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Another NI contribution question

Another NI contribution question

Old Oct 19th 2010, 8:41 pm
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Question Another NI contribution question

Just received a letter from HM advising that for the year 2008-2009 I can make up the missing NI contributions with just over £400 cheque.

I currently have 26 years contributions in.

Is it worth me doing so as I doubt there will be much of a basic state pension when I get there ? If they scrapped it would they only honour people who have full contributions ( I know....unanswerable )

If I don't does it mean I would get 26/30th of the full basic state pension anyway ?

Noting the amount to make up one year and assuming similar amounts for the other remaining 3 years, that would be about £1700 to get the full 30 years.....again is it worth it ?

Thoughts ?
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Old Oct 19th 2010, 8:51 pm
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Default Re: Another NI contribution question

Originally Posted by Tangram
Thoughts ?
I didn't realise you were such an old git? Perhaps not what you were looking for, but undoubtedly a thought.
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Old Oct 19th 2010, 10:07 pm
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Default Re: Another NI contribution question

Originally Posted by Tangram
If I don't does it mean I would get 26/30th of the full basic state pension anyway ?
Noting the amount to make up one year and assuming similar amounts for the other remaining 3 years, that would be about £1700 to get the full 30 years.....again is it worth it ?

Thoughts ?
It depends on how long you are planning to live. If the basic state pension is £90 a week that £1,700 gets you 4/30ths or £12 a week. I.e. you get your money back in less than three years of retirement. That seems a good deal - especially if you are close (ish) to retirement now. If the £ strengthens against the $ between now and retirement then it will be a better deal.

However, you also have to think about what else you could invest the £1,700 in and what other return it would give you, and compare.
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Old Oct 19th 2010, 10:17 pm
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Default Re: Another NI contribution question

Originally Posted by JonboyE
It depends on how long you are planning to live. If the basic state pension is £90 a week that £1,700 gets you 4/30ths or £12 a week. I.e. you get your money back in less than three years of retirement. That seems a good deal - especially if you are close (ish) to retirement now. If the £ strengthens against the $ between now and retirement then it will be a better deal.

However, you also have to think about what else you could invest the £1,700 in and what other return it would give you, and compare.
But does he really get his money back in that short a time?

If he pays nothing he gets 26/30ths. If he pays the £1,700 he gets the full amount. So instead of taking the full amount shouldn't you just take 4/30ths and calculate how it will take that amount to pay back the £1,700 investment. I figure roughly ten years.
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Old Oct 19th 2010, 10:24 pm
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Default Re: Another NI contribution question

Originally Posted by Steve_P
But does he really get his money back in that short a time?

If he pays nothing he gets 26/30ths. If he pays the £1,700 he gets the full amount. So instead of taking the full amount shouldn't you just take 4/30ths and calculate how it will take that amount to pay back the £1,700 investment. I figure roughly ten years.
If the full amount is £90 a week (I think this is approximately right) then at the moment he will get 90 x 26/30 = £78 a week. He will get £12 a week (90-78) extra if he makes the £1,700 contribution.

£12*52 = £624 a year. 624 x 2.725 years = £1,700.

Of course, the real return depends on a) how long the British government hold the money until you retire and b) how long you live after you retire.

Last edited by JonboyE; Oct 19th 2010 at 10:27 pm.
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Old Oct 19th 2010, 10:26 pm
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Default Re: Another NI contribution question

Originally Posted by JonboyE
If the full amount is £90 a week (I think this is approximately right) then at the moment he will get 90 x 26/30 = £78 a week. He will get £12 a week (90-78) extra if he makes the £1,700 contribution.

£12*52 = £624 a year. 624 x 2.725 years = £1,700
I should know better. Apologies.

Just did a quick look currently the full pension is £97.65 so it would pay back a little quicker.

Last edited by Steve_P; Oct 19th 2010 at 10:29 pm.
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Old Oct 19th 2010, 10:39 pm
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Default Re: Another NI contribution question

No worries.
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Old Oct 19th 2010, 10:43 pm
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Default Re: Another NI contribution question

Last year I paid my missing 3 years contributions to qualify me for full pension (just over 300 GBP I think) The exchange rate made it seem like an even bigger bargain and I thought it was worth it considering they vastly reduced the amount of years required to qualify for full state pension

Gawd I feel old
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Old Oct 19th 2010, 10:57 pm
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Default Re: Another NI contribution question

Originally Posted by Cookie
Last year I paid my missing 3 years contributions to qualify me for full pension (just over 300 GBP I think) The exchange rate made it seem like an even bigger bargain and I thought it was worth it considering they vastly reduced the amount of years required to qualify for full state pension

Gawd I feel old
I have 22 years of contributions so need another 8 to qualify for a full pension. If I wanted to be really mercenary about it I would wait till I am 63 and pay the maximum of six years arrears you are allowed, plus the final two years and qualify for the full pension. Between now and age 63 I get to keep the money for myself.

Of course, they may change the rules again by then and you'll be sitting pretty and I will lose out.
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Old Oct 19th 2010, 11:14 pm
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Default Re: Another NI contribution question

Originally Posted by JonboyE
I have 22 years of contributions so need another 8 to qualify for a full pension. If I wanted to be really mercenary about it I would wait till I am 63 and pay the maximum of six years arrears you are allowed, plus the final two years and qualify for the full pension. Between now and age 63 I get to keep the money for myself.

Of course, they may change the rules again by then and you'll be sitting pretty and I will lose out.
Not directly relevant but perhaps useful to someone.

With the help of a very knowledgeable poster on the France forum, I discovered that even though I haven't contributed to NI for more than a couple of years in my life, the time spent in full time education after the age of 18 counts.

I will be eligible for the princely sum of 19 pounds a week, a life changing amount to be sure. But not so fast.... being in receipt of a UK state pension, no matter how paltry, allows me full access to the publicly funded health care system in France (where, as I may have mentioned, we plan to retire).

Last edited by Novocastrian; Oct 20th 2010 at 12:37 am. Reason: typo
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Old Oct 19th 2010, 11:23 pm
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Default Re: Another NI contribution question

Originally Posted by Novocastrian
Not directly relevant but perhaps useful to someone.

With the help of a very knowledgeable poster on the France forum, I discovered that even though I haven't contributed to NI for more than a couple of years in my life, the time spent in full time education after the age of 18 counts.

I will be eligible for the princely sum of 19 ponds a week, a life changing amount to be sure. But not so fast.... being in receipt of a UK state pension, no matter how paltry, allows me full access to the publicly funded health care system in France (where, as I may have mentioned, we plan to retire).
France eh.....should have known! You can dance on Bastille Day, indulge in industrial action at the drop of a hat and become a fully paid up member of the petted lip, anarchists are us society

Enjoy when the time comes....
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Old Oct 19th 2010, 11:26 pm
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Default Re: Another NI contribution question

Originally Posted by macadian
France eh.....should have known! You can dance on Bastille Day, indulge in industrial action at the drop of a hat and become a fully paid up member of the petted lip, anarchists are us society

Enjoy when the time comes....
Thanks. We're already enjoying on a limited access basis.
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Old Oct 19th 2010, 11:59 pm
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Default Re: Another NI contribution question

Originally Posted by Novocastrian
I will be eligible for the princely sum of 19 ponds a week, a life changing amount to be sure. But not so fast.... being in receipt of a UK state pension, no matter how paltry, allows me full access to the publicly funded health care system in France (where, as I may have mentioned, we plan to retire).
That is good. My sister and brother in law also plan to retire in France. He is in public health in the NHS and considers the French public health care system to be significantly better than the British equivalent.
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Old Oct 20th 2010, 12:49 am
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Default Re: Another NI contribution question

Originally Posted by JonboyE
That is good. My sister and brother in law also plan to retire in France. He is in public health in the NHS and considers the French public health care system to be significantly better than the British equivalent.
Along the lines of "Oh, you live in Canada, do you know Jim Bollox?", where in france will he retire?
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Old Oct 20th 2010, 1:51 pm
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Question Worth checking whether it will be Class II or Class III

Originally Posted by Tangram
Just received a letter from HM advising that for the year 2008-2009 I can make up the missing NI contributions with just over £400 cheque.

I currently have 26 years contributions in.

Is it worth me doing so as I doubt there will be much of a basic state pension when I get there ? If they scrapped it would they only honour people who have full contributions ( I know....unanswerable )

If I don't does it mean I would get 26/30th of the full basic state pension anyway ?

Noting the amount to make up one year and assuming similar amounts for the other remaining 3 years, that would be about £1700 to get the full 30 years.....again is it worth it ?

Thoughts ?
I just rang the International Caseworker Team and explained that I'm in work here and I'll be in work when I move to Canada next year. They're sending me a pension forecast, which should indicate I've paid in around 23 years of NI contributions. The lady on the phone said I could pay the extra years to take me up to 30 yrs and it would be at Class II rates, not Class III. I suggest you give them a ring because the Class II rate is only £2.40 a week, which is about a tenner less than the Class III.
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