I gave up working at end of 2014/15. My NI records tell me I have
- 40 years of full contributions
- 1 year to contribute before 5 April 2020
- 8 years when I did not contribute enough
The 40 years comprise 1971/72 to 2014/15 less a couple of 2-year gaps. I was contracted out for most of my working life and my Contracted Out Pension Equivalent (COPE) estimate is £112.63/week.
My pension forecast shows three numbers
- Estimate based on my National Insurance record up to 5 April 2019 - £145.37/week
- Forecast if I contribute until 5 April 2020 - £150.38/week
- The most I can increase my forecast to is - £165.40/week
I have looked at past topics on this board and searched around the internet. I think I've made sense of the numbers but if there are any flaws in my logic I'd be happy to know about these.
This post from John B Buying NI years, a worked example, this TMF Post from mc2fool, and this page from Royal London were useful and informative.
Under the new state scheme the maximum pension of £175.20/week is based on 35 years NI contributions - equivalent to £5.006/week for each full NI year. The differences between my forecasts of £145.37, £150.38 and £165.40 fit with this. The differences between the smallest forecast and the two larger ones equate to £5.01/week and £20.03/week, equivalent to an additional one and four years worth of NI contributions, respectively.
My NI record has not changed since the end of 2014/15 and my "starting amount" as at 6 April 2016 (used in the transition to the new state pension) appears (to me at least) to be £145.37/week. I surmise this is the current value under the old system and comprises a full (30 year) basic state pension of £134.25/week plus (net) additional state pension of £11.12/week (the £134.25 value came from the Royal London page, the £11.12 by difference). This is greater than the value under the new system of a full (35 year) pension of £175.20/week less COPE of £112.63.
My maximum is less than the £175.20 maximum because I only have 4 NI years available between the switch to the new arrangements and my state pension age. Unlike JohnB, I can't get any benefit from years before the switch because I had 30 full years at 6 April 2016. The best I can do is to stump up for 2016/17, 2017/18, 2018/19 and 2019/20. The cost of this looks like it will be around £3100 for an additional £20.03/week - a payback period of 3 years. Not too shabby.
I haven't as yet done anything about making a claim for my pension. Am I correct in assuming that it would be sensible to pay for the additional years and have them show up on my record before I make my claim?