National Insurance arrears.

The gov't is not doing much to advertise the implications of the changes to the State Pension.

My wife recently sent off for a Pension Forecast. She was not expecting much of a pension because she has spent more time raising a family than going out to work. It turns out, however, that she has ten years of qualifying contributions, backed up by ten years of 'Home Responsibility Protection'. Because the number of qualifying years have been reduced to 30, this means she will get 20/30's of the full basic pension (as things stand at the present).

She also, however, has the opportunity to make voluntary contributions for nine years in the past when she either paid no contributions, or insufficient for a qualifying 'year'. We can buy back those 9 years for £3,200 which would give her 29/30's of the full basic pension - and which would be recovered in less than three years of pension payments. A no-brainer really and we will be doing so.

Although we don't have to repay all those nine years of arrears in one lump sum, we learn from yesterdays Financial Mail, that if we don't pay these arrears by next April, the annual charge for a year's arrears will be going up from £420 to £630 - a 50% increase! There was nothing to that effect in the bumph that came with the pension forecast! I think that far more should be done to let people know about these changes which can have a dramatic effect upon their financial situation in retirement.

Ret.

Reply to
Ret.
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Hi,

Is it actually worth bothering to pay additional NI contributions at whatever price? I thought "overlapping benefit" rules operated to wipe out a wife's pension if the amount she could draw on the husbands contributions exceeded that available on the strength of her own contributions. Have the rules changed?

Roy

Reply to
Roy Norris

But IIRC the maximum a wife can get based on her husband's contributions is 60% or so (or might be 2/3rd's - google NP46). If she can get more than that by buying extra years then it'll be worth it.

Reply to
Andy Pandy

Yes the rules have changed - quite significantly. For women retiring after April 2010, they now only require 30 qualifying years of NI contributions to qualify for a full pension - previously it was 39 years. Also those women will have included any years that they were not working but claiming child benefit (known as Home Responsibility Protection). Under the old rules my wife would only have had 10 qualifying years - and would have had to 'buy back' 29 years to obtain a full pension (which in practice would not have been possible under the old rules). Under the new rules she now has 20 qualifying years and only has to buy back 10 years to qualify for a full basic pension. It will cost us around £3,600 to buy back those ten years - but so long as she lives for three years beyond retirement age that will be fully paid back.

Ret.

Reply to
Ret.

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