Haven't been paying into SS for ages...

Yes indeed. Pay voluntary contributions for the past six years (the time limit for retroactive payment). This will cost you £356.20 if paid before next 6 April. A bargain.

There is an even bigger bargain that consists of declaring earnings of £4,000 p.a. or so.

It won't affect you eligibility, it will affect the amount if the current legislation is maintained.

Background info. in NP46

Pension forecast which details what back payments you can make

hth

Daytona

If by self employed you mean an owner managed limited company then you can pay yourself a salary just below the personal allowance, and it still counts as contributions to NI even though you aren't paying anything.

Thank you for the reply and to Biwah too. Would I be well-advised to pay the 356 for 6 years back-payments if I told you that I am 70,000 in debt (part of which is a mortgage and the rest being credit card debt? Would that 356 be better spent toward repaying my debt?

Thanks again,

JS

Thanks for that. No; I'm just a sole trader.

JS

You can have 5 years in your working life (16-65) without NI credits and you'll still get the full basic state pension. If you're over 60 you get automatic credits, also for full time school education (up to A levels IIRC).

But how much do you expect to have in savings/private pension/occupational pensions when you retire (including your partner if you have one)? Equity in your house doesn't count. If the answer is not a lot, or nothing, then paying voluntary contributions could be money down the drain, as any additional state pension would reduce means tested benefits. Particularly if you're still paying a mortgage. See the recent threads in this newsgroup.

The pension credit calculator on the government's pension web site is worth playing with:

You'll see that if all you have in retirement is the full basic state pension (79.60 a week), you'll get 25.85 in pension credit. If you reduce the basic state pension by any amount you like, the pension credit magically increases by exactly the same amount, leaving you no worse off!

The other thing worth bearing in mind, if applicable, is that from 2010 you are entitled to a state pension based on your wife's NI record, up to 60%, if this is higher than the amount your own NI record gets you. So if, for instance, voluntary contributions take your record from 40% to 60% and your wife has a full record, your voluntary contributions don't get you anything extra.

Fuck knows. Sorry brain not working.

Try

The factors involved on the debt side are -

- will such a payment be held against you if you go bankrupt/IVA

- does your income exceed your expenditure

and on the investment side are -

- what is government policy on pensions when you finally retire eg how much will you get ?

- the yield on the investment. Someone did a superb post demonstrating that it was a great deal, which I can't find. Something like -

Fund required for an annuity to provide 1/40?th of current full pension / One years back payment

I'd tend towards paying the back payments unless it's going to cause you the problem mentioned.

The best place for debt advise is - TMF dealing with debt board.

Daytona

A very helpful reply, notwithstanding! ;-) Thanks...

JS

"Andy Pandy" wrote

This talk of using spouse's NI record to get a state pension, got me to thinking -

If the spouse (male or female) with the NI record is below State Retirement Age, when the other spouse (with no NI record) reaches state retirement age - does this still count? If so, the "couple" would end up receiving some state pension on the back of someone's NI record *before* they get to state retirement age?

In a word, "No". As long as you have an entitlement of some sort in your own right at retirement age, then you will get that pension, which may be a combination of a partial SRP and SERP or S2P. When the other half reaches their retirement age, then if the SRP in receipt is less than the spouse's SRP, you will get that spouse's SRP plus your SERP/S2P (and any Graduated Pension due) instead. It's what happens already with wives with a partial NIC record.

"Terry Harper" wrote

Oh, OK - so both husband & wife have to be past state retirement age. Fair enough.

In real life I'm a bankruptcy lawyer.

If you are overindebted (not obvious from what you said), you are ESPECIALLY advised to pay everything you can into NICs (or, as I wrote, to get 'round the system and get free, or cheap, credit for years by declaring, retroactively if necessary and paying the penalties, earnings of over the NIC threshold (roughly £4000; actually somewhat less and it varies by year but if you skirt the threshold too much they may guess at what you're doing) for the past years.

The reason for voluntarily paying the £356 (you have till April 5 for the

6th year past) is that state pensions are bankruptcy proof.

Under the Landau case

and some others, most private pensions can be seized by creditors through a bankruptcy proceeding. Not state pensions, nor civil service pensions and certain others written in a particular form of trust. State pensions -- at the low-paid level -- are, across the board and in most countries, the best bargain around. (In the USA there is a Windfall Elimination Provision specifically designed to reduce pensions by up to 60% or so when the worker (deliberately or inadvertently) games the system by working in two or more different countries, or under a government pension system not covered by social security. In Canada they accomplish a similar thing by having both a funded Canada (& Quebec) Pension Plan, and a tax-supported Old Age benefit that only is earned if you live in Canada a qualifying number of years (it's also roughly means tested).

The only thing nasty the UK does (besides keeping the pension level relatively low) is to deny emigrants the annual cost of living allowance (except for those in the EEA, Switzerland, the USA and any other countries (not Canada or Australia) that happen to have a totalisation agreement.

So: I've ranted on just to validate my advice. Pay the £356, or get 'round it. But get the annual credits. You need 44 years (I think it is) for a full pension, but missing some doesn't do a lot of damage. If you go abroad, still pay in to the UK system voluntarily. The booklet on that is NI 38 ("Social Security Abroad"), and you can download it:

But you're not at that state now, or yet...

Basic state pension isn't money down the drain. It's the other savings and private pensions that are. Basic state pension becomes an entitlement once you qualify. I can conceive of no set of circumstances in which anyone should refrain from making voluntary contributions (other than getting free, or almost free, contributions via the dole or a private limited company with a salary just over the minimum threshold (and under the tax allowance level), etc.

Indeed, one should contrive to qualify for such state pensions in as many countries as possible.

Try reading the bit of my post which you snipped. I have outlined two such circumstances in which making voluntary contributions would be money down the drain.

If you have no savings or private/occupational pension when you retire, then you will get the basic state pension made up to 105 a week by the PGC (for a single pensioner). This is true whether you are entitled to the full basic state pension, half of it, or none of it.

So under current rules, a person who expects to have no other income or savings in retirement would be pouring money down the drain by making voluntary contributions. Similarly if your voluntary contributions don't get you a state pension of more than you'd get on your spouse's record.

Never down the drain. There is a difference between a vested right, an entitlement valid across national boundaries and endorsed by totalisation agreements and EU/EEA law, and a welfare payment.

I have read what you said. Your premises are no basis for mapping one's financial plans through 44 years in the future. Plus, I would never advise a client to count on welfare.

That said, you have the right to your views. As a bankruptcy and tax specialist I am accustomed to meeting victims of unfortunate advice.

So tell me, what exactly is this "vested right"? Can the government not change the rules? Could they not (as they have been doing over the last few years), reduce the value of the basic state pension relative to earnings but increase the MIG (ie "welfare" as you put it) in line with earnings?

They seem to moving more towards means testing. What would stop them freezing the level of the basic state pension so that inflation makes it worthless when you retire?

OK, I take the point about the state pension being valid across international borders. However I don't imagine that too many people who have no savings and the basic state pension as their *only* income (which are the people I'm talking about) are going to retire abroad.

I doubt the OP was a 21 year old somehow. A 21 year old can't possibly know whether or not he'd have savings/other pensions when he retires so what I wrote wouldn't apply anyway.

Even if he was, can you predict the level of the BSP in 44 years any more accurately than I can predict the level of means tested benefits?

Well they are going to have to if the BSP is their only income.

I see the current means testing regime as just as reliable as the current state pension rules. Means testing is becoming more generous, the BSP is becoming less generous. Of course this may reverse, but there are no guarantees one way or the other.

They are not "views", they are facts about how the system today works. OK, I haven't got a crystal ball which tells me what changes will be made in the future, but I doubt you do either.

Advice which ignores the existence means tested benefits is most definitely "unfortunate". Many financial advisors are worried about giving clients "bad" advice, such as paying into a pension scheme when this will reduce the client's entitlement to means tested benefits.

I'm not going to address everything you said because your posting stinks of hostility and confrontation. Which perhaps you didn't intend. Since I am licensed and you are [perhaps, presumably] not, I don't really need to defend myself or my experience.

A vested right is an "entitlement". It is true that legislation can modify this, but it cannot take it away. And the web of totalisation agreements, and EU law, make it impossible to deprive someone of non-means-tested benefits. Although they could be diminished by a revision of the COLA, etc.

As for retiring abroad: it is not just, or even mainly, the wealthy who hive it off to Spain.

The future is in defined contribution plans. The Bush administration wants to bring that into the US system of social security just as Britain did (with SERPS) years ago -- and which has proven to be a fraud.

All I can say is that one can contrive to get 44 years of state pension (NIC) credits at a cost that is so low -- even virtually free -- and that is immune from seizure by creditors, and heritable by family -- and anyone trained in insolvency or familiar with real-life financial issues (and aware how "means testing" can be redefined to deny benefit when politically expedient) would agree with my advice: sign on to national insurance and pay voluntary contributions if necessary, get 10 years of US social security, join any system that will have you and qualify at least for the minimum benefit.

A client of a colleague was a teacher at the American School in London for

35 years. She retired and moved back to the USA having almost a full UK state pension but few or no US SS credit. Problem: while she gets her UK pension including SERPS and her private pension, she doesn't qualify for Medicare.

You say the poor don't move across frontiers. I find that enough do. There are old ladies in tennis shoes today crossing the Sahara, seemingly on foot, with no visible means of support. My friends who are consular officers tell me about them every time we meet.

As I said, you have the right to your views, and views they are. I see the victims of people with your type of view every day.

When states act unilaterally on matters of international interest, individuals get burned. An example: Canada moved to taxing decedents' estate on the basis of deemed sale and CGT at death. The US and UK continued to tax those same estates on the basis of IHT with no credit for CGT (the UK at least taxed only the net, after-CGT, value). It took ten years for the US to negotiate a treaty protocol so the CGT could be offset against the US IHT and vice versa. The UK still has not addressed the issue, and probably won't.

Your field of vision is just too narrow. Sorry.

This is my last posting on the subject. With all due respect, It's beating a dead horse.

"Biwah" wrote

SERPS) years ago ...

SERPS was/is most definitely *not* a defined contribution plan. It was/is most definitely a defined *benefit* scheme (just as final salary schemes are).

Hint: the "ER" in the middle of "SERPS" stands for "earnings-related" !!

"Biwah" wrote

That's a shame. I'd like to see how on earth you can defend calling SERPS a "defined contribution plan" ...

Not at all. Merely a frank exchange of ideas. However I was somewhat narked by your first reply to me in which you wrote "I can conceive of no set of circumstances in which anyone should refrain from making voluntary contributions" when I had described in some detail two such circumstances. If you thought I was wrong on either point you could have explained why by quoting what I wrote and quoting the issue you had with it.

So perhaps my posting did slightly stink of "hostility and confrontation", but yours seemed to me to stink of arrogance.

I am not licenced to give financial advice, and I am not doing so. I would never advise someone to make a particular financial decision on a newsgroup, or indeed in real life. Nor should a qualified financial advisor unless they have done a full fact find on the client. You don't need to "defend" yourself and nor do I.

I am merely pointing out how the system works, the current rules of the game, so people can understand the possible implications of taking a particular course of action. If I have got any of those rules wrong, please feel free to correct me. That's the beauty of usenet, particularly on a group full of knowlegeable people like this one.

But an attitude of "I am more qualified than you therefore I am right" will just wind people up.

A possible implication of making voluntary contribution *is* a potential reduction in means tested benefits. That is fact, under current rules. Not advice. And it is something people should be aware of.

OK. But do you really think any future government would abolish means tested benefits? If not, then means tested benefits are simply subject to modification, just like the BSP.

Yes and this is a point that needs to be taken account of. But I still doubt many people retire abroad with the BSP as their *only* income and no savings. People with a modest pension/savings are not necessarily anywhere near being "wealthy".

Really? Have you not heard all the news this week about the proposals for a "Citizen's Pension" which would be paid to everyone *regardless* of contributions? The Prime Minister himself is in favour, apparently. Do a Google search for "Citizen's Pension".

You really are an arrogant tosser, aren't you. Bye bye, have a nice life.