Voluntary Ni Payments

[bluemoon1]

I have some missed years on my NI payments and was hoping to pay them off with voluntary contributions. Can anyone tell me if they'll be going up in the next tax year as I'll struggle to pay them now, but next year will be okay.
I've looked online but can't find anything to say whether they'll rise or are frozen.

[Buenchico]

You normally pay whatever the current rate is when making voluntary NI contributions except that: "If you’re paying Class 2 contributions for the previous tax year or Class 3 contributions for the previous 2 tax years, you pay the original rate for those tax years"
https://www.gov.uk/voluntary-national-insurance-contributions/rates

The Class 2 rate for the tax year which is just ending is £3.05 per week. It remains unchanged for the forthcoming tax year (starting next week).

The Class 3 rate for the current year is £15.30 per week. It rises to £15.40 per week from next week.

Rates for the following tax year won't be announced until the beginning of February 2022 but are unlikely to be greatly higher than those for 2021/22.

Before making any voluntary NI contributions though, check whether it will actually benefit you. If you've already paid in enough to secure the maximum State Pension, there's no point in paying any more!

When I was approaching State Pension Age, I enquired about whether I was able to make voluntary contributions for certain 'gap' years in my NI records. The answer was 'Yes'. I then asked if, by making such payments, I'd actually be any better off with regard to the State Pension that I'd receive. The answer was 'No'. I suspect that you can guess what my decision was ;-)

[bluemoon1]

Thanks for that, as I expected I'll have to pay more but not as much as if I borrow the money to pay now.

Thanks for the heads up about extra payments when not needed, although I was already aware of that. People only need to make up gaps from 2016 when the new state pension rules came into force, in case anybody else reads this.

[THECORBYLOON]

If 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 April 2006 and April 2016.

[Hopkirk]

To get the full state pension you need 35 years of contributions. Check your personal gov.uk to see how many qualifying years you have as you might be wasting your money.

I paid voluntary contributions for four years when I worked abroad, but didn't need to as I have more than 35 years now. What's more, a couple of years later I was made redundant, but couldn't claim unemployment benefit, as my contributions didn't qualify me for that.

[bluemoon1]

Sorry, my reply may have been misleading, as THE CORBYLOON says any shortfalls pre 2016 should be taken into consideration.

[dasherman]

There are instances were you might need more than 35 qualifying years to get the full rate, such as if you were contracted out of the state second pension.

In practice only those who will have all their state pension qualifying years from 2016 onwards are sure to only need 35 years. That's assuming the rules aren't changed in the future!

[Hopkirk]

Not sure that's true Dasherman. I don't think being contracted out affects it at all. I was contracted out for many years, but gov.uk confirms I qualify for full state pension.

[bluemoon1]

There are two state pensions, the old one and the new one.

35 years before 2016 qualifies you for the old state pension 134.25/week

To qualify for the new state pension you have to keep paying NI until your pension age to qualify for the full amount, currently 175.20/week.

[Chinajan]

That's incorrect bluemoon1.

People who reached their state pension age before 5/4/16 got the old state pension or a percentage thereof if they hadn't paid 30 years of qualifying NI contributions.

People who reach state pension age after that date are entitled to full new state pension if they have made 35 years of qualifying NI contributions. If you continue to work, however, your liability to pay NI continues until state pension age.

[Chinajan]

*above 'hadn't' should read 'had' in regard to first para!

[bluemoon1]

I had 30 years fully paid up and they wrote to me telling me I had no need to pay any extra as it wouldn't benefit my pension, that was in 2010. Had I paid the extra I would have had 35 years paid up in 2015 and would have qualified for the new state pension. A fact that still rankles with me now.

As I didn't see the sense in paying something of no advantage to myself, I left it. Then in 2016 they announced the new state pension which meant that I know have to keep paying until I'm 67 to get the full state pension.

If I was to go back now and pay the years I missed between 2010 and 2015 they wouldn't count towards any pension payment.

[dasherman]

Like I said Hopkirk, 'there are instances' where some people might need more than 35 years. State pensions are a very individual thing based on work and NI history, which will obviously vary.

It's also possible to have accrued more than the current full rate, if you were a high earner in the past.

Personally I will reach the maximum number of years to get the full rate by the time I'm aged 55 in two years time, and was contracted out of S2P from 1987-2016. I do have a 'full record' dating back to 1984/85 if I remember correctly, as I was credited with a couple of years when I was a teenager, something that was stopped a few years back.

[THECORBYLOON]

I have more than thirty-five qualifying years but need three more to qualify for the full pension and I was in contracted-out employment.