State Pension : 2 year N.I. contributions shortfall

[ProverbialBoot]

Hi, anyone currently in a similar situation or has been?

My retirement year will be 2032 and my state pension summary states that I have a 2 year shortfall in contributions.

Effectively this means, currently, my estimated forecast is:

£209.27 a week
OR, if I make up the shortfall then it will be £221.20 a week.

I've printed out my record and have details of the gaps for the past 6 years, all state the shortfall figures may increase after 5 April 2025.

The cheapest 2 years to buy are 2021-2022 £800.80
And 2020-2021 £795.60

All other years are £824.20.

Is it actually worth me buying the 2 years shortfall at this point, or at all?

Looks like you would get an extra £500ish per year if you made up the shortfall so only just over 3 years to break even once you start receiving your pension. I'm not a financial adviser but that seems like a pretty good deal to me.

I am an Accountant and if you were my client I would advise you to do it. Its an extra £620 a year and as above PP says, just 3 years pension and then you will be in profit.

I agree with the pps. I will have a shortfall and I will pay it. You're banking on the future. If you die suddenly then no,you won't benefit, but most people don't die suddenly.

I'm also an accountant and it's a no brainer to me!

I was short and bought all the extra years I could: Definitely worth it. I've covered what in under 3 years. Now over £20 per week better off. I've not got much more than my state pension so over £80 month definitely makes life easier

Does the shortfall take into account the years you still have to pay between now and retirement age?

I'm currently 4 years short but I still have another 17 years to make those up so I haven’t bought any additional years.

@ProverbialBoot I am in the process of buying three years. I have to wait until next January to buy the 2023/24 tax year. It is definitely worth paying if you are not able to get credits.

As pp have said at today’s state pension rate in less than 3 years you get back your contributions but in reality each year the state pension rises so by the time you reach pension age it will take even less time to be in profit. Additionally when you draw your pension it rises each year and again you are maximising the increase by having a full pension.

Thanks all!

I'll just do it - I'll ring up tomorrow and see if I can pay in tranches rather than a lump sum as it will help me to budget over coming months rather than take the chunk out of savings.

itll be good to tie up this loose rnd and forget about it once done.

@Harassedevictee - are you able to purchase in Installments? Do they allow that? For example, 3 installment payments spread out over a few months for each year?

@ProverbialBoot I think you have to pay it in one lump sum. You need to phone up to get a reference number so ask them when you phone.

Pretty certain you have to pay it as a lump sum.
When you ring and speak with them, they will give you a reference number (sixteen digit I think) and you use that as the reference on your bank transfer.

As a PP asked, does the outstanding two years include the years running up to SPA (i.e. would you not be making up those years anyway)?

As others have asked are you teo years short as in only need two more years over the next 7 years in which case I wouldn't buy them back or you need 9 more years but only 7 years of working left in which case yes you should buy them if you can afford to.c

I'm 2 years short over the next 7 years.

I currently work in a very part time role which doesn't meet the threshold for NI contributions - so I either need to increase hours/look for new work or buy these 2 years.

I was short too as I retired in my 40s and not eligible for child benefit . I paid for the extra years until I had the full amount (now 53). It's definitely worth it!