State Pension & Income Tax

[Tashyboy]

Because I think that anyone approaching Pension age will be interested in this thread, I’ll add that in rough terms, if you are short of the 35 years of NI contributions, each year that you are able to purchase will take three years of pension payments to return the cost of the purchase. If you live beyond the three year point, you are ‘quids in’.

I was going to post something similar earlier but I ended up watching Bradley Tash play football. ( Won 12-0). I think the point you raise is very Important and should not be poo pooed. At the end of the day you are investing in yourself. In this day and age though I hear folk saying paying into a pension is a waste of time. At the end of the day its down to the individual. For me it’s worth doing.

 

[Doon frae Troon]

If it is still an option, buying extra years if you do not have a full pension is a great option for those about to retire.

 

[NearHull]

If it is still an option, buying extra years if you do not have a full pension is a great option for those about to retire.

If you are retired and receive less than full pension due to not having the 35 qualifying years, you can still buy extra years to increase the State payment.

 

[backwoodsman]

If you are retired and receive less than full pension due to not having the 35 qualifying years, you can still buy extra years to increase the State payment.

As i had worked more than 35 years, I thought I was due the full state pension - until I checked. Found out I was still 4 years short so wouldn't get the full pension. Seems I needed to pay NI for those 4 years between stopping work (ie retiring) and when I would reach state pension age. But I had the option of 'buying' those years. A few quick sums showed, as others have said, that if I draw my pension for more than three years, I'll get back more than I paid for those 4 years. So earlier this year I paid it.

Simple moral is: check the government's 'pension calculator' to see how much you're due to get. It might not be what you think.

 

[Tashyboy]

Last weeks Martin Lewis is must watch re pensions, catch up on ITV xtra. IF you are short Of years you can buy extra years which has been extended to April 2025.

 

[cliveb]

Late to this thread as I've been on holiday.

The reason 35 years may not give a full pension is if you were contracted out. If you were, then you paid less NI during those years, therefore you need more than 35 years. I was contracted out for a long time and ended up needing way more than 40 years to get a full pension.

One other thing that may be of interest. If you have more than one additional income source (eg. two private pensions), then HMRC seem to use a really strange way of calculating how to split any remaining allowance between them. I couldn't fathom it and ended up calling them to ask for it all to be assigned to one of the private pensions and give the other one a zero tax code.

 

[jim8flog]

Late to this thread as I've been on holiday.

The reason 35 years may not give a full pension is if you were contracted out. If you were, then you paid less NI during those years, therefore you need more than 35 years. I was contracted out for a long time and ended up needing way more than 40 years to get a full pension.

One other thing that may be of interest. If you have more than one additional income source (eg. two private pensions), then HMRC seem to use a really strange way of calculating how to split any remaining allowance between them. I couldn't fathom it and ended up calling them to ask for it all to be assigned to one of the private pensions and give the other one a zero tax code.

I used to have to phone the IR every year to get mine changed for the same thing.

In the end I just gave up and left it as it was.

 

[Tashyboy]

Late to this thread as I've been on holiday.

The reason 35 years may not give a full pension is if you were contracted out. If you were, then you paid less NI during those years, therefore you need more than 35 years. I was contracted out for a long time and ended up needing way more than 40 years to get a full pension.

One other thing that may be of interest. If you have more than one additional income source (eg. two private pensions), then HMRC seem to use a really strange way of calculating how to split any remaining allowance between them. I couldn't fathom it and ended up calling them to ask for it all to be assigned to one of the private pensions and give the other one a zero tax code.

I have 5 pensions of which most are in the pension protection fund. It was a bloody royal Pain in the ass sorting them out. Bits and bobs all over the place.

 

[backwoodsman]

Late to this thread as I've been on holiday.

The reason 35 years may not give a full pension is if you were contracted out. If you were, then you paid less NI during those years, therefore you need more than 35 years. I was contracted out for a long time and ended up needing way more than 40 years to get a full pension.

One other thing that may be of interest. If you have more than one additional income source (eg. two private pensions), then HMRC seem to use a really strange way of calculating how to split any remaining allowance between them. I couldn't fathom it and ended up calling them to ask for it all to be assigned to one of the private pensions and give the other one a zero tax code.

This indeed is the reason I wasn't due the full pension. But wasn't aware of the fact, so it was fortunate I checked, else I wouldn't have realised until too late. Always check!