Is this right? NI contributions

[Bowbobobo]

I’m 61 and have paid NI since I was 16, not full contributions for three university years. To get the full state pension at 67 the website tells me I still need to pay another three years - so 45 years contributions!!! Can this be right??

Christ, I hope not. I only have 35 and I've just been made redundant. I'm 60 and my chances of getting many more years in are minimal.

I had a similar thing but it was because I’d been opted out for a number of years when paying into a private pension. Could this apply to you?

I thought the maximum years required was 35 years?

I’ve only ever paid into a private pension as I never had an employer with a pension scheme and now I’ve been self employed for 24 years paying full class 2 and class 4 NI. Perhaps those two things combined are the reason?

Do you have grandchildren you look after whilst their parents work? If the parents claim child benefit they can ‘give’ you their NI contributions which are linked to the child benefit. I did this for my husband who had taken early retirement (and did look after my grandson). The switch over gave my husbands pension a boost of £30 per week.

Are you looking at the X years left to contribute sentence OP? I was actually looking at my pension forecast the other day and I thought this was very misleading.

It's the number of years until you can claim your pension.

ah just found this snippet! 35 years only applies to someone who began work from 6th April 2016 onwards. For the rest of us we're in a transitional phase from old to new system and anything from 29 to 50 years may be needed. With 40 years, the only reason you are not getting the full new state pension is because you have been contracted out. but surely this cant be right because the pension age has been extended???

No grandchildren and anyway I work longer hours than my children so I’m never going to be in that position!

Thanks everyone, I think it’s the contracting out thing. It’s a moot point as I’ll carry on working/paying NI until 67 anyway, health willing. But when young people complain about 35 years contributions I’m going to let them know about my situation!

Wasn’t there an option to buy incomplete years. Martin Lewis did something about this a while back. I don’t know if the deadline passed
i think government portal shows if you have incomplete years and how much they cost to make up to the full year.

I had a similar issue.

Contributions prior to 2016 may not count in full if you were in a pension scheme and were contracted out of the State Second Pension (I think this means SERPS and similar). Where that was the case you paid a lower rate of NI, called the contracted out rate.

As I was employed in the Civil Service from leaving school in 1978 until I was made redundant in 2013 I paying NI at the contracted out rate for approx 35 years.

When I got to around 60 and started thinking about the State Pension I discovered that my pension prediction was significantly less than the £203.85 which government was trumpeting at the time the scheme changed in 2016. I was credited with contributions for the two years from 16 until I started work. The years in the CS did not count in full as part of my Guaranteed Minimum Pension would be delivered through my CS pension and not th State one.

I could have bought in the missing years but as I'm still employed and paying NI I'm now adding years; Provided I keep working until I'm 66 I will get the max amount.

I had a phase of being 'contracted out' with my first employer but I think there's an adjustment made for SERPS etc.

As a PP said the way it's presented on the website is quite misleading.

I would ring HMRC, if you can get through, and check. They have extended the deadline for people to review and potentially top up some years so I would enquire.

I know you say it's a moot point as you'll keep working but you never know what life could throw at you or if your circumstances change.

Hope you get it sorted / or at least confirmed.

Have you looked at your NI history as that will tell you the incomplete years and how much (if still possible) to buy them?

Some people get very confused with the Gov Gateway site, are you certain it is saying you have a shortfall and is not just telling you how many years until you reach SPA?

Mine tells me that, based on my NIC's up to including 2022/23 I have a shortfall such that if I pay no more my pension in 2025 will be £197.73.

It goes on to say that if I contribute two more years it will hit the max of £203.85.

I suspect that in practice I will have enough for the max before April 25 but I'm not too worried. If my job ends before I'm 66 and I'm short I might decide to buy in the years. I believe a full year cost approx £800 and that each full year is about £5/week on the State Pension.

Another point although it may have changed from when I was paying for my NI years - it has to be a FULL year to count
Although with the current practice of crediting years for child rearing and being on benefits - it may be no longer the case.

Yes, they are the ballpark figures we were given.

My NI history is complete so even though I recently retired in my 50's I have no concern about getting my full SP at 67.

OH on the other hand had a few gaps (although they were paying into a private pension all that time). They did make up a couple of the missing years a little while ago (these were really cheap to buy) but are hanging back on the last few as although early retired (like me), they do some PT work so do pay NI. If they drop the PT work in the near future we will just pay for the missing years but if they keep doing it longer than expected then some of those years could be covered.

Thanks, I hadn't seen that.

I just want to clarify for people that Contracting Out was contracting out of the SERPS/S2P (State Second Pension) and had no effect on the basic state pension.

I was contracted out for quite a few years but still paid normal NI minus the S2P/SERPS additional NI and have full years for each of them. I have 37 years and am fully paid up for the basic state pension.

I also had a couple of years where I didn’t get full NI contributions due to being out of work and not on relevant benefits for those years - if memory serves only the main unemployment claimant in a couple in the 90s got NI contributions, not both - not sure if that has changed.

Yes. The 35 years people often quote is not relevant for many of us.

I am 62 and now retired but despite 38 years of full contributions I will not get a full pension at 67 unless I make some voluntary contributions. So far I have paid one extra year but I have a few to go.

If you're planning to work until you're 67 it's not really worth it but for anyone who won't qualify for a full pension it's worth phoning DWP for advice on their personal situation.

I did and although it took ages to get through, when I did, I spoke to a very helpful woman. She advised me not to pay in advance for the missing years in case my circumstances changed. She also advised me that I might not want to pay for the final year because it would only make a difference of 2p a week!

@TheBabylonian although I mentioned SERPS I think it's more complicated than just that.

AIUI under the pre 2016 State Pension scheme there is a concept called Guaranteed Minimum Pension (GMP). If you were in an employers pension scheme you could be 'contracted out' of part of the State Pension. You'd pay a lower amount in NICs and part of the GMP would be delivered through the employers scheme rather than the State Pension.

Effective from 2016 that was abolished and a new scheme came in. Under that system there's no contracting out; we all pay the same NI.

However, for the new 'basic' pension of £203.85 years contracted out pre 2016 do not count in full.

You can check your predicted pension on line via the Government Gateway.

If it looks as if you'll get less than £203.85 at age 66/67 you have the option to make voluntary NI payments - around £800 for each missing year - to make it up.