come from?
Quote from: tiermat
that's not science, it's semantics.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #22 on: January 11, 2020, 10:55:18 am »
Quote
£129.98 is the most you can get
You cannot improve your forecast any more.

If you’re working you may still need to pay National Insurance contributions until 6 March 2020 as they fund other state benefits and the NHS.

View your National Insurance record
Your forecast may be different if there are any changes to your National Insurance information. There is more about this in the terms and conditions.

That looks as though paying extra will give me no more money, as per JenM's post.
Oh, Bach without any doubt. Bach every time for me.

road-runner

  • is in Slovakia.
Re: National Insurance contributions
« Reply #23 on: January 11, 2020, 11:41:47 am »
Mine shows £168.60 as the most.

Mine too.

Wowbagger

  • Dez's butler
    • Musings of a Gentleman Cyclist
Re: National Insurance contributions
« Reply #24 on: January 11, 2020, 04:53:00 pm »
Mine shows £168.60 as the most.

Mine too.

Which was what mine was showing prior to me actually asking them to start paying it.
Oh, Bach without any doubt. Bach every time for me.