State pension - Voluntary Class 3 National Insurance Contributions

[Nearly Retired (I am now)]

If you are aged somewhere in the mid-fifties and are considering an early retirement then give some thought to the Government's proposed pension reforms.

I thought I might make voluntary National Insurance contributions (of I guess £400 ish per year for around 5 years or so) up to 60 years old, so I would get entitlement to the full UK State Pension.

This might not be necessary.

Take a look at http://www.hmrc.gov.uk/nic/vc3-important.htm

It seems those of us of a certain age may be better off than we expected.

 

 

[Cassis]

That's very interesting, NR.  Thanks for the info. 

Nowhere near retirement age but I think at least one of us has about 30 years of contributions, so I'll check it with at Newcastle.

[Gastines]

Cassis, the best of luck if you have to check anything with Newcastle. I started 3 years ago to find out my pension position.I was still paying in untill recently. After MONTHS I was eventually sent a computer printout of my payments since I'd left school. On querying a few items that I knew were incorrect,I was after MONTHS sent another printout with 6 different payments on it, including 2 years when I apparently didn't make any payments.1981-1982. I queried this as payments were made by standing order.Sorry, payments were made late and don't count!!!. No good checking with the bank as they can't confirm anything over 7 years.. So there!! When I pointed out all the errors and omissions on the readouts, I was told to rip the first one up as it was obviously wrong!! Brick wall comes to mind. Perhaps Mr. Brown needs the 6% deducted more than I do. I wish you the best of luck dealing with them but don't forget to allow the usual  2 months for a reply.

Bonne Chance.

Regards.Resting at  St.Malo

[Cassis]

Oddly, I've never had a problem with the folks at Longbenton.  I know that's not been everyone's experience. 

Maybe it is because I speak fluent Geordie!  [:D]

[Jon 1]

I don't fully understand how this is going to work in reality.

Take the example of a woman who is due the state pension on October 2008, and has 26 years of contributions.  Will she lose out and get just 26/39ths of the pension?  Whereas a woman who has 26 years of contributions and due the state pension on May 2010 will receive 26/30ths of the pension.

How will they deal with this disparity?

How will they deal with someone else due the pension in February 2010?  Will they too be disadvantaged and thus discriminated against?

[KathyC]

[quote user="Jon"]

I don't fully understand how this is going to work in reality.

Take the example of a woman who is due the state pension on October 2008, and has 26 years of contributions.  Will she lose out and get just 26/39ths of the pension?  Whereas a woman who has 26 years of contributions and due the state pension on May 2010 will receive 26/30ths of the pension.

How will they deal with this disparity?

How will they deal with someone else due the pension in February 2010?  Will they too be disadvantaged and thus discriminated against?

[/quote]

I don't think there are any plans to deal with the disparities; most articles suggest that this situation will exist . There are anomalies in any system.

You can't really say that the people in your examples are being disadvantaged as the situation will be exactly as they have been expecting for many years, they're not losing anything. That's not to say that there won't be resentment from people in this situation.

[Cassis]

Can I just remind everyone who's running the country and their record on well-thought-through legislation? [blink]

[KathyC]

[quote user="Cassis"]Can I just remind everyone who's running the country and their record on well-thought-through legislation? [blink]
[/quote]

I know what you mean Cassis, but on the other hand, if you bring in an improvement (which this seems to be) it would  be uneconomic to backdate it so that it would apply to everyone. What matters is that nobody's worse off than they expected even if  some are better off. In addition, it's from April 2010 that the women's state pension age starts to increase so women who reach 60 after that date have to work longer. Swings and roundabouts really.

[Cassis]

It'll be a first for the office of Mr Brown if it's as simple as it sounds. [:D]

I do like the sound of it - and that's another first!

[cooperlola]

My husband and I have just received a letter from the Revenue as we both pay volunary contributions.  Basically it says that if you've paid into the fund for more than 30 years "you should seriously consider whether you should delay further Class 2/3 contributions until it is clear whether the rules will change.  If you decide that you  want to continue to pay, you might not be able to get a refund if it turns out that you need not have paid them."  Interesting, what?  In the circs, we have cancelled my husband's as he had paid for 38 years but have left mine running for now as I haven't paid a full "stamp" for so long.  No doubt most people will be getting this letter but if not, maybe it's worthwhile enquiring?

[Cassis]

I'm sure that's right, stop if you've already paid up 30 years.  If they go back on the proposals you can always make up the shortfall, but I can't see them giving a refund for overpayment!

[Nearly Retired (I am now)]

The Bill is getting ever closer to Royal Assent after which UK residents will need only 30 years contributions for a full state pension.

 http://www.publications.parliament.uk/pa/pabills/200607/pensions.htm

[cooperlola]

Thanks for the update.  Good to know that we seem to have done the right thing.[:)]

[Nearly Retired (I am now)]

It looks like Royal Assent was given on 26 July.  No more NI subs for a good few of us now.

[Bob T]

I retired at 46, a couple of years ago. When I had to think about additional NI payments, I decided that when I get to 65 the state pension will probably no longer exist, so I opted not to make any. I now suspect that there will be a bill in the next few years to say that the pension will only be payable if you live in the UK.

The UK government does not want to give anything away. i know that neither my wife nor I will get a winter fuel payment despite the fact that we have paid tax and NI all our lives so far.

[AnOther]

I've already got a full NI record of 44 years however I've long viewed whatever I get might eventually get as a state pension as a bonus and not figured it into my pension planning at all.

Of course if I'd been a feckless unemployed waster all my life I'd be guaranteed, what is it now, £184 P/W or so. To get that from an annuity (before tax that is) I think you'd need a pot of something like £160k.

Not much wonder that folks aren't saving for their old age is it, the vast majority of working people don't stand a hope in hell of saving that in the course of their working life so where's the incentive ?

I read somewhere that the average Joe's pension pot is around £20K or so [:-))]

It's exactly what the UK government wants of course, the bulk of the population totally beholden to means tested handouts for their retirement income, neat control mechanism huh !

 

[malheureusement]

If you ring the Pension Service on 0845 3000168 they will tell you how many qualifying years you have.

[freddy]

I agree that the state pension position is likely to get worse but this would seem to be an unecessarily pessimistic view for a number of reasons.

1) any major change like depriving people of a state pension would need a substantial notice period at least 10-20 years as this will have legitimately been part of peoples financial plans and would need to allow enough time to make other arrangements, simialr to the recent changes in pensionable ages.

2) re. not paying the pension if abroad, this is really very unlikely - as state pensions are payed on the basis of what you contributed in the past not your current circumstances it is where you lived when you were building the pension that is important - basically did you make the NI contributions. Basic state pensions are not social security benefit which would legitimately be based on residence, although you point on winter fuel payments is well made and such rules could be made to apply to and 'new' payments. I am also pretty sure that any attempt at this would seriously breach European law around free movement between member states etc. so is prbably a non starter at least within the EEC.

3) A more reasonable (and slightly less depressing) idea might be that the government reduces or eliminates the state pension based on your lifetime earnings, the idea being that is you have earned a large amount during your life you should have made adequate pension provision, but this would also need a huge notice period. This might also be brought in gradually via the back door by simply not increasing the basic state pension at all but increasing the means tested benefits available thus focussing the available money on the least well off, and conincidentally excluding all those who live abroad from getting the extra.

Overall I think an assumption that you will get a basic state penison is fairly safe but you should not assume that it will increase from current levels with inflation or possibly at all.

[Nearly Retired (I am now)]

What they give with one hand they take away with the other.

My euphoria was very shortlived. I proudly told her indoors that we've saved a couple of grand on future NI payments and isn't it good that for once, just once, this government's pension reforms have panned out in our favour.

I was reminded curtly that she has lost about £15000 as a result of the phased raising in pension age for women. 

[Gastines]

Having returned all the forms sent me by the pensions office I waited with bated breath for my pension to arrive in April,or perhaps more forms. As nothing was heard by mid-May I phoned to inquire what the problem was, "We will phone you back!!!!" Believe it or not a chap did phone about 10 minutes later and said he couldn't understand why I hadn't received anything, he would look into it and get back to me. About an hour later he phoned back,asked a few details and said you will get your payment within10 days including all back payments due and the amount will be £X. Great, a lot more than previously advised????  I did indeed receive the payment and have each month since,via Ireland with full exchange rate and no fees. Amazingly enough I also received 2  letters  from the same Dept  saying my pension would be £X and the other £X minus about 1/3rd?.

Perhaps the fault lies with the staff who deal with the pensions as left hand and right hand comes to mind and if it's difficult,bin it.

However, now sorted, I hope I wont have to deal with them again and they probably feel the same.

Regards.