Check to see if you can increase your state pension

FabioPorkpie

FabioPorkpie

Well-known member
Advice from Martin Lewis regarding thoise who may have a shortfall in their qualifying national insurance years, and how it may be worth ‘buying’ a missing year or two to significantly increase your state pension.

Won’t be applicable to everyone but thought it worth a share as it could prove to be valuable information for some -

 
It is a confusing area, because the DWP often quote a higher state pension for people born in the 1950s and 60s who were contracted oout of SERPS. So it will say my state pension is say £195/week but its really going to be £135/week. I can't buy years I was contracted out of SERPS. Many were contracted out of SERPs because they were in a occupational scheme and/or were paying into their own private scheme.

If you were contracted you paid less National Insurance hence lower state pension.

I would have thought most on here will make 70 so buying extra years if they are available to you could be useful. You need the cash up front, you really need not to be planning on claiming Pension Credit. Check if you need to claim you may also have free years due. see video.
 
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Be careful to calculate how old you will be before you see any real ( ignore any likely inflation increases) returns ( other than just your own money back) then ask yourself if the capital amount it costs (a holiday with the grand kids whilst your fit) is worth that extra amount when your 87.
It used to be a no brainer until the ratios were changed a few years ago.
 
Yeah, I "bought" some years as well. I'm still about £5 a week short of the maximum, but can't do anything until the 21-22 figures are available.

Mind you, if rumour is correct you'll have to be 70 to collect it.
 
Deferring your pension is a good option - if you are working beyond pension age. I have done this and am looking to defer again at the end of the year.Does make a difference- even though you stop paying NI when you reach pensionable age.
 
NK - I would add if in good health.

My dad died when he was only just 71, if he deferred by 6 years he would have received nothing.
 
Nosmo-King said:
Deferring your pension is a good option - if you are working beyond pension age. I have done this and am looking to defer again at the end of the year.Does make a difference- even though you stop paying NI when you reach pensionable age.
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I think deferring your state pension is a really bad idea to be honest.

Every year you defer your state pension, the amount you can receive increases by just under 6% BUT you have to remember that you’re forgoing an entire year’s payments in order to get that increase. If you do the maths, that means you’d need to live for at least 17 years from the point where you start claiming the pension just to break even.

In practice, this means you’ve got be pretty certain of living into your mid-80s just to end up in the same position you would have been anyway. Even if you did, at that age it’s more than likely that most of the money would be going towards care fees.
 
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Just by coincidence I have been onto HMRC & the Pensions Centre today to discuss the short fall in NI years credited due to being contracted out. I’m 4 years short of the full pension amount, £185.15. The advice they gave was for 2020-21 pay £795.60 to increase your pension by £5.29 per week, you would need to be paid 152 weeks pension to be in credit, nearly 3 years. 2021-22 pay £800.80 to claim another £5.29 per week, 2022-23 pay £824.20 for an additional £5.29 per week. No figures available yet for the year 2023-24 to pay, but you would only receive an additional £3.02 per week what ever you pay for that missing year. So if I paid an additional £2420.60 my pension would increase by £15.87 per week, to break even would take 153 weeks, just under 3 years. The missing year 2020-21 must be paid for before 5th April 2023 or the figure of £795.60 will increase. Hope this helps 👍 UTB ⚽️
 
Redwurzel said:
NK - I would add if in good health.

My dad died when he was only just 71, if he deferred by 6 years he would have received nothing.
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That is the risk without a doubt. The government would be quite happy to see folk work till they drop - but a gamble for sure.
 
I bought 3 years to have around an extra 15 pound per week in reality I'm only getting 12 pounds per week due to paying extra tax on my company pension so the break even date is around 30 weeks longer before you are in profit.Still worth doing though depending on your circumstances/health issues.
 
weststandwally said:
I bought 3 years to have around an extra 15 pound per week in reality I'm only getting 12 pounds per week due to paying extra tax on my company pension so the break even date is around 30 weeks longer before you are in profit.Still worth doing though depending on your circumstances/health issues.
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Circumstances really sums it up. If you have enough from elsewhere, you might just as well collect.
 
apparently short in one year - 32 weeks - 85-86... & can't top that up though all other years are fine.
 
Billy Horner said:
I think deferring your state pension is a really bad idea to be honest.

Every year you defer your state pension, the amount you can receive increases by just under 6% BUT you have to remember that you’re forgoing an entire year’s payments in order to get that increase. If you do the maths, that means you’d need to live for at least 17 years from the point where you start claiming the pension just to break even.

In practice, this means you’ve got be pretty certain of living into your mid-80s just to end up in the same position you would have been anyway. Even if you did, at that age it’s more than likely that most of the money would be going towards care fees.
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If you defer your pension by a year you get 10½% extra.

It's a a question of how long do you expect to live?
 
Soutra said:
If you defer your pension by a year you get 10½% extra.

It's a a question of how long do you expect to live?
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Before 2016 you did. With the new state pension you get 1% for every 9 weeks that you defer, which equates to about 5.8% for one year.
 
just paid 3 years total £2560 (last 3 years not counting this one which will be £850) was going to get 156/week in August 2023 when I can claim. Now will be £180/week. had 45 full years before the last 3 ... shame to loose 20% after all those years working non-stop
 
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