Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to eyeball08,Wondergirly,bofh,johnstevens77,Bhoddhisatva, for Donating to support the site

Confusing pension forecast

UncleEbenezer
The full Lemon
Posts: 10783
Joined: November 4th, 2016, 8:17 pm
Has thanked: 1470 times
Been thanked: 2993 times

Confusing pension forecast

#470309

Postby UncleEbenezer » January 4th, 2022, 11:15 pm

According to state pension forecast, I need to pay three more years NI:
Estimate based on your National Insurance record up to 5 April 2021 £169 a week
Forecast if you contribute another 3 years before 5 April 2028 £179.60 a week


OK, so pay another three years, right?

Yet when I view my NI record, it tells me I have 35 complete years. Shouldn't that mean I've already paid enough to take the maximum? Confused! :?



Elsewhere on the site, about contracting out:
Your COPE estimate is£42.93 a week.

This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.


Hmm. I was contracted out for a few years with the Equitable, which of course was robbed to pay the older pensioners. Utmost (who took over my Equitable pension) have quoted me a value that came as a very pleasant surprise, but it won't amount to forty squid a week. Is that subtracted from the £179.60?

mc2fool
Lemon Half
Posts: 7885
Joined: November 4th, 2016, 11:24 am
Has thanked: 7 times
Been thanked: 3043 times

Re: Confusing pension forecast

#470323

Postby mc2fool » January 4th, 2022, 11:51 pm

UncleEbenezer wrote:According to state pension forecast, I need to pay three more years NI:
Estimate based on your National Insurance record up to 5 April 2021 £169 a week
Forecast if you contribute another 3 years before 5 April 2028 £179.60 a week

OK, so pay another three years, right?

If you want the (current) maximum of £179.60, yes. However, note that every additional (post 2016) year (currently) gets you an additional £179.60/35 = £5.13 per week. So, if you were to pay only two more years you'd get pretty close to the max with £169 + (2 * £5.13) = £179.26 per week.

Of course, if you'll be contributing involuntarily (i.e. 'cos you're working) then you'll be paying the third year anyway. However, if you'll be making voluntary NICs you may consider if it's worth paying for the third year to get yourself that final 34p per week. That's £17.68 per year, and with the cheapest voluntary NICs (class 2) costing £158.60 for a year, that'll take almost 9 years to payback (flat). And with class 3 voluntary NICs at £800.80 that's 45 years...!

UncleEbenezer wrote:Yet when I view my NI record, it tells me I have 35 complete years. Shouldn't that mean I've already paid enough to take the maximum? Confused! :?

35 years to get the max only applies to people totally under the new state pension system, i.e. those that started contributing in 2016 or later. For people that made any NI contributions before 2016 it can be more, or even less, than 35 years.

UncleEbenezer wrote:Elsewhere on the site, about contracting out:
Your COPE estimate is £42.93 a week.

This will not affect your State Pension forecast. The COPE amount is paid as part of your other pension schemes, not by the government.

Hmm. I was contracted out for a few years with the Equitable, which of course was robbed to pay the older pensioners. Utmost (who took over my Equitable pension) have quoted me a value that came as a very pleasant surprise, but it won't amount to forty squid a week. Is that subtracted from the £179.60?

No. The COPE was used in figuring out your "2016 starting amount" for your transition-to-new-state-pension calculation and (without asking you for more details about your NI history and running the calculation) was very likely responsible for you needing the 38 years to get the full £179.60, but it doesn't affect either of the headline figures you've been given.

monabri
Lemon Half
Posts: 8418
Joined: January 7th, 2017, 9:56 am
Has thanked: 1548 times
Been thanked: 3439 times

Re: Confusing pension forecast

#470339

Postby monabri » January 5th, 2022, 12:20 am

As per mc2fool's explanation.

The minimum state pension you should receive is £169 per week. That £169 assumed you stopped work April 21. Of course, you might have continued working ( you don't say).

You can put the COPE consideration to one side ( and forget it).

The £179.60 full pension will shortly increase to £185.10 in the next tax yr.

Your £169 minimum figure will increase by the same percentage to £174 approx.

( the pension from "Utmost" ( not heard of them! ) will be an additional payment totally separate from the state pension).

Ball Park...

If you work until April 22, your min pension should be ~£180 pw PLUS the sum from Utmost.

You can check the exact figure on your Government Gateway account after April 22.

UncleEbenezer
The full Lemon
Posts: 10783
Joined: November 4th, 2016, 8:17 pm
Has thanked: 1470 times
Been thanked: 2993 times

Re: Confusing pension forecast

#470346

Postby UncleEbenezer » January 5th, 2022, 12:40 am

Thanks, that's much clearer. Why didn't I find a link to that information on the site?

The HMRC site quotes the £800 for a year's voluntary NICs, which I take it from your post must be Class 3. Guess the next thing to google is how to qualify for Class 2, if it gets the same for cheaper!

mc2fool
Lemon Half
Posts: 7885
Joined: November 4th, 2016, 11:24 am
Has thanked: 7 times
Been thanked: 3043 times

Re: Confusing pension forecast

#470351

Postby mc2fool » January 5th, 2022, 1:04 am

UncleEbenezer wrote:The HMRC site quotes the £800 for a year's voluntary NICs, which I take it from your post must be Class 3. Guess the next thing to google is how to qualify for Class 2, if it gets the same for cheaper!

Declare yourself self-employed, and do some small time business, e.g. ebay trading, baby sitting the grandkids, gardening for the neighbours, etc. Then you can make voluntary class 2 NICs. And if you keep your income from your "business" to less than £1000pa then there's no tax on it.

Have a dig through this board to see what others have done, it comes up every now and again...

Vince56
Posts: 19
Joined: November 6th, 2016, 11:01 pm
Has thanked: 85 times
Been thanked: 1 time

Re: Confusing pension forecast

#471253

Postby Vince56 » January 7th, 2022, 7:39 pm

mc2fool wrote:
UncleEbenezer wrote:The HMRC site quotes the £800 for a year's voluntary NICs, which I take it from your post must be Class 3. Guess the next thing to google is how to qualify for Class 2, if it gets the same for cheaper!

Declare yourself self-employed, and do some small time business, e.g. ebay trading, baby sitting the grandkids, gardening for the neighbours, etc. Then you can make voluntary class 2 NICs. And if you keep your income from your "business" to less than £1000pa then there's no tax on it.

Have a dig through this board to see what others have done, it comes up every now and again...


Could I just ask, is that £1000 profit or is it turnover? Thanks

mc2fool
Lemon Half
Posts: 7885
Joined: November 4th, 2016, 11:24 am
Has thanked: 7 times
Been thanked: 3043 times

Re: Confusing pension forecast

#471300

Postby mc2fool » January 7th, 2022, 10:19 pm

Vince56 wrote:
mc2fool wrote:
UncleEbenezer wrote:The HMRC site quotes the £800 for a year's voluntary NICs, which I take it from your post must be Class 3. Guess the next thing to google is how to qualify for Class 2, if it gets the same for cheaper!

Declare yourself self-employed, and do some small time business, e.g. ebay trading, baby sitting the grandkids, gardening for the neighbours, etc. Then you can make voluntary class 2 NICs. And if you keep your income from your "business" to less than £1000pa then there's no tax on it.

Have a dig through this board to see what others have done, it comes up every now and again...


Could I just ask, is that £1000 profit or is it turnover? Thanks

Gross trading income. https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income

More in details, including explanatory video, here: https://www.litrg.org.uk/tax-guides/self-employment/what-trading-allowance

bluedonkey
Lemon Quarter
Posts: 1809
Joined: November 13th, 2016, 3:41 pm
Has thanked: 1416 times
Been thanked: 652 times

Re: Confusing pension forecast

#471366

Postby bluedonkey » January 8th, 2022, 12:25 pm

Vince56 wrote:
mc2fool wrote:
UncleEbenezer wrote:The HMRC site quotes the £800 for a year's voluntary NICs, which I take it from your post must be Class 3. Guess the next thing to google is how to qualify for Class 2, if it gets the same for cheaper!

Declare yourself self-employed, and do some small time business, e.g. ebay trading, baby sitting the grandkids, gardening for the neighbours, etc. Then you can make voluntary class 2 NICs. And if you keep your income from your "business" to less than £1000pa then there's no tax on it.

Have a dig through this board to see what others have done, it comes up every now and again...


Could I just ask, is that £1000 profit or is it turnover? Thanks

Turnover.

Vince56
Posts: 19
Joined: November 6th, 2016, 11:01 pm
Has thanked: 85 times
Been thanked: 1 time

Re: Confusing pension forecast

#471479

Postby Vince56 » January 8th, 2022, 10:35 pm

mc2fool and bluedonkey
Thanks for your replies- those links are very helpful too.


Return to “Pensions - Practical Problems”

Who is online

Users browsing this forum: No registered users and 22 guests