I won’t get my state pension for another five years. While extra cash is always useful, we already muddle through fine on our work pensions. My state pension in 2028 will be a nice boost to the funds, followed by Mrs HH’s in 2031. We will max out her state pension on the assumption that I die first, and have worked out that she will be comfortable on her full state pension, work pension and share of my work pension. Should, heaven forbid, she die first, I’ll be perfectly fine on my pensions. So it really makes no sense to spend the best part of £3,000 to boost my state pension by a relatively small weekly amount, which will then be taxed. We’d rather have savings in the bank. We worked all this out in a very cold and clinical way, which really is the only way to do it.
Absolutely spot on. A considerable amount of research exists on voluntary contributions and the picture has remained unchanged since the late 1980s. They are a poor and inefficient way of spending your money and will consistently give you the least return for your money out of all the available options.
Really?
Each individual has to consider their own circumstances, but I don’t get your “consistently give you the least return” claim.
In a simple typical case, £825 gets £275 per year, so a three year payback.
Could you explain further please?
It’s important to remember that it’s taxable, if you are over the the threshold, which most people will be. So the £275 becomes £220 or £165, and the payback period 3.75 or 5 years. Still not bad of course.
Well my wife needs to pay £1,200 to get an extra 5 years pension credits which equates to £1,300 extra pension per year.
So, over 10 years that’s £13,000 for a £1,200 investment. (Guaranteed, with the triple lock inflation protection)
If anybody can suggest a more efficient way of spending £1,200, I’m all ears.
Note.
She won’t be paying tax.
Her parents lived into their mid 90s, so the £13,000 could be nearer £40,000 
Put simply.
1 - DWP have no advisory function. Their “advice” is largely outsourced and often wrong/made up. Take your pick.
2 - Whilst this is relevant for people aged forty five to seventy most people under sixty six will make up any missing contributions at this point through employment or credits.
3 - There is a great Steve Webb (of all people 
) article on this which highlights the horrendous number of people who are paying voluntary contributions because the software shows a shortfall and a need to pay. The software is flawed. There are numerous example of people being shown their pension projection where that projection is actually showing entitlement to the maximum amount. Nevertheless the software goes on to both calculate a shortfall and give a new figure if you pay up. It’s been wrong on both counts.
When do you find this out? Likely when you get your pension and can’t understand why you’re getting lower than the figure quoted for post voluntary contributions and why that figure matches the maximum SRP. So yeah, that ROI looks fantastic and, for some people with a genuine shortfall and no alternative route to make it up, it will be. For most though it’s fantasy stuff. Paying for something to be more when the law says it can’t be but the software says different.
Heard of a case in another service this past week where someone paid a four figure sum to top up several years. Absolutely adamant they were going to be quids in until it was pointed out there couldn’t possibly be a shortfall given that they’d been a carer for a decade and had full credits for every year of caring responsibilities. Good luck to them getting their money back.
To be honest I’ve been in this game for thirty seven years come May and when my staff advise clients on this their expertise is accepted and acted upon. It’s only on a forum of middle class people with more money than sense (else I wouldn’t be here either 
) where people go “no you’re definitely wrong cos the DWP said so.
Historically DWP decision making has never exceeded around sixty six percent accuracy. When the failure to move the dial was noted a long while back now the government solution was not to try and move the dial. It was to remove the dial. The statistic is no longer published. The fact that more of the decision making and calculation is visible online is by no means a recipe for accuracy.
Still, it’s your mean. By all means **** it away.
Am I correct thinking time has virtually run out for the ‘offer’ anyway?
Should I be able to claim contributions for six years at Uni? Worked some summers back then and got letter requesting top up NI contributions but could not afford it as a student.
I watched a useful video today by Martin Lewis. My understanding is:
You can currently go back to 2006 to complete missed or part years.
The deadline for 2006 to 2016 years was 5 April, but has since been extended a few months (July I think).
After that you can only go back 6 years.
Like you, my part contributions for university years have long expired. I knew that back then but the £40 or whatever needed was a big deal for me as a student!
Good points.
Inflation protection can be extremely valuable. Whilst there may be some uncertainty over whether the triple lock will remain long term, it is currently better than most other pensions where inflation is often capped at 5% or less.
Many people, including industry “experts”, underestimate longevity. Your mid 90s example is about spot on (my rule of thumb is 90 on average and to plan for 100 if relying on funds such as drawdown).
The amount my wife needs to pay make up the ni contribution shortfall doesn’t make sense.
2013/14
No contributions. £142.65 to pay.
2010/11
£13.75 contributions. 713.25 to pay.
Trying not to laugh.
Do you know how to calculate the amount of voluntary contributions a person has to pay.
Anything different about those years such as claiming child benefit?
Just guessing but maybe self employed versus employed? It’s not my area of expertise but I think Class 2 contribution rates are much lower than Class 3.
I share much of Mike’s cynicism about complexity and lack of clarity, but I think it is a valuable benefit for many.
She stopped claiming CB before those dates.
She’s only worked part time for the last 30 years.
Usually 12 hours a week, so earnings hovering close to the NI payment threshold.
The shortfall of £142.65 indicates she didn’t pay NI for 9 weeks that year. (15.85 per week). So she obviously did pay contributions.
The £713.25 shortfall indicates she didn’t pay NI for 45 weeks that year.
I can’t prove or disprove the above, we haven’t kept her payslips, but the figures sound plausible.
But crucially, if the figures are correct, she will only need to pay £1200 to get a full pension.
Also remember that the payback is risked, if you die you get nothing….
Normally true but being an oldie I took up the DWP Top Up pension option. My wife gets 50% when I die. As she is 12 1/2 years younger it is a very good deal.
A bit of googling bought up this.
If you earn between the Lower Earning Limit and the Primary Threshold you will get National Insurance ‘credits’ – that is you will be entitled to some basic National Insurance benefits, but won’t actually pay any National Insurance. The LEL is £123 per week for 2022/23. The Primary Threshold for 2022/23 is £190 per week
So, any shortfall is due to not reaching the LEL for a particular week, any NI contributions are due to exceeding Primary Threshold.
It does make sense when you know what’s going on. 
Apologies. Would have posted exactly that as it’s very basic welfare right stuff bout was consumed by work followed by a very enjoyable leaving do for a colleague.
Once you ally the above to the info. on credits you can weigh up for yourself whether there might be a shortfall. As I posted earlier in about seventy percent of apllicattins there is not.