contracting out - Don't let it be a surprise

[RobertT]

I have just checked my NI record and it says that I have 45 years of full contributions and do not have any gaps. Am I correct in thinking that as there are no gaps in my record then I can't make any voluntary contributions?

It sounds as if you won't be able to top up any previous years, because there is nothing to top up!
But if you expect to have a lower state pension than the full rate(currently £175 per week) you could potentially buy qualifying years that you subsequently miss.

For example, you're currently 60 with a state pension entitlement of £165 and an SPA of 67. Therefore you have another 7 years to make up that £10.
You could do that by continuing to work, or by purchasing two qualifying years. It only has to be two because each qualifying year earned, whether by working or buying, gives you 1/35th of the full state pension, which is currently £5.

Bear in mind:
You can only buy years you've already missed, not expect to miss.
You can't buy more if it takes you over the full rate.
If you reach SPA with less than the full rate you can only buy years from before 2016.
I you want to purchase post 2016 years, you have to do it before you reach SPA.
You can buy in increments of 1 week.

[stephen500]

Mine said £174.71 as of April 2020 , so this will increase by the grand total of 49p in the current tax year.
What I don't understand though is I was contracted out for a period of time. So how many years do you need to pay NICs to get maximum pension ?

For someone with all their state pension qualifying years after 2016, then it will be 35 years.
But for those with both before and after 2016, it'll depend on their own individual work / NI history, particularly if they've been contracted out at some point. So there isn't a definitive answer to that one!

I don't know your personal circumstances. But your estimated pension should rise by about £4.60 per year as you should now be paying the same NIC as every one.
Mine has risen by about £18 for 4 years. SORRY TYPO £18 OVER 4 YEARS
Mine started off at around £138 and I expect it to be £161 by December of this year.
The government pension forecast site says with another 4 years I would reach full pension, so I don't know what your 49p is about?
The gov web site should also tell you when you will reach a full state pension, or you can just buy the years.

NI payments will depend on circumstances. You don't pay NI on pension payments in isolation only tax (if it is above your personal allowance).

[Steve_claret]

Thanks Robert.
MY SPA is 66 and it says that up to 5th April 2020 my estimate is £159.43 per week and I will reach full SP of £175.20 only if I contribute for another 4 years before 2025. So am I correct in thinking that to 5th April 2021 I will have earned another £5 taking this up to £164.43 or thereabouts and another £5 for every year thereafter up to the maximum of £175.20? I was planning on retiring at 62 which will be March 2022 so won't be able to contribute for another 4 years. I may just have to settle for receiving a slightly reduced SP as there are no years I have missed and so can't make it up.

[vmaxv4]

Thanks Robert.
MY SPA is 66 and it says that up to 5th April 2020 my estimate is £159.43 per week and I will reach full SP of £175.20 only if I contribute for another 4 years before 2025. So am I correct in thinking that to 5th April 2021 I will have earned another £5 taking this up to £164.43 or thereabouts and another £5 for every year thereafter up to the maximum of £175.20? I was planning on retiring at 62 which will be March 2022 so won't be able to contribute for another 4 years. I may just have to settle for receiving a slightly reduced SP as there are no years I have missed and so can't make it up.

Exactly the same as mine but I’m not planning on retiring until 5th April 2025 just after my 65th birthday.
Good luck with your early retirement plans ..

[RobertT]

Thanks Robert.
MY SPA is 66 and it says that up to 5th April 2020 my estimate is £159.43 per week and I will reach full SP of £175.20 only if I contribute for another 4 years before 2025. So am I correct in thinking that to 5th April 2021 I will have earned another £5 taking this up to £164.43 or thereabouts and another £5 for every year thereafter up to the maximum of £175.20?

Yes that's correct. But also bear in mind that the state pension generally increases each year, currently by at least 2.5% via the triple lock mechanism. So your entitlement will also go up each year, whether you've actually taken it or not, meaning you'll still have the same entitlement in percentage terms.

I was planning on retiring at 62 which will be March 2022 so won't be able to contribute for another 4 years. I may just have to settle for receiving a slightly reduced SP as there are no years I have missed and so can't make it up.

You will earn another qualifying year by working until March 2022, and you could then buy the remaining 2 years sometime during the 2024/25 tax year, before you reach SPA.