how much it would cost to top-up her state pension?

What do you mean "didn't pay a full stamp"? Reduced married women's NI (think this only applies if she started paying the reduced rate in the 1970's)? Or she wasn't earning enough (less than about 90 a week in today's terms)?

It's about 400 a year. But there's a limit on how far back you can pay.

If she retires after April 2010 she only needs 30 years of contributions for a full pension anyway. Get a state pension forecast:

Andy... I have a question for you.... if I have 44 years qualifying service under the state scheme (and since 2007? only now need 30), does the "surplus" service count to get additional pension entitlement please?

thanks...sorry to original poster...(since I have noticed you are knowledgeable of such things from your past replies to posters)

Nope. Not the basic state pension anyway. As before you get more second state pension (S2P, was SERPS) for more years, but you can't "buy" credits for the S2P.

As with a lot of other changes this govt have made, the "contributory" element of NI has been eroded or even inverted. My wife pays about a tenth of the NI I do, but her contributions get her more pension than mine do!

Can you explain how that works? It's easy to see how your NI can be ten times hers: She might earn £2k more than the threshold and you might earn £20k more than the threshold, for example. But surely irrespective of the level of your respective annual contributions (provided they're enough to make a year count), is not each year getting each of you 1/30 of the BSP entitlement?

Or do you fall under the 44ths regime and she under the 30ths?

Or do you already have all the 30 years you need, and so your continuing contributions buy you nothing?

As far as the BSP goes, yes. But she gets more S2P than me.

We are both in contracted-out final salary schemes. The rules for S2P (since

2002) AIUI are that:

1) If you earn above the LEL (4685) but less than 13,500 you get treated as if you earn 13,500

2) You get a 40% accural rate (divided by no of years in working life) for earnings between LEL and 13,500, then 10% up to 31,100 and then 20% up to the UAP (40400, which is now fixed).

3) Contracting out reduces your S2P accrual by the 20% rate.

So anyone contracted out who earns above 31100 get no S2P at all. But anyone earning below that will still get some S2P even if contracted out. And anyone earning below 13500 will get a considerable amount of S2P, a 20% accrual between LEL and what the actually earn and then 40% between what they earn and

13,500.

Our latest state pension forecast shows me getting about 95, and her getting about 130.

Very interesting. I had always assumed that contracting out meant no S2P entitlement at all, which is why I've never even bothered to look into it. To what exactly does this 2002 rule change apply?

1) To all pensions payable after 2002, 2) To pensions first becoming payable after 2002, or 3) Only to earnings entitlement accruing since 2002?

Knowing my luck, it'll be (3). I left my final salary scheme employment in 2001, becoming a deferred pensioner, and I won't become eligible to draw my pension for at least another 6-11 years. Since then I've only paid C2NI (SE earnings below C4NI threshold). I presume this means I won't qualify for any S2P.

Nope. In fact even in the old SERPS (pre 1997), contracting out doesn't mean you get no additional pension. You get the additional pension but subject to a contracted out deduction, which is usually about the same, but could be less than or even greater than the additional pension you've accrued! They've stopped itemising the COD on the pension forecasts for some reason, you just get the net amount.

It gets complicated if you have a deferred pension from a contracted out scheme - my wife does, and the company scheme has to increase part of the pension (the GMP - guaranteed minimum pension) by something like 6% every year, and the COD is based on this so the COD increases faster than the SERPS entitlement does for the relevant years!

Correct.

Not sure about SE earnings. NP46 should tell you:

My wife has recently topped up eight years of voluntary class 3 contributions. Prior to the pension changes she only had ten qualifying years (she is not currently working) and would have had to repay 28 years to get a full pension - just not on!

With the changes she has gained an additional ten qualifying years due to Home Responsibilities Protection, and now only requires 30 qualifying years for a full pension. This meant that we only had to repay ten years for her to get a full state pension.

We have so far repaid 8 years (at a cost of around £2800) and will repay the final two years prior to April 2010.

Just a point - get a pension forecast quick because after this April the amount you will have to pay to buy back years will increase substantially.

Ret.

--SNIP--

As far as I know if you buy back a year that is more than 2 years ago you pay this years rate instead of the other years rate.

Is this changing?

(I looked at buying the years -also for my wife - and allowing for increases in payment in line with inflation and loss of interest at 5% - it was last year - I felt it was not worth paying until the last minute especially as the Gov. can change the rules. I have already 'voluntarily' overpaid by 5 years due to the rule changes)

--

Mark BR

You are right - but next year the NI voluntary class 3 contributions are increasing substantially - so if you want to pay back years that are over 2 years 'old', then you should do it before April. Until April you can pay back up to ten years at the old rates.

Yes - it's a confusing picture isn't it!

Ret.