State pension qualifying years State pension qualifying years - Page 2
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  1. #11

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    Quote Originally Posted by GhostofTarbera View Post
    Why bother it’s like peanuts you get back


    Sent from my iPhone using Contractor UK Forum
    The state pension of 120 a week is hardly peanuts - Everyone should be buying years if they can or need to

  2. #12

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    Quote Originally Posted by LondonPM1 View Post
    The state pension of 120 a week is hardly peanuts - Everyone should be buying years if they can or need to
    If they need to yes. No, they shouldnt if they can without considering several things.

    If you have been contracted out, buying credits may not improve your State Pension 1 penny. You should discuss with DWP first.

    If you have an occupational pension, you need to be aware if you buy credits which result in both your State Pension and occupational pension putting you over the income tax threshold, you will lose 20 odd percent to tax, straight off the bat.

    Effectively, that might mean if you pay, I dont know, 750 quid for a year's credit, you could potentially only get the value of around 500 quid's worth of that credit after tax added to your State Pension.

    I think at current rates, a year's NIC's adds about £4.50 a week to your State pension before any tax due.

  3. #13

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    Quote Originally Posted by TheDogsNads View Post
    I think at current rates, a year's NIC's adds about £4.50 a week to your State pension before any tax due.
    Definitely worth it because I got this £4.5/week for free because I don t pay for NI.


    And if I can accumulate without having to pay for anything for 35 years, I cumulate to £175/week.

    I wouldn t say no to that. And it definitely worth the effort

  4. #14

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    Or another to put it to light, £175/week is £9450/year.

    So if you live to 77 years you already get £94k, which is not a small amount anymore. And it's adjusted to inflation as well!

    Would be stupid not cumulating because 1 year feels too small.

  5. #15

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    Quote Originally Posted by cwah View Post
    My salary was on 2017-18: £8,160
    The threshold salary to be a qualifying year (Primary theshold) is £680/month or £8,160 (so exactly my salary)
    Just want to pick up on this point as its not correct. As shown in the graphic in your post its not the thresholds primary £9500 or secondary £8788 that make a year qualify - these are trigger points for employer NI (secondary) and employees NI (primary). Its the lower earnings limit you have to look for, this is the level above which a year would qualify. For 20/21 this is £120 per week, so £6240.

    Those who earn between the lower earnings limit and the primary threshold: this group is ‘credited’ with NI contributions towards their NI record but do not have to actually pay employees NICs. Personally I pay upto secondary threshold as that means my company does not pay employers NI either!

  6. #16

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    Quote Originally Posted by cwah View Post
    Or another to put it to light, £175/week is £9450/year.

    So if you live to 77 years you already get £94k, which is not a small amount anymore. And it's adjusted to inflation as well!

    Would be stupid not cumulating because 1 year feels too small.
    You're ignoring the tax element if, as I mentioned, you have a State Pension and an occupational pension.

    For 2020/ 21, it costs just over 15 quid a week, times 52 to buy a year's NI qualifying contributions. Earlier years are a bit less due to the NI rate in force at the time.

    This means you would pay about £780 for the year. However, when you have a State pension and occupational pension and added together, they take you over the income tax threshold, you will lose roughly 25% of the value of the £780 contribution due to income tax when you draw both pensions.

    Bear in mind although the income tax threshold will ultimately rise with inflation, so too will the amount of the State Pension and perhaps, even the occupational pension.

    If you are a younger person who's retirment date is years in the future and you have years missing from your NI record, it is probably best to buy these while you can. If you are close to your retirement date, have an occupational pension and have recent missing NI contribution years, it may not be that beneficial buying those extra years.

    That's what Im saying, you need to look at your circumstances and decide whether it is worthwhile.

  7. #17

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    Quote Originally Posted by TheDogsNads View Post
    You're ignoring the tax element if, as I mentioned, you have a State Pension and an occupational pension.

    For 2020/ 21, it costs just over 15 quid a week, times 52 to buy a year's NI qualifying contributions. Earlier years are a bit less due to the NI rate in force at the time.

    This means you would pay about £780 for the year. However, when you have a State pension and occupational pension and added together, they take you over the income tax threshold, you will lose roughly 25% of the value of the £780 contribution due to income tax when you draw both pensions.

    Bear in mind although the income tax threshold will ultimately rise with inflation, so too will the amount of the State Pension and perhaps, even the occupational pension.

    If you are a younger person who's retirment date is years in the future and you have years missing from your NI record, it is probably best to buy these while you can. If you are close to your retirement date, have an occupational pension and have recent missing NI contribution years, it may not be that beneficial buying those extra years.

    That's what Im saying, you need to look at your circumstances and decide whether it is worthwhile.
    Fair point for occupational pension. I don't have that and only use SIPP, which I can manage the withdrawal rate in order to remain below the taxable rate.

    So could be different with occupational pension but not for the one without

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