Buying more National Insurance stamps

So, for the assembled accounting and pensions folk around here.

You can buy more NI stamps to get your contribution record up a number of years so as to increase the amount of the Old Age Pension.

OK.

So, can you do this after your retirement date? After the OAP date, that is? So, at age 68 – when your age cohort gains access to the OAP at 67 – go back and buy another decade’s worth (I think you can only buy a decade’s worth these days) of contributions? Or does it all have to be done before the pension kick in date?

23 thoughts on “Buying more National Insurance stamps”

  1. I bought some years recently, I don’t remember it saying on the HMRC website about a limit.
    The helpline was very good and actually helped.

    ps Not much point buying more than 35 years and none more than 40

  2. Class 3 voluntary contributions can be paid up to the end of the sixth tax year following the tax year you’re paying for. So as we’re currently in 2022-23, you can go back to 2015-16 if you pay before 5th April 2023.

    You pay at the rate in force at the time for the two most recent past years but at a higher rate for years earlier than that.

    You CAN pay Class 3 to fill in past years once you’ve reached state pension age.

    But the position for those living/working abroad is complicated so if it’s you you’re asking about, I’d check with HMRC.

    If you have a Government gateway ID, you can check your contributions record. I’ve already got 35 years so anything more I paid wouldn’t add to my pension. But then most of what I get is by way of dividend so I don’t pay NI anyway. IN YOUR FACE Government thieves.

  3. Topping up you contributions in the year(s) before you retire is one of the best investments around. Not only do you break even a little more than three years after you retire, the return is pretty much inflation proof.

  4. I don’t think you can do it after you have begun to draw your pension – though possibly this restriction applies only to wage-slaves, self-employed may get a better deal, ymmv. What I am sure about is that it’s much more complicated than it appears, contribution years are not all equivalent and what looks from the website as if it might complete your record, might not actually because reasons – “Oh no *that* year doesn’t count” etc etc. it’s very opaque.

    Call them, if can get through to an actual person they are surprisingly helpful. They even volunteered to me an additional payment based on grandchild care, which I didn’t know about and have never seen publicised anywhere.

  5. @Peter. Yes, I believe once you start claiming your pension you can’t contribute more. Your pension however does not start automatically at retirement age: you have to ask for it to start and you have the option to defer it for a larger pension later.

  6. Also, it’s not worth it if you know your total income is going to be less than the full pension, as you’ll get pension credits to top up to the full amount (if you live in the UK). If you know your income+state pension will go over the full amount, any extra NI payments increases the pension income on top of whatever other income you have.

    Essentially, it harnesses human greed to incentivie well-off people to pay more, and poor people to pay less.

    Also also, your pension entitlement is in whole number of years, so got eg three weeks in one year that counts as zero. So it’s best to prioritise years where you’re just short of a full year. 50 weeks gets you zero, top it up to the full 52 weeks and you get the full 1/35th.

    Also also also, you only get a pension if you have over ten years contributions. If you have less than ten, it may not be worth buying any extra. As you get closer to ten it gets more worthwhile. Going from 9 years to 10 years goes from 0 pension to 10/35 pension.

    Administratively, you need a reference code to pay the top-ups which you can’t get online (at least I’ve failed to find any way). Once you’ve got the reference number you can pay online. I’m waiting for my code to top up about 12 missing weeks from a couple of years ago.

    Of course, all this assumes they don’t change the rules.

  7. Peter: Another one, I found out last week that full-time university study also counts, so I snaffled an extra three years.

  8. The stuff about “35 years” maximising your pension applies strictly only to people whose NIC contributions have all been to the post April 2016 new-style State Retirement Pension. If you have NICs to both schemes it gets complicated which is one reason why you are being told “it’s much more complicated than it appears”. Frinstance, for me my last three years at Secondary School counted but not my university years.

    However the gist is indeed that it tends to be an absurdly good investment for the prospective pensioner and a wild extravagance for the taxpayer.
    https://www.lemonfool.co.uk/viewtopic.php?p=402147#p402147
    https://www.lemonfool.co.uk/viewtopic.php?f=77&t=16423
    https://www.gov.uk/international-pension-centre
    https://www.gov.uk/national-insurance-if-you-go-abroad
    https://www.thisismoney.co.uk/money/pensions/article-10927867/How-state-pension-Steve-Webb-launches-site-help.html

  9. Bloke in North Dorset

    Your pension however does not start automatically at retirement age: you have to ask for it to start and you have the option to defer it for a larger pension later.

    I can confirm that. I got notified about 2 months ago that I qualified for the pension last Saturday. First payment received today.

    It makes me feel very old.

  10. BiND

    Don’t worry, I officially became a pensioner (inasmuch as I was receiving a pension) when I turned 55 and started drawing my civil service pension. That was 5 years ago. I only did it for the 3 x lump sum. And they repaid all my ‘widows’ contributions back as I was divorced by the time I drew the pension.

  11. @jgh
    I found out last week that full-time university study also count
    Would you care to share chapter and verse, please?

  12. Why would you think that a free marketeer would insist everything is mediated by money? A free marketeer is one who believes in free markets, right? On whatever terms the people in the market are willing to exchange?

  13. Bloke in North Dorset

    Andrew C,

    I started drawing down my pension at ’60 but getting the State pension just seems like a bigger deal when considering your age..

  14. Due to SWMBO’d not having enough pension contributions, having taken time out to look after the kids, we paid a bit over £3K to bring her up to a full pension. I worked in the merchant navy for a good number of years for a Japanese company, with my office in Rotterdam. I was paid in US dollars from an account in Guernsey. I didn’t need to pay tax or NI for 5 years, I spent all of my time outside of the UK. Having said that I find that I will qualify for a full pension as I have over 35 years of contributions.

  15. By the by, Mr Tim, do check whether as a foreign resident you can get what you want by using Type 2 contributions rather than Type 3 i.e at £3.15 per week rather than £15.85 per week.

  16. Seen in a blog comment thread: “BTW, HMG Autumn Statement paperwork confirms class II/III voluntary NI contribution rates will also increase by 10.1%.”

  17. @atgnat
    Thanks — don’t think that helps me 🙁

    Given you get credits for being on the dole it does seem odd that you don’t get them for being in full-time higher education given that can significant increase the amount that you pay in later (to no additional benefit). The £261 in NICs I paid in 2000-01 counts just the same as the £5463 I paid last year.

  18. “When plunder becomes a way of life for a group of men in a society, over the course of time they create for themselves a legal system that authorizes it and a moral code that glorifies it.” ~ Frédéric Bastiat

    NI is a good investment because and only because the investor legally plunders. Otherwise the normal caveats would apply, frog zample Timmy Elsewhere wrote this for out edification. https://www.adamsmith.org/blog/dont-let-the-state-do-our-investing-for-us

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