Topping up NI contribution shortfall
Discussion
Just after opinion, not advice, but the basic question is ... should I top up the shortfall in my NI contributions in relation to the state pension?
Pension date April 2039
Based on current NI contributions, prediction is 141.52 a week
If I add another 9 years then the prediction is 185.15 a week (the maximum)
NI record shows:
23 years of full contributions
17 years left to contribute
11 years when "you did not contribute enough"
6 years are "too late to pay for this year"
5 years are each "Pay a voluntary contribution of £824.20"
I'm 50 and expect to work for another 10 years regardless because (a) I enjoy it and (b) I can't afford not to.
So should I pay £4,121 (5 * 824.20) to have as full an NI record as I can get, as of today.
Or if I continue to work as anticipated then I'll make the 9 year's worth of contributions and get up to the max required full contribution years anyway.
WWYD?
Pension date April 2039
Based on current NI contributions, prediction is 141.52 a week
If I add another 9 years then the prediction is 185.15 a week (the maximum)
NI record shows:
23 years of full contributions
17 years left to contribute
11 years when "you did not contribute enough"
6 years are "too late to pay for this year"
5 years are each "Pay a voluntary contribution of £824.20"
I'm 50 and expect to work for another 10 years regardless because (a) I enjoy it and (b) I can't afford not to.
So should I pay £4,121 (5 * 824.20) to have as full an NI record as I can get, as of today.
Or if I continue to work as anticipated then I'll make the 9 year's worth of contributions and get up to the max required full contribution years anyway.
WWYD?
If you are planning on working the additional 9 years then if your understanding of the conundrum is correct paying the additional £4k now seems unnecessary.
If you aren't or indeed want to hedge your bets , paying £4k now would see you get that returned in Pension terms within 2 years.
But you asked for an opinion and wwyd so I would pay the £4k now.
If you aren't or indeed want to hedge your bets , paying £4k now would see you get that returned in Pension terms within 2 years.
But you asked for an opinion and wwyd so I would pay the £4k now.
Oakey said:
Pay the oldest first and the re-evaluate as each one nears to expiring?
I forgot to put in a key bit of information, like a fool.The 'missing' years are between 1999/2000 and 2010/2011
For each year from 1999/2000 to 2005/2006 I get "It’s too late to pay for this year. You can usually only pay for the last 6 years."
For 2006/2007 onwards I get "You can make up the shortfall. Pay a voluntary contribution of £824.20 by 5 April 2023. This shortfall may increase after 5 April 2023."
And from 2011/2012 onwards I have full year contributions.
When I read up about voluntary contributions, it says (my bold) ..
gov.uk said:
You can usually pay voluntary contributions for the past 6 years. The deadline is 5 April each year.
You can sometimes pay for gaps from more than 6 years ago, depending on your age.
You’re a man born after 5 April 1951 or a woman born after 5 April 1953
You have until 5 April 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if you’re eligible.
After 5 April 2023 you’ll only be able to pay for voluntary contributions for the past 6 years. This may not be enough to qualify for a new State Pension if you have fewer than 4 qualifying years on your National Insurance record. You’ll usually need at least 10 qualifying years in total.
https://www.gov.uk/voluntary-national-insurance-co...
So I read that as if I don't pay those 5 years up soon, then in April I will lose forever the ability to make them.You can sometimes pay for gaps from more than 6 years ago, depending on your age.
You’re a man born after 5 April 1951 or a woman born after 5 April 1953
You have until 5 April 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if you’re eligible.
After 5 April 2023 you’ll only be able to pay for voluntary contributions for the past 6 years. This may not be enough to qualify for a new State Pension if you have fewer than 4 qualifying years on your National Insurance record. You’ll usually need at least 10 qualifying years in total.
https://www.gov.uk/voluntary-national-insurance-co...
I'm leaning towards paying them all because I've got the money available and I'd probably only squander it on cheese or something.
If you have more than 9 years to retirement and only need 9 years additional NI payments then there seem sno point in making these additional payments.
Case 1 - you work the 9 years - you've got the full pension with no additional payments required.
Case 2 - you work less than the 9 years - for the years that you don't work you pay voluntary additional Class 3 NI payments. So you still get the full pension.
There's an argument that the additional years cost may be lower by buying now rather than later but I wouldn't throw away any extra money now when there's a good chance it not add anything to the pension.
We are currently in this situation with my wife. She has 'retired' a few years before pension date and we only need to buy a couple of years to reach the full pension and we have 8 years to do it in.
Case 1 - you work the 9 years - you've got the full pension with no additional payments required.
Case 2 - you work less than the 9 years - for the years that you don't work you pay voluntary additional Class 3 NI payments. So you still get the full pension.
There's an argument that the additional years cost may be lower by buying now rather than later but I wouldn't throw away any extra money now when there's a good chance it not add anything to the pension.
We are currently in this situation with my wife. She has 'retired' a few years before pension date and we only need to buy a couple of years to reach the full pension and we have 8 years to do it in.
Given that you are planning to pay NI for another 10 years it's likley you will have full contributions by then. Even if you do stop working at 60 you will have another 7(?) years between then & when you are eligable for your State Pension to top up any missing years, although they may cost more than £824.20 per year.
I'd consider investing the £4,121 & if you haven't got enough NI when you stop work at 60 then you can use the £6,100 you will have in the account (assuming you can get 3% return) in buying any missing years to get you to the full entitlement.
If there were no prospect of you earning more years over the next 10 years the answer would be different, but you've already said you are going to continue working.
I'd consider investing the £4,121 & if you haven't got enough NI when you stop work at 60 then you can use the £6,100 you will have in the account (assuming you can get 3% return) in buying any missing years to get you to the full entitlement.
If there were no prospect of you earning more years over the next 10 years the answer would be different, but you've already said you are going to continue working.
A timely post from the OP and I am in a similar, but probably worse(?) boat. I would appreciate someone with a more financially astute mind than mine offering thoughts on my situation.
I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
I also worked abroad and had some gaps in my NI record.
I decided to pay and fill them in. It was cheaper than 824 then, that price is only going up.
From memory the risk vs reward requires living into your 80s but it’s a better guaranteed return than you’ll get on a DC pension.
If I intended to work right up until the state pension age I’d probably not have paid it as I’d have my 35 years.
There’s no right or wrong answer in my view but consider your own circumstances and act accordingly. If you’re unlikely to hit the full 35 years without topping up it’s probably a good thing to do.
I decided to pay and fill them in. It was cheaper than 824 then, that price is only going up.
From memory the risk vs reward requires living into your 80s but it’s a better guaranteed return than you’ll get on a DC pension.
If I intended to work right up until the state pension age I’d probably not have paid it as I’d have my 35 years.
There’s no right or wrong answer in my view but consider your own circumstances and act accordingly. If you’re unlikely to hit the full 35 years without topping up it’s probably a good thing to do.
geeman237 said:
A timely post from the OP and I am in a similar, but probably worse(?) boat. I would appreciate someone with a more financially astute mind than mine offering thoughts on my situation.
I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
Would probably make sense to pay those years to take you up to the 35 year total, obviously expensive but makes sense if you don’t intend to come back to the uk to work, or you could pay some of those pre 2017 years and then some later on only downside is you would have a reduction of your social security due to WEP, but if you have 30 years total relevant social security earnings, then WEP no longer applies, I’m guessing you have worked continuously in the US since 2003? Then you would be 2/3 of the way to the 30 year total anyway.I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
Where does this "35 years of contributions" come from?
I got my state pension application letter yesterday, as I will be 66 in May.
Checking my pension prediction, it says I have 47 years of contributions, 45 of which are full. The 2 "not paid enough" years are from when I first went completely self employed 6 years ago. Earned income was too low to pay NI.
The prediction says I will get the full £185 if I pay NI for 2022/23, but only £183 as it stands.
2022/23 NI will be paid when I do my tax return, but I won't have all the info required until June or July (company pension P60s).
If you only need 35 years of NI contributions to get the full state pension, how come I will need one more when I already have 45?
I got my state pension application letter yesterday, as I will be 66 in May.
Checking my pension prediction, it says I have 47 years of contributions, 45 of which are full. The 2 "not paid enough" years are from when I first went completely self employed 6 years ago. Earned income was too low to pay NI.
The prediction says I will get the full £185 if I pay NI for 2022/23, but only £183 as it stands.
2022/23 NI will be paid when I do my tax return, but I won't have all the info required until June or July (company pension P60s).
If you only need 35 years of NI contributions to get the full state pension, how come I will need one more when I already have 45?
I am in almost exactly the same position as the OP, although I have fewer gap years and partial years.
I would urge you not to just take the NI history to decide whether to purchase additional years. It doesn’t give the full picture.
In particular… You don’t necessarily need 35 qualifying years to achieve full State Pension.
You should also look at the online State Pension forecast at https://www.gov.uk/check-state-pension
And you should also call the Future Pension Centre on 0800 731 0175 before making any decision. Be ready for a long wait in their queue (and keep trying, because if the queue is full it’ll cut you off before you get into the queue). But when I spoke to them the lady was very helpful and hugely knowledgeable.
In my case, the NI history said I had 27 qualifying years, with 2 empty years and 2 partial years in the last six years. That would imply that I have 8 more qualifying years still to accrue, right? Wrong! The State Pension forecast said I only needed 4 more qualifying years. The lady at the Future Pension Centre explained that I only need 31 qualifying years because earlier in my career I contributed to SERPS.
OP, you are the same age as me, and if you’ve worked for the same years as me it is quite possible that you also contributed to SERPS at some point, and therefore you may not need 35 qualifying years.
You do need to make a decision now, because at this very moment you can pay or top up any years from 2006 onwards. But as of April 6th 2023 you will only be able to pay or top-up the last six years. So any years from 2016/17 and earlier will become “too late”. But you need to determine how many more qualifying years you actually need, before you make your decision.
But you’re expecting to work another 10 years anyway, so you’re quite likely to earn the qualifying years you need through your future NI contributions. There is no prize for reaching the target early - you’ll still have to continue paying NI.
I would urge you not to just take the NI history to decide whether to purchase additional years. It doesn’t give the full picture.
In particular… You don’t necessarily need 35 qualifying years to achieve full State Pension.
You should also look at the online State Pension forecast at https://www.gov.uk/check-state-pension
And you should also call the Future Pension Centre on 0800 731 0175 before making any decision. Be ready for a long wait in their queue (and keep trying, because if the queue is full it’ll cut you off before you get into the queue). But when I spoke to them the lady was very helpful and hugely knowledgeable.
In my case, the NI history said I had 27 qualifying years, with 2 empty years and 2 partial years in the last six years. That would imply that I have 8 more qualifying years still to accrue, right? Wrong! The State Pension forecast said I only needed 4 more qualifying years. The lady at the Future Pension Centre explained that I only need 31 qualifying years because earlier in my career I contributed to SERPS.
OP, you are the same age as me, and if you’ve worked for the same years as me it is quite possible that you also contributed to SERPS at some point, and therefore you may not need 35 qualifying years.
You do need to make a decision now, because at this very moment you can pay or top up any years from 2006 onwards. But as of April 6th 2023 you will only be able to pay or top-up the last six years. So any years from 2016/17 and earlier will become “too late”. But you need to determine how many more qualifying years you actually need, before you make your decision.
But you’re expecting to work another 10 years anyway, so you’re quite likely to earn the qualifying years you need through your future NI contributions. There is no prize for reaching the target early - you’ll still have to continue paying NI.
bigandclever said:
I'm leaning towards paying them all because I've got the money available and I'd probably only squander it on cheese or something.
If you pay them all now without knowing how many years you actually need, HMRC will happily take your money. But it could be wasted, especially if you then proceed to pay enough NI over the next ten years to earn the required years anyway.clockworks said:
If you only need 35 years of NI contributions to get the full state pension, how come I will need one more when I already have 45?
Phone the Future Pension Centre on the number I gave above and ask them why.Edited by Dr Mike Oxgreen on Saturday 28th January 09:00
geeman237 said:
I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
...
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
You are still entitled to collect UK state pension as an overseas resident....
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
bigandclever said:
Just after opinion, not advice, but the basic question is ... should I top up the shortfall in my NI contributions in relation to the state pension?
Pension date April 2039
Based on current NI contributions, prediction is 141.52 a week
If I add another 9 years then the prediction is 185.15 a week (the maximum)
NI record shows:
23 years of full contributions
17 years left to contribute
11 years when "you did not contribute enough"
6 years are "too late to pay for this year"
5 years are each "Pay a voluntary contribution of £824.20"
I'm 50 and expect to work for another 10 years regardless because (a) I enjoy it and (b) I can't afford not to.
So should I pay £4,121 (5 * 824.20) to have as full an NI record as I can get, as of today.
Or if I continue to work as anticipated then I'll make the 9 year's worth of contributions and get up to the max required full contribution years anyway.
WWYD?
I'm not quite sure having read the thread and answers, but are you (and the others) self employed?Pension date April 2039
Based on current NI contributions, prediction is 141.52 a week
If I add another 9 years then the prediction is 185.15 a week (the maximum)
NI record shows:
23 years of full contributions
17 years left to contribute
11 years when "you did not contribute enough"
6 years are "too late to pay for this year"
5 years are each "Pay a voluntary contribution of £824.20"
I'm 50 and expect to work for another 10 years regardless because (a) I enjoy it and (b) I can't afford not to.
So should I pay £4,121 (5 * 824.20) to have as full an NI record as I can get, as of today.
Or if I continue to work as anticipated then I'll make the 9 year's worth of contributions and get up to the max required full contribution years anyway.
WWYD?
If not, register as self employed now and pay over the course of the remaining 9 years class 2 NIC's at approx £156 per year. You can pay that voluntarily even if you don't make any profit that is taxable above the personal allowance.
I do not see how paying the voluntary rate of £824 is in anyway necessary. I wouldn't even be considering it.
I've been self employed since leaving school so not sure if you are talking about different rules if you are employed and paying class 1 NIC's?
clockworks said:
Where does this "35 years of contributions" come from?
I got my state pension application letter yesterday, as I will be 66 in May.
Checking my pension prediction, it says I have 47 years of contributions, 45 of which are full. The 2 "not paid enough" years are from when I first went completely self employed 6 years ago. Earned income was too low to pay NI.
The prediction says I will get the full £185 if I pay NI for 2022/23, but only £183 as it stands.
2022/23 NI will be paid when I do my tax return, but I won't have all the info required until June or July (company pension P60s).
If you only need 35 years of NI contributions to get the full state pension, how come I will need one more when I already have 45?
That doesn't make sense to me. You have already qualified for full pension. But even so, usually if income was too low you get a NIC exemption for those 2 years and they still qualify towards pension.I got my state pension application letter yesterday, as I will be 66 in May.
Checking my pension prediction, it says I have 47 years of contributions, 45 of which are full. The 2 "not paid enough" years are from when I first went completely self employed 6 years ago. Earned income was too low to pay NI.
The prediction says I will get the full £185 if I pay NI for 2022/23, but only £183 as it stands.
2022/23 NI will be paid when I do my tax return, but I won't have all the info required until June or July (company pension P60s).
If you only need 35 years of NI contributions to get the full state pension, how come I will need one more when I already have 45?
geeman237 said:
A timely post from the OP and I am in a similar, but probably worse(?) boat. I would appreciate someone with a more financially astute mind than mine offering thoughts on my situation.
I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
Fill in the form for voluntary payments and see if you are eligible to pay Class 2 contributions rather than Class 3. It's about 150 a year and buys you 1/35 of the state pension per year you're missing. I'm doing this while living in Switzerland and paying into their state pension and will receive 2 pensions - full UK (assuming I pay 35 years' of contributions) and pro-rate for Switzerland for the years I'll have worked here.I emigrated to the USA from the UK in early 2003 and haven't paid any NI contributions since. Figured I'd never see any UK state pension and didn't know you could top up.
Pension date January 2036
Based on current NI contributions to April 2022, prediction is 86.16 a week
If I contribute to April 2035 is 154.93 a week, but it also says I can increase this to 185.15 a week.
NI record shows:
18 years of full contributions
13 years to contribute to April 2023
20 years not enough
They list from 2006 to 2017 I can pay 824.20
So, is this saying I can pay 824 for each year, 2006 - 2017 (by this April) to top up to get a full state pension?
I am not sure if I will even retire back to the UK yet. I am now a US citizen and have been contributing to the US Social Security system too.
PositronicRay said:
I may be off kilter here but isn't the basic state pension means tested? If so then worth taking yourself up to the full pension.
You’re absolutely correct - you are indeed off kilter. 
It’s not means tested. What you get is determined only by how many qualifying years of work you’ve done (or you can get credit for various other situations as well), and not even by how much NI you’ve paid. You get a qualifying year by earning at least the Lower Earnings Limit in a year (currently 52 x £123), although weeks in which you earn less than £123 don’t count. But between £123 and £242 per week you pay no NI, so it’s entirely possible to earn a qualifying year without paying a penny. This is for employed people; self employed pay class 2 contributions (flat rate of £3.15 a week), and may also pay class 4 above a certain profit threshold.
Of course, as per any kind of pension payment, once you’re drawing the pension it counts as taxable income.
Edited by Dr Mike Oxgreen on Saturday 28th January 15:28
deeps said:
I'm not quite sure having read the thread and answers, but are you (and the others) self employed?
If not, register as self employed now and pay over the course of the remaining 9 years class 2 NIC's at approx £156 per year. You can pay that voluntarily even if you don't make any profit that is taxable above the personal allowance.
I do not see how paying the voluntary rate of £824 is in anyway necessary. I wouldn't even be considering it.
I've been self employed since leaving school so not sure if you are talking about different rules if you are employed and paying class 1 NIC's?
You can't just register as If not, register as self employed now and pay over the course of the remaining 9 years class 2 NIC's at approx £156 per year. You can pay that voluntarily even if you don't make any profit that is taxable above the personal allowance.
I do not see how paying the voluntary rate of £824 is in anyway necessary. I wouldn't even be considering it.
I've been self employed since leaving school so not sure if you are talking about different rules if you are employed and paying class 1 NIC's?
Gassing Station | Finance | Top of Page | What's New | My Stuff