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Original poster

Is this right about pensions/pension credit?!

38 replies

Cavalierchaos · 01/12/2024 13:27

So imagine I'm in a situation where, when i reach state pension age, I have only paid in 10 years national insurance. This would mean I earn £58.24 minimum state pension.

I have some unpaid years of national insurance that I can pay for to boost my pension. This is what I was planning to do. Each year to buy is pretty costly however.

Or, I could just save my money and apply for pension credit which would automatically put up my weekly pension about to almost the maximum (£221.20).

If this is right...why would anyone bother buying back years of national insurance stamps to bump up their state pension?

IS this right?

OP posts:
IKnowAristotle · 01/12/2024 13:33

Some imaginings from me:

The criteria for pension credit could change and you could miss out.

If you're in a couple, the thresholds are different so that could impact on eligibility.

Whereas the state pension is guaranteed (as much as anything is)

ACynicalDad · 01/12/2024 13:35

Buying back state pension is one of the cheapest ways to get retirement money; whilst I don't fully trust this government not to screw us over more, I think your future will be much more secure this way.

Miley1967 · 01/12/2024 13:35

Cavalierchaos · 01/12/2024 13:27

So imagine I'm in a situation where, when i reach state pension age, I have only paid in 10 years national insurance. This would mean I earn £58.24 minimum state pension.

I have some unpaid years of national insurance that I can pay for to boost my pension. This is what I was planning to do. Each year to buy is pretty costly however.

Or, I could just save my money and apply for pension credit which would automatically put up my weekly pension about to almost the maximum (£221.20).

If this is right...why would anyone bother buying back years of national insurance stamps to bump up their state pension?

IS this right?

Any savings over 10k would reduce the Pension credit. Just something to bear in mind.
Also if you inherited money then that could wipe out any Pension credit as it's means tested.

Original poster
Cavalierchaos · 01/12/2024 13:59

Sorry I didn't say, I would be living alone and have less than 10 savings.

It just seems I would save myself thousands of pounds by not buying back years and just waiting for pension credit (provided pension credit stays as it is now).

OP posts:
Original poster
Cavalierchaos · 01/12/2024 14:00

Also yes, I probably would inherit at some point, but I would be happy living off the inheritance and stopping the pension credit in that case.

I have no children so don't need to save money except for repairs etc. I just need enough money to buy food and pay bills (mortgage will be paid off).

OP posts:
ThereIsALifeOutThere · 01/12/2024 14:31

That only works if you’re assuming that Tax credit will carry in working for the next 20 years after you retire.

unsync · 01/12/2024 14:46

Pension credit is currently a gateway benefit too so it unlocks a range of other benefits and discounts. There is no guarantee that this will still be the case.

Having said that, paying extra now goes in the pot of things that need funding now including the NHS, education and suchlike, so if you value those things, you might like to pay in. Your future state pension will be dependent on kids who are currently going through the system getting a good education and then being net contributors when they work.

ipenas · 01/12/2024 14:53

My parents claim pension credit and it works out pretty well for them. My dad has a full pension but my mum has missing years (I suspect she could/should have been claiming ESA credits at some point because she didn't work due to ill health and that would probably have covered her missing years, but they weren't aware). They have a house which is paid off, my mum gets PIP and dad gets a carer premium, so the pension credit amount is a bit higher than standard. They get council tax paid and public transport is free. Their lifestyle is modest but that's all they've been used to, they've been frugal all their lives although they can afford holidays. They have a small amount of savings under the £10k threshold, which is enough to cover repairs etc. My siblings and I often get together to pay for more expensive items like a tablet or mobile.

The downside I suppose is that the pension credit system may well change in future, especially if you are relatively young. And if they get any windfall then it will be means-tested (they are not likely to get any inheritances, but we've wanted to gift them larger amounts and had to be careful by paying for services directly).

GranPepper · 01/12/2024 14:57

Cavalierchaos · 01/12/2024 13:27

So imagine I'm in a situation where, when i reach state pension age, I have only paid in 10 years national insurance. This would mean I earn £58.24 minimum state pension.

I have some unpaid years of national insurance that I can pay for to boost my pension. This is what I was planning to do. Each year to buy is pretty costly however.

Or, I could just save my money and apply for pension credit which would automatically put up my weekly pension about to almost the maximum (£221.20).

If this is right...why would anyone bother buying back years of national insurance stamps to bump up their state pension?

IS this right?

Why have you only got 10 years of National Insurance credits? How have you potentially got thousands in savings you don't want to use to buy extra years? Have you been overseas or something? If so, where? There may be a reciprocal agreement. What have you been living on previously if you weren't building up NI credits? Is this a hypothetical situation you are not personally in?

P00hsticks · 01/12/2024 15:36

do you not have any other form of workplace pension ?

redfishcat · 01/12/2024 18:41

I have wondered if the entitlement to a state pension, will be based on people having contributed when they could. So if you could pay in and didn't, then you won't be able to claim pension credit.
You can get credits if you claim all the legitimate benefits, so child benefit, ESA, carers, and so on.

Pension credit is only to top up the old state pension, and not the new one

I would think you need to be very careful here, as you could be very poor indeed if things change

GranPepper · 01/12/2024 18:46

redfishcat · 01/12/2024 18:41

I have wondered if the entitlement to a state pension, will be based on people having contributed when they could. So if you could pay in and didn't, then you won't be able to claim pension credit.
You can get credits if you claim all the legitimate benefits, so child benefit, ESA, carers, and so on.

Pension credit is only to top up the old state pension, and not the new one

I would think you need to be very careful here, as you could be very poor indeed if things change

"if you could pay in and didn't"? Most are PAYE so don't have the choice to not pay NI - do you mean self-employed?

redfishcat · 01/12/2024 19:13

Yes, I suppose I do mean self employed.
So many women come on to say their now exH has gone self employed to avoid CM payments and they are the sort to then avoid National insurance payments.
And there seem to be enough cocklodgers who also don't seem to be in any sort of employment

GranPepper · 01/12/2024 19:20

redfishcat · 01/12/2024 19:13

Yes, I suppose I do mean self employed.
So many women come on to say their now exH has gone self employed to avoid CM payments and they are the sort to then avoid National insurance payments.
And there seem to be enough cocklodgers who also don't seem to be in any sort of employment

I don't know what your rather unpleasant description word means but if someone is on benefits they get NI credits. If someone is self-employed, that's their business

Viviennemary · 01/12/2024 19:23

Cavalierchaos · 01/12/2024 13:27

So imagine I'm in a situation where, when i reach state pension age, I have only paid in 10 years national insurance. This would mean I earn £58.24 minimum state pension.

I have some unpaid years of national insurance that I can pay for to boost my pension. This is what I was planning to do. Each year to buy is pretty costly however.

Or, I could just save my money and apply for pension credit which would automatically put up my weekly pension about to almost the maximum (£221.20).

If this is right...why would anyone bother buying back years of national insurance stamps to bump up their state pension?

IS this right?

A person might have savings which would make them ineligible for pension credit, Or they may have a partner who has a higher income.

PrincessofWells · 01/12/2024 19:26

In your position I would not buy the NI credits. PC hasn't changed in any fundamental way for 20 years or so.

taxguru · 01/12/2024 19:31

No political party would remove pension credits. Just imagine the howls of protest from those who it would affect. The removal of WFA was bad enough. Even the Tories never dared remove or reduce pension credits (nor tax credits or UC for that matter). If anything, a future government would probably limit or means test the main state pension for those that could afford it (i.e. on a par with WFA means testing), leaving the only OAP benefit remaining as pension credit for those with low/no income nor savings.

redfishcat · 01/12/2024 19:31

I am totally speculating about the possible changes to pension credit, but just thought I'd post to say what has crossed my mind a few times.

And for the poster who is questioning what a cocklodger is, welcome to mums net.
It is a term used to describe a man who moves himself in and then pays nothing towards the household costs, or food, or bills or anything. And often does not even do basic household chores.

Original poster
Cavalierchaos · 01/12/2024 21:26

GranPepper · 01/12/2024 14:57

Why have you only got 10 years of National Insurance credits? How have you potentially got thousands in savings you don't want to use to buy extra years? Have you been overseas or something? If so, where? There may be a reciprocal agreement. What have you been living on previously if you weren't building up NI credits? Is this a hypothetical situation you are not personally in?

Show quote history

Hypothetical situation. Say if one had done ten years of work, then received inheritance that lasted until state pension age. So they gave up work and lived off the inheritance and wouldn't have paid any national insurance in all that time.
Or yes, maybe they went overseas. Basically, whatever the situation, they get to pension age and only have 10 years of credits.

OP posts:
Original poster
Cavalierchaos · 01/12/2024 21:27

redfishcat · 01/12/2024 18:41

I have wondered if the entitlement to a state pension, will be based on people having contributed when they could. So if you could pay in and didn't, then you won't be able to claim pension credit.
You can get credits if you claim all the legitimate benefits, so child benefit, ESA, carers, and so on.

Pension credit is only to top up the old state pension, and not the new one

I would think you need to be very careful here, as you could be very poor indeed if things change

"pension credit is only to top up the old state pension and not the new one"

Are you sure? Where does it say that?

OP posts:
Original poster
Cavalierchaos · 01/12/2024 21:29

PrincessofWells · 01/12/2024 19:26

In your position I would not buy the NI credits. PC hasn't changed in any fundamental way for 20 years or so.

This is what I'm thinking, and with the poster below you too.

So long as pension credit doesn't change, then I would be better off saving my money now and just claiming the pension credit when I got pension age. Either way, I can get the full pension...

OP posts:
Miley1967 · 01/12/2024 21:34

Cavalierchaos · 01/12/2024 21:27

"pension credit is only to top up the old state pension and not the new one"

Are you sure? Where does it say that?

Show quote history

You are correct this is not true at all. Someone can be on the new state pension which is around £222 a week so over the pension credit basic limit but then the limit can rise if for example someone is a carer or they live alone and claim a disability benefit. So it's perfectly possibly for example that a single person living alone claiming a disability benefit and no-one claiming carers allowance for looking after them can be on new state pension but still be eligible for pension credit. A severe disability premium on the Pension credit calculation raises the applicable amount by £81.90 a week.

Lougle · 01/12/2024 21:34

redfishcat · 01/12/2024 18:41

I have wondered if the entitlement to a state pension, will be based on people having contributed when they could. So if you could pay in and didn't, then you won't be able to claim pension credit.
You can get credits if you claim all the legitimate benefits, so child benefit, ESA, carers, and so on.

Pension credit is only to top up the old state pension, and not the new one

I would think you need to be very careful here, as you could be very poor indeed if things change

'Pension credit is only a top-up to the old state pension, not the new one.'

No it's not. Pension credit will top up to £218.15 (single) or £332.95 (couple) per week. The new state pension is £221.20 per week. The old state pension was £169.50 per week.

GranPepper · 01/12/2024 21:39

Cavalierchaos · 01/12/2024 21:26

Hypothetical situation. Say if one had done ten years of work, then received inheritance that lasted until state pension age. So they gave up work and lived off the inheritance and wouldn't have paid any national insurance in all that time.
Or yes, maybe they went overseas. Basically, whatever the situation, they get to pension age and only have 10 years of credits.

Show quote history

So it's not a real situation. I'm not interested in hypothetical situations. I was interested in trying to see if I could add some useful advice to help a real scenario so I have no further comment to make.

RedRiverShore5 · 01/12/2024 21:40

I have seen warnings to be quite careful with topping up the NI credits if you have no other pension or a very small one as it can put you over the pension credit amount and make you worse off.