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Voluntary National Insurance contributions

Voluntary National Insurance contributions

Old Dec 23rd 2016, 3:38 am
  #181  
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Default Re: Voluntary National Insurance contributions

I would have thought the foundation amount was used with the old style pension, where you had a basic part and an earnings related part. Now they have a base rate of £155 and subtract the opted out part(COPE)
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Old Dec 23rd 2016, 8:01 am
  #182  
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Default Re: Voluntary National Insurance contributions

Originally Posted by rebs View Post
The new state pension (NSP) (which came in in April 2016) has a very simple calculation, that applies post April 2016. For every qualifying year (post April 2016), you earn 1/35th of the NSP amount. Any contributions after that will not increase the amount of NSP.

Someone starting to contribute post April 2016 it will take 35 years to get to the max amount.

However, that is starting at '0' and most of us that have worked prior to the new system being introduced, don't start at 0. We have a 'foundation amount'. This was calculated in 2 ways - old system (including SERPS, S2P etc) and a calculation using the new system. The larger of these 2 amounts was used as the foundation amount.

In the example of chawkins99 the foundation amount is £132.22 which took them 26 years to accumulate under the old system.

Starting from that amount, post April 2016 it could well be that the max amount is reached sooner than 35 years.

Essentially, post April 2016 it is more useful to think in amounts rather than number of years.
Originally Posted by BristolUK View Post
So one would expect another 9 years were needed but you think it may be fewer.

At this stage they are none the wiser and needing 9 years would be the simple part.
In the new system, it makes less sense to think about years remaining than it does to think about amounts needed.

In this example, think of the difference between the max £155 and the starting amount (foundation amount) of £133.

In the new system, amounts are accrued at the rate of 1/35 of £155 per year.

That will be less than 9 years to get from £133 to £155.

Originally Posted by BristolUK View Post
In my case, I had my details from them in August, confirming I had 32 years and inviting me to buy ten years worth, when I only need 3 to get 35 in.

That doesn't strike me as simple.
The new system is simple - what's complex is the transition for those of us that have contributions carried over from the old system. In your case - again, think in amounts, not years and see how it looks.


Originally Posted by BristolUK View Post
Foundation amount? Never heard of it. Nothing on my account on the website and nothing using that expression in my August letter which went into a lot of detail...about anything other than telling me 3 years added to the 32 I have will get the maximum.
The first paragraph of this gov fact sheet explains what the foundation amount is -

https://www.gov.uk/government/upload...acting-out.pdf


Originally Posted by mrken30 View Post
I would have thought the foundation amount was used with the old style pension, where you had a basic part and an earnings related part. Now they have a base rate of £155 and subtract the opted out part(COPE)
You might have thought that, but that is not what a 'foundation amount' is - see the fact sheet linked above.

It is the starting figure for people transitioning from the old system to the new.
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Old Dec 23rd 2016, 12:41 pm
  #183  
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Default Re: Voluntary National Insurance contributions

Originally Posted by rebs View Post
...In your case - again, think in amounts, not years and see how it looks...
Sorry, can't do that. My letter specifically says that a full year has to be paid for it to count.

I have been given a list of years I can pay for where the amounts vary between £137.80 and £145.75 (and they don't go up steadily, they go up and then down and down again and then up etc).

Your payment will not count until we receive the full amount needed for each tax year.
So, yes, the amount is important but only because it represents the full year.

Start mucking about with 35ths and you're in danger of falling short of the full amount needed for it to count.
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Old Dec 23rd 2016, 12:59 pm
  #184  
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Default Re: Voluntary National Insurance contributions

Originally Posted by BristolUK View Post
Sorry, can't do that. My letter specifically says that a full year has to be paid for it to count.

I have been given a list of years I can pay for where the amounts vary between £137.80 and £145.75 (and they don't go up steadily, they go up and then down and down again and then up etc).


So, yes, the amount is important but only because it represents the full year.

Start mucking about with 35ths and you're in danger of falling short of the full amount needed for it to count.
I'm not sure I understand your point here? Are those figures you quote the amounts you have to pay for your contributions, or the amounts you will receive in pension?

The 1/35ths fraction is simply the calculation that gives you the amount of pension you will receive, per week, for every qualifying year after April 2016.

A qualifying year is any year that you have made enough contributions for it to count as a full year.
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Old Dec 23rd 2016, 1:32 pm
  #185  
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Default Re: Voluntary National Insurance contributions

Originally Posted by rebs View Post
I'm not sure I understand your point here? Are those figures you quote the amounts you have to pay for your contributions, or the amounts you will receive in pension?.
They are the amounts to pay for each year to count in order to increase my current 32 years to 35.
eg 2006-07 and 07-08 @£137.80, 2008-09 @ £140.45 or 2010-11 @ £137.80, 2011-12 @ £130 and 12-13 @ £130
(I quote two different sets to show how the amounts go up and down)

So, I'm told I have 32 years and on current levels that's around £120, so it's about £30 short of the max.

One could say, roughly that for each year I pay for I'll get about £10 a week, so three full years would put me on the max.

But instead of getting a letter to say "you're three years short, if you pay 2006-09 (2x 137.80 and 1x140.45) £416.05, then you'll qualify for the max" they (not very helpfully) tell me I can contribute the specific but varying amounts for any or all of the 10 years mentioned in the letter...all when I have 32 already and need 35.

If I simply send them 3x 137.80 then that would be short for 2006-09 and £137.80 would have been in vain because £140.45 would have been needed for the last year of those three.

Just to further complicate it, in theory, I suppose I could pick 2011-12 @ £130 and 2006-07 and 2007-08 on the basis those are the three cheapest years and save myself over £20 getting the same result.
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Old Dec 23rd 2016, 5:04 pm
  #186  
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Default Re: Voluntary National Insurance contributions

Bristol @ post #185

I suppose (& its a guess) that DWP want you to pay the earliest years missed that would get you to 35... being 2006, 7, 8?

32 years paid in, that with three years to get to max 35, that you need only pay any three years from the ones that was provided to you?

Either a letter too them or a quick call to them may fix it?
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Old Dec 23rd 2016, 5:30 pm
  #187  
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Default Re: Voluntary National Insurance contributions

It appears I was credited NI contributions while I was doing A-levels. Should the same have happened with time spent at Uni?
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Old Dec 23rd 2016, 8:30 pm
  #188  
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Default Re: Voluntary National Insurance contributions

Originally Posted by not2old View Post
I suppose (& its a guess) that DWP want you to pay the earliest years missed that would get you to 35... being 2006, 7, 8?...
I don't believe it makes any difference which three just as it wouldn't if I'd gone traveling, back working a year and travelling etc

You'll know, of course, that there will be the added issue of GIS clawback. I'm going to do it in a couple of stages when I have a better idea from the Canadian side of things.
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Old Dec 23rd 2016, 10:36 pm
  #189  
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Default Re: Voluntary National Insurance contributions

Originally Posted by BristolUK View Post

You'll know, of course, that there will be the added issue of GIS clawback. I'm going to do it in a couple of stages when I have a better idea from the Canadian side of things.
Its a crap shoot depending on 'what one needs in income' with the possibility of deferring your state pension to some future date if its not needed as income from the get-go.

https://www.gov.uk/deferring-state-pension/how-it-works

My wife (eligible at age 60) opted to defer her state pension 5 years then started collecting it as extra pension, which worked in her favour on the payback under the old rules increased 1% for every 5 weeks defering it

An acquaintance deferred to opt to collect the lump sum of what he banked over the years.

Three points on this - different strokes for different folks...

- Is time on your side to make it work in your favour?

- Loss of the Canadian (supplement) GIS or keep it till you start to collect state pension?

- Opt for the 'state pension' lump sum or increased pension?


.

Last edited by not2old; Dec 23rd 2016 at 10:38 pm.
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Old Dec 28th 2016, 4:22 pm
  #190  
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Default Re: Voluntary National Insurance contributions

Re: my post #114 where my OAP was canceled due not responding in time to their 'are you still alive' letter.

As I still had not been paid I decided to delay until after Xmas to respond but on the 19th Dec., the date I was supposed to receive my monthly stipend, I received it and all the back pay as well.

Just thought everyone should know it doesn't get canceled unless you tell them you are dead....

Thanks to all for advice.
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Old Dec 28th 2016, 4:48 pm
  #191  
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Default Re: Voluntary National Insurance contributions

Originally Posted by Davita View Post
Re: my post #114 where my OAP was canceled due not responding in time to their 'are you still alive' letter.

As I still had not been paid I decided to delay until after Xmas to respond but on the 19th Dec., the date I was supposed to receive my monthly stipend, I received it and all the back pay as well.

Just thought everyone should know it doesn't get canceled unless you tell them you are dead....

Thanks to all for advice.
That was a nice Christmas present
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Old Dec 28th 2016, 5:17 pm
  #192  
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Default Re: Voluntary National Insurance contributions

Originally Posted by mrken30 View Post
That was a nice Christmas present
As I don't spend in GBP I was thinking if they had paid me earlier I'd get a decent rate....... then you come up with this Xmissy thing.
Well, thinking positive is also my motto so thank you for the reminder that I am lucky...and a happy new year.
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Old Dec 30th 2016, 2:01 am
  #193  
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Default Re: Voluntary National Insurance contributions

Originally Posted by Quokka View Post
I received a letter today from HMRC confirming that years spent in Australia prior to 2001 are considered when claiming state pension as a UK resident. This is in addition to the qualifying years you may already have.
Hi,
I worked in UK for about 18 months, then came out to Australia in 1974 and worked here. Does that mean that I can add 27 years (1974- 2001) onto my "UK pension years" to make 28.5 .?
Can you tell me who to write to to get a letter like yours.?
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Old Dec 30th 2016, 8:06 am
  #194  
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Default Re: Voluntary National Insurance contributions

Originally Posted by Exnorthumbrian View Post
Hi,
I worked in UK for about 18 months, then came out to Australia in 1974 and worked here. Does that mean that I can add 27 years (1974- 2001) onto my "UK pension years" to make 28.5 .?
Can you tell me who to write to to get a letter like yours.?
I think that would be the case if you are a UK resident.

I wrote to HMRC. I would have to look for details.
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Old Dec 30th 2016, 10:37 am
  #195  
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Default Re: Voluntary National Insurance contributions

Originally Posted by Exnorthumbrian View Post
Hi,
I worked in UK for about 18 months, then came out to Australia in 1974 and worked here. Does that mean that I can add 27 years (1974- 2001) onto my "UK pension years" to make 28.5 .?
Can you tell me who to write to to get a letter like yours.?
I am in similar situation. I paid Class 3 when I was abroad, and while working my understanding being abroad couldn't pay Class 2. I am curious how kust working abroad can add qualifying years ?
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