Increasing Pension Contributions

[Bonefish Blues]

I am quite astonished at how much people can put in, and how much their employer contributes too.
If I put in 7.5% of my salary, the company will match it. If I put in 10% the company will only put in 5%. I double checked this with payroll and they confirmed it so I have a separate pension pot and put into that instead.
very late to this pension thing as i didn’t start a pension pot when younger as I was very low waged and needed to do frivolous things like pay the rent and eat. Being a carer for 14 years didn’t help much either.

I will have a chat to my tame accountant, who is all over these things, and see what he advises.

Eh? Who designed that scheme, it's daft - unless there's a hidden reason I don't understand.

 

[PaulSB]

I think the above applies to the old state pension. The new state pension requires 35 years of NI contributions for a full pension with no benefit from additional years. And no state pension unless you have paid in for at least years.

You may be right but I'm unsure. I'm 67 and on the new state pension - first payment at 65 years 10 months. My wife will get the new pension at 66 next September. We both have 40+ years contributions.

 

[Lozz360]

The amount required will vary according to the individual circumstances. The term "fully paid up" can lead to misunderstanding. It's my understanding if one retires before state pension age the intervening years are not "paid up." An individual retiring at 60 with a state pension age of 67 can show all contributions are fully paid for the years he/she worked however for the years between 60 and 67 no contributions are paid.

So does this individual end up with a reduced pension if he or she pays no NI from age 60 to 67? Reason for asking is that I retired earlier this year at 61. My state pension is paid from age 66. I have 44 years of NI contributions. The pension forecast says that I cannot increase this pension value they are forecasting. However, is that statement assuming I will continue making NI contributions until I reach SP age? I wasn’t intending to pay anymore NI as I’m no longer working and understood I was fully paid up.

 

[SpokeyDokey]

So does this individual end up with a reduced pension if he or she pays no NI from age 60 to 67? Reason for asking is that I retired earlier this year at 61. My state pension is paid from age 66. I have 44 years of NI contributions. The pension forecast says that I cannot increase this pension value they are forecasting. However, is that statement assuming I will continue making NI contributions until I reach SP age? I wasn’t intending to pay anymore NI as I’m no longer working and understood I was fully paid up.

No, you do not need to pay any more NI to receive your forecast pension.

Only if you decide to take another job will you have to pay it by default subject to usual NI earnings level rules.

Not paid NI for yonks here and I am forecast for full NSP + some for SSP/S2P - some for contracted out = £10551 pa.

 

[bikingdad90]

Correct…..but as im currently paying 5% and im increasing it to 7%……will i pay the taxman less in tax and NI…….simple answer is YES

therefore by putting more money in my pension pot, less will go to the taxman, therefore offsetting some of the additional rise in NI……

so if you read my OP, i said i was looking to increase my pension contributions, to save more on NI to help reduce the amount of the NI rise….

I think what wasn’t explained very well is that a scheme like C2W saves you tax but a similar scheme such as a pension defers that tax until a later date when you draw down from the pension pot but with careful planning and utilising the available cash free allowances you can keep it free of income tax entirely and enjoy the sacrificed salary as part of your pension where as with C2W you get to enjoy the bike as that is the enduring benefit.

 

[PaulSB]

So does this individual end up with a reduced pension if he or she pays no NI from age 60 to 67? Reason for asking is that I retired earlier this year at 61. My state pension is paid from age 66. I have 44 years of NI contributions. The pension forecast says that I cannot increase this pension value they are forecasting. However, is that statement assuming I will continue making NI contributions until I reach SP age? I wasn’t intending to pay anymore NI as I’m no longer working and understood I was fully paid up.

Yes, if my wife does not purchase additional years her NSP will be £25 lower than the full NSP. She can make additional contributions which will take her up to full NSP. She can make as many or as few contributions as she wishes. The NSP she receives will depend on how many she makes. As I said for her it's a no brainer and represents a 41% return for life after repaying capital. This assumes she lives for 29 months!!

The only way to answer the second part of your question is to run an NSP check on the website you linked to earlier. You'll get a forecast and if you can increase the forecast you will be able to see by how much. You don't pay more for what the forecast shows but do if it shows you can increase that forecast.

If your forecast is £179.40 or higher I don't think you'll be able to increase. Higher would mean you must paid extra contributions at some point - can't recall what they were called.