scotview wrote:mc2fool wrote:scotview wrote:How old is she, does she have any 2006 to 2015 shortfalls, how many years does she have already?
Thanks for the reply mc2.
My daughter is 35, as far as she could make out from her on line record, she has 13 full years and 6 part years beginning 2006 (Uni) which will cost about £2000 to fill. She's going to phone DWP to confirm the details and check how to pay.
My question is whether, at her age, it is worthwhile paying to fill those years, in case HMG increase the OAP requirements to say 40 years contributions, anything's possible.
Well, as you say, anything's possible. However, under current legislation she'll reach state pension age at 68, so she has at least another 31 potential qualifying years in front of her (maybe up to 33, depending on when her birthday falls), and as she has 13 years already you're talking about insuring against a rise to over 44 qualifying years.
As you say, anything's possible. I suppose that even ignoring the possibility of legislative changes, there is an argument for filling those 6 part years anyway, just to get them under her belt, so to speak, so that she can get to 35 years* and stop involuntarily contributing, i.e. working, after 16 years* onwards.
But then of course she could just stop after 16 years anyway and make voluntary contributions going forward from there, so the question then becomes would it be cheaper then or now? Well, again under current legislation, the cost of NICs goes up by CPI each year, so that's what she'd have to beat if she invested that £2000 for the possibility of using it to cover future voluntary NICs.
However, there's a couple of other twists.
Firstly, there's the class 2 "wheeze" (see posts earlier in thread) she could employ in future, although of course the govt may make that may disappear at some point. Secondly, £2000 to fill part 6 years is actually pretty cheap as to fill a full year it's £824.20. And in particular if the £2K isn't evenly needed, at £333 for each year, and there are some years that only need a few quid to fill then those might well be worth filling just for the heck of it.
* as I keep on saying, 35 years only actually applies to folks starting from 2016 onwards. The practical upshot is that she may need more or less than 35, and also filling pre-2016 years may not gain as much as post 2016 years. I can figure it out for her but I'll need from her pension forecast:
her "
Estimate based on your National Insurance record up to 5 April 202X", the "X" and the £ amount
the number of years she has up to 5-Apr-2016
the number of years she has from 6-Apr-2016 onwards
her COPE (Contracted out Pension Equivalent) if she has one, it's in the lower part of the page