Remove ads

Introducing the LemonFools Personal Finance Calculators

Are voluntary NI contributions a no-brainer?

GoSeigen
Lemon Slice
Posts: 977
Joined: November 8th, 2016, 11:14 pm
Has thanked: 216 times
Been thanked: 215 times

Re: Are voluntary NI contributions a no-brainer?

#167386

Postby GoSeigen » September 19th, 2018, 9:39 am

mc2fool wrote:
vrdiver wrote:I followed your link, but sadly it says "can't be reached". Any chance of reposting?

Oops, sorry, I posted the original TMF address rather than the archive URL! Being within the editing window I've corrected it in my post, and here it is too: http://web.archive.org/web/201701120049 ... 01655.aspx


I've read your posts and very informative they are -- thank you.

My situation is I have a relatively high starting amount calculated on the old system. This comes from a few years of work some time back in which I had sizeable pension contributions. I have many empty years (no NI payments) leading up to 2016 and about 18 years to retirement age. My reading of what you have said and of other web sites is that it would be worthwhile my making up a few of the empty years, at least the ones where I'd made partial contributions. Also I should perhaps do this before the next tax year when presumably the amounts payable will be indexed up. Or should I wait until the last minute (2023)?

As an aside, my assessment of the current and future fiscal/political situation is that pressure will grow to reduce pension benefits or increase the cost of contributions or both i.e. perhaps now is as good as it gets for contribution vs return. Is that far off-beam?


GS

dmukgr
Posts: 12
Joined: September 14th, 2018, 3:35 pm
Has thanked: 4 times
Been thanked: 3 times

Re: Are voluntary NI contributions a no-brainer?

#167394

Postby dmukgr » September 19th, 2018, 10:03 am

Lootman wrote:
monabri wrote:You can pay quarterly to HMRC or simply by writing a cheque for the full amount for the year you are buying.

I accompany the cheque with a short note saying what the cheque is for ( class 3 voluntary NI for year xxxx/yyyy, my full name,address and contact details and NI number ( also write the NI number on the front of the cheque).

A few months later you receive confirmation of the payment by post.

There is actually a form you can get for paying backdated years. When I asked for my record of NI contributions it was automatically sent to me, along with each year I could back pay, and the cost of each one.

I felt that was an easier and more reliable way to do it than computing it myself, sending a cheque and accompanying it with a letter.

The new numbers showed up after a few months.


I want to pay a year for my wife and was sent the form but I don't do cheques any more. Is there a way to do it online does anyone know?

monabri
Lemon Quarter
Posts: 1853
Joined: January 7th, 2017, 9:56 am
Has thanked: 155 times
Been thanked: 428 times

Re: Are voluntary NI contributions a no-brainer?

#167410

Postby monabri » September 19th, 2018, 10:50 am

Possibly

"You can pay monthly via Direct Debit. Contact HM Revenue and Customs (HMRC) if you want to pay by another method.

You can:
- pay quarterly - they’ll send you a bill every July, October, January and April
- make a one-off payment"

https://www.gov.uk/pay-voluntary-class- ... -insurance



It might be worth a phone call on the number in this link

Tel: 0300 200 3500

Opening times:
Monday to Friday: 8am to 8pm
Saturday: 8am to 4pm

Closed Sundays and bank holidays

https://www.gov.uk/government/organisat ... ndividuals

mc2fool
Lemon Slice
Posts: 993
Joined: November 4th, 2016, 11:24 am
Has thanked: 4 times
Been thanked: 175 times

Re: Are voluntary NI contributions a no-brainer?

#167424

Postby mc2fool » September 19th, 2018, 11:26 am

GoSeigen wrote:My situation is I have a relatively high starting amount calculated on the old system. This comes from a few years of work some time back in which I had sizeable pension contributions. I have many empty years (no NI payments) leading up to 2016 and about 18 years to retirement age. My reading of what you have said and of other web sites is that it would be worthwhile my making up a few of the empty years

A definite maybe! :) On the scant info you've given it sounds likely but if you can post your vital numbers we can figure out if it really is. That's the forecast state pension amount with your already made contributions, the number of qualifying years you already have, the COPE, and the number of pre and post 2016 empty years (that are fillable).

Also I should perhaps do this before the next tax year when presumably the amounts payable will be indexed up. Or should I wait until the last minute (2023)?

As an aside, my assessment of the current and future fiscal/political situation is that pressure will grow to reduce pension benefits or increase the cost of contributions or both i.e. perhaps now is as good as it gets for contribution vs return. Is that far off-beam?

Your guess is as good as mine (and maybe better ;)). I tend to work on what is known now, and that's that the cost of the pre-2016 voluntary NICs are currently frozen until 5-Apr-19 and after that they go up. And they'll go up to the (then) current year's cost, so if you wait until 2023 to pay the NICs for 2010 you'll pay at the 2023 rate. Currently voluntary NICs go up each year by (IIRC) the previous September's annual CPI inflation rate.

Lootman
Lemon Quarter
Posts: 4036
Joined: November 4th, 2016, 3:58 pm
Has thanked: 8 times
Been thanked: 633 times

Re: Are voluntary NI contributions a no-brainer?

#167478

Postby Lootman » September 19th, 2018, 3:10 pm

GoSeigen wrote:my assessment of the current and future fiscal/political situation is that pressure will grow to reduce pension benefits or increase the cost of contributions or both i.e. perhaps now is as good as it gets for contribution vs return. Is that far off-beam?

The government has a choice between further tinkering with the system or implementing some kind of radical, structural change.

Given massive changes will create millions of losers (e.g. means testing state pensions) then I'd agree with you that it will be a combination of lowering the pension (at least in real terms), increasing NICs (although they are already something like 26% if you include the employer part) and raising the retirement age.

Older folks, who vote a lot, will prefer to push the pain onto younger folks. They will feel that the rules should not be changed on people who have spent their lifetime making decisions based on what they were promised. Whereas a young person can make different decisions e.g. work overseas or seek income that doesn't attract NICs.

swill453
Lemon Quarter
Posts: 1741
Joined: November 4th, 2016, 6:11 pm
Has thanked: 91 times
Been thanked: 396 times

Re: Are voluntary NI contributions a no-brainer?

#167569

Postby swill453 » September 19th, 2018, 10:10 pm

Clariman wrote:At first site, the voluntary contributions seem like a no-brainer. £741 for last year would give her £4.70 a week, which pays for itself after 3 years of pension.

If you want to completely avoid the risk of being beholden to the whims of government, you could always independently buy an annuity to pay £4.70 a week, index linked for life.

It would cost a tad more than £741, of course. Somewhere around £10,000 I reckon...

Scott.


Return to “Pensions - Practical Problems”

Who is online

Users browsing this forum: No registered users and 2 guests