Reply With QuoteIt's a total no brainer and you would be mad not to do it. The £20 is also increased annually.Originally Posted by Weirdfish
I'm 2 years away from state pension age and after reading about the governments extension to any NI shortfall you my have I did pension review, to my surprise I came up short by the tune of £20 per week.
Made a phone call and it appears my company contracted me out and it leaves me 4 years short of NI contributions, ( I really can't remember asking them to do this ).
So, if I pay about £3K I can then get full flat rate state pension in 2 years.
Has anyone else had this and made a decision about what to do, as for some reason I can't make up my mind.
It's a no brainer I suppose if you work it out, but something is stopping me jumping in and paying it.
It's a total no brainer and you would be mad not to do it. The £20 is also increased annually.
I know, I've done all the sums etc but something is stopping me jumping in, I don't even have to pay 2 of the 4 years in full, so it makes even easier. I must be having a blonde moment, lol.
You get the £3000 back in 3 years @ £20 a week. Unless you know you are going to check out before then, no brainer.
And that's without any annual increase in the pension, I know, silly really even to be thinking about it.
Can only echo the above, but I would make enquires as to why the company contracted you out without consultation, it happened to me when the company I worked for was privatised, it was buried in T&Cs.
Please us know when you have done it.
For some mad reason the government throws money at pension perks, probably to make up for the fact that the basic pension is all but useless. Anyone who relies purely on a state pension is truly in deep financial dung.
My wife delayed taking her pension by 2.5 years and it was increased by 10.4% for each year she delayed it, thus when she took her pension, it was increased by 27%. That system still applies but the increase is down to ( I think) 5.2% and is now not so attractive.
If you delay taking it the increase is 1% every 9 weeks I think, so it’s still worth thinking about.
Last edited by Weirdfish; 11th April 2023 at 12:30.
But so would value of £3000 if invested elsewhere.
I’m not sure if my maths is correct but at 5%, it looks like they’re paying your delayed year over the twenty years following your retirement. So if you delay taking the pension until your seventieth birthday, you won’t start to benefit until you are ninety.
I think you’re probably better off taking the pension at pension age and investing it if you don’t need it.
As to the OP’s question, it does seem a no brained to just pay the extra £3k now.
Last edited by Dave+63; 11th April 2023 at 13:32.
I agree, if I invest the £3K now rather than pay the NI shortfall, that would start making money, then after 2 years start taking the slightly less flat rate, but already have a little investment pot in place.
I should add that I won’t be relying on the pension to live so it would be invested anyway.
But the increase in your SP goes on for as long as you are drawing it and it's likley to be at least index linked (& compounded) - did you make 10% on your investments last year? You also won't see the benefit of your £3k investment unless you start withdrawing funds & therefore the ongoing increase will reduce. You'll always have the benefi of the increased pension.
Buying four years NI is pretty much a no-brainer if you are that close to being able to withdraw it.
You are so correct and probably the best argument for paying the NI deficit to get maximum state pension.
I worked for the NHS and was contracted out in the 80s - we were told about it, but thought nothing of it at the time.
Just as you, when I got my pension details a few years before pension age, I was down about £30 per week. I put the maximum I could pay in at the time (somewhere around £2.5K) and it was increased by about £18pw. As far as I was concerned, paying that for a regular, inflation linked sum was very worthwhile. I've only been taking my state pension for 18 months and already had half of it back.
I did search before starting this thread but didn’t come across that link, very helpful, thanks.
As has been said, although you may have enough service years, ( myself included), it’s the opting out that’s normally the culprit.
And I think you’ve only got until July to be able to pay underpaid NI to obtain full state pension
So, after a reality check from the wise heads on here I decided to pay up.
That’s the easy bit!!! Trying to get through to the payment department is an absolute joke, you go through all the options which take about 3-4 minutes and then they cut you off because they are so busy, not even a chance to wait in a queue!
They do say you can go on line and pay, so I did this, guess what, you need a reference number to enable you to pay, and, you have to ring them to get it.
It’s a good job you’ve got until July to pay, lol.
Do you know exactly which years you are trying to pay for? the change happening in July is that you can only go back six years ie to the 2017/18 tax year whereas at the moment you can go back further.
According to the future pensions team it’s from 2021 through to 2025 ( which is my official state pension age ).
So are you saying that the July date might not apply to me?
After you pay, they told me it won't show on the website for @10 weeks. You can get confirmation by ringing them.
Eventually you get a letter.
Well that’s an hour of my life I’ll never get back.
Finally got through to a real nice chap and have now got all the relevant details.
Thanks to all who talked me into it.
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