Class 3 National Insurance Contributions - Opinions?

[bluezedd]

Hi everyone,

I am looking for your opinions on making class 3 national insurance contributions as it's something I am seriously considering to add 1 or 2 years.

I'm currently 30 and have 5 years of contributions due to being a long-term student. I am now working full-time in a permanent position so I expect to be able to build up years of contributions from now on.

I can purchase year 2019 for £225, and 2018 for £366. The other years are much more expensive (£400 to around £800).

I understand that if the rules stay the same, I may work another 30 years and my contribution will be wasted. I do have a fair amount invested in passive index funds in an ISA too for the purpose of retirement (possibly early retirement). I'm also paying into an NHS pension.

I was looking for your opinions on whether I should make 1 or maybe 2 years of class 3 contributions? I expect to be working for at least 25 years (or at least get credited national insurance if I become ill).

Thanks for the help guys!

[i4got]

bluezedd said:

Hi everyone,

I am looking for your opinions on making class 3 national insurance contributions as it's something I am seriously considering to add 1 or 2 years.

I'm currently 30 and have 5 years of contributions due to being a long-term student. I am now working full-time in a permanent position so I expect to be able to build up years of contributions from now on.

I can purchase year 2019 for £225, and 2018 for £366. The other years are much more expensive (£400 to around £800).

I understand that if the rules stay the same, I may work another 30 years and my contribution will be wasted. I do have a fair amount invested in passive index funds in an ISA too for the purpose of retirement (possibly early retirement). I'm also paying into an NHS pension.

I was looking for your opinions on whether I should make 1 or maybe 2 years of class 3 contributions? I expect to be working for at least 25 years (or at least get credited national insurance if I become ill).

Thanks for the help guys!

Have you looked at your online state pension forecast. This should tell you whether you are in line to reach the maximum pension at retirement age and therefore whether additional years will be needed.

Having said all that I'm not sure what it looks like for someone age 30 but definitely worth a look.

[bluezedd]

i4got said:

Have you looked at your online state pension forecast. This should tell you whether you are in line to reach the maximum pension at retirement age and therefore whether additional years will be needed.

Having said all that I'm not sure what it looks like for someone age 30 but definitely worth a look.

Thanks i4got,

I had a look and it shows my forecast as being £175.20 a week, which is the maximum pension and assumes that I will be able to contribute another 30 years. If the forecast is right then it seems I'd likely be wasting my money purchasing additional years contributions. I admit that my current 5 years contributions makes me feel a bit wary as I have been a student for so long and was feeling the need to "catch up".

Thanks for your help!

[Mr Pointy]

bluezedd said:

I had a look and it shows my forecast as being £175.20 a week, which is the maximum pension and assumes that I will be able to contribute another 30 years. If the forecast is right then it seems I'd likely be wasting my money purchasing additional years contributions. I admit that my current 5 years contributions makes me feel a bit wary as I have been a student for so long and was feeling the need to "catch up".

At your age it's difficult to say but I'd certainly consider buying 2018 & 2019 at those rates. You never know, you may want to stop working before you hit whatever then pension age will be in 30 years time & it will certainly cost more to buy years then.

[h0bbsy]

Different circumstances but I was exempt from NI for a few years and paid the class 3 for those as it's so cheap compared to the normal rates. Yes I could still be working and there be no need but if there was a shortfall it would definitely be worthwhile. Also the goalposts could move before we get to pension age increasing the number of qualifying years.

[bluezedd]

Mr Pointy said:

At your age it's difficult to say but I'd certainly consider buying 2018 & 2019 at those rates. You never know, you may want to stop working before you hit whatever then pension age will be in 30 years time & it will certainly cost more to buy years then.

Thanks Mr Pointy, yes it's hard to say without knowing what will happen in the future. I'm thinking I might pay the £225 for the first year, then see how I feel in a year or so and decide then whether I want to pay for an additional year of contributions. That way I'll have more time to think it over and spread the cost too. The £225 one definitely comes across as being cheap enough that it's worthwhile.

h0bbsy said:

Different circumstances but I was exempt from NI for a few years and paid the class 3 for those as it's so cheap compared to the normal rates. Yes I could still be working and there be no need but if there was a shortfall it would definitely be worthwhile. Also the goalposts could move before we get to pension age increasing the number of qualifying years.

Thanks h0bbsy, the goalposts moving are definitely a consideration too. It's something which wouldn't surprise me especially when the population is continually increasing and people are living longer. I think it will be worthwhile for me to pay at least 1 year, if not 2 years national insurance contributions while I have the opportunity. I've decided to pay for the £225 year, and then see how I feel about the other one over the next year or so.

Thanks again guys!

[dingg]

As a student aren't you credited with ni contributions anyway?

[trickywoo]

At your age I would try to pay as little as possible, forget topping up.

Even if you live long enough to collect anything it will almost certainly not be worthwhile.

Make your own investment provision is my recommendation.

[anonymous-user]

I worked overseas a lot, but I started work at 16, I kept an eye on it, and about 5 years ago when I was 63, I had 27 years in, I could back pay, 5 years. So I topped it up to get full state pension.
When I was 16 I was on 8pounds a week, the top up cost me around 1000 pounds, it was a great investment for me.
Keep an eye on it and top up latter, not now.