Is it worth paying Class 2 NICs?

[KM01]

Hi all,

i have a PAYE job and a small self employed income.

I have just filled in my SA tax return and, for the first time in many years, my self employed income is well below £6k. The form offers me the option of paying voluntary Class 2 NICs - £159 - but i'm struggling to work out whether i need to. All i can find are references to "may not be necessary if paying full class 1" - but what is full? Everything due under class 1 is deducted via PAYE, i already have 37 years worth of NI contributions (and several more years of working life ahead of me) so as far as i can see, i will qualify for a full state pension.

Am i missing something or can i save myself £159?

Thanks! KM01

[bluedonkey]

Unlikely to provide you with anything extra based on what you have said.

[vrdiver]

... i already have 37 years worth of NI contributions (and several more years of working life ahead of me) so as far as i can see, i will qualify for a full state pension.

Am i missing something or can i save myself £159?

Thanks! KM01

Check your NI record ( https://www.gov.uk/check-national-insurance-record ) and your projected SP ( https://www.gov.uk/check-state-pension ). You may have 37 years NI, but if you were contracted out during any of these years they may generate a deduction to your pension entitlement.

You might want to post back here once you know how many years you have been credited with, and what your current projected SP will be.

An example: I have 44 years of NI contributions, but due to being contracted out still need to make one more year of voluntary contributions to ensure a full SP at 67.

VRD

[chas49]

Take a look here: https://www.thisismoney.co.uk/money/pen ... nsion.html

If your PAYE job is giving you more than £8632pa, your class 1 NICs will be enough to make a full year for SP I beleive.

[KM01]

Thanks for the responses.

My NI record says this:
37 years of full contributions
11 years to contribute before 5 April 2031

My pension forecast says:
£175.20 is the most you can get
You cannot improve your forecast any more.

The Contracted out info says:
Contracted Out Pension Equivalent (COPE)
Your COPE estimate is £37.84 a week.
This will not affect your State Pension forecast.

From this, and the This Is Money link, it looks to me as though there's no benefit in me making a voluntary payment.

[1nvest]

Thanks for those links/pointers.

Mine says 44 years of full contributions. £175.20/week forecast pension 5th Dec 2026
£157.73/week based on current
£175.20/week forecast if I contribute another 4 years before 5th April 2026
COPE indicates a £78.27 figure.

I'm about to retire with a £15K (approx) company pension payable on reaching age 60 in a few months, wont be working/employed thereafter. Without any other employment income, should I be preparing to take some action at/after age 60 to generate those additional four years in order to achieve the full forecast pension amount?

TIA

[GrahamPlatt]

Thanks for those links/pointers.

Mine says 44 years of full contributions. £175.20/week forecast pension 5th Dec 2026
£157.73/week based on current
£175.20/week forecast if I contribute another 4 years before 5th April 2026
COPE indicates a £78.27 figure.

I'm about to retire with a £15K (approx) company pension payable on reaching age 60 in a few months, wont be working/employed thereafter. Without any other employment income, should I be preparing to take some action at/after age 60 to generate those additional four years in order to achieve the full forecast pension amount?

TIA

AIUI max OAP is achieved with 40 years contributions. So I presume your forecast of £157 is because you were “contracted out”.
I’d suggest giving them a call (https://www.gov.uk/government/organisat ... ndividuals) - they’re very helpful.

[swill453]

Thanks for those links/pointers.

Mine says 44 years of full contributions. £175.20/week forecast pension 5th Dec 2026
£157.73/week based on current
£175.20/week forecast if I contribute another 4 years before 5th April 2026
COPE indicates a £78.27 figure.

I'm about to retire with a £15K (approx) company pension payable on reaching age 60 in a few months, wont be working/employed thereafter. Without any other employment income, should I be preparing to take some action at/after age 60 to generate those additional four years in order to achieve the full forecast pension amount?

Yes, it'd be worthwhile making voluntary contributions. If you become self-employed then Class 2 would be much cheaper.

Scott.

[1nvest]

Yes I intend to sign up to Class 2 (£3/week). Will call them first however as I might have been contracted in when they are indicating otherwise (dual life as a carer and being self employed at the same time). Having achieved >40 years I had wrongly assumed I was fully paid-up/covered, hadn't realised the shortfall was evident, so thanks to all for the pointers/details as with 6 year still to go it was great finding out now rather than being surprised later.