Pension planning

[Re-sign Carl Dale]

just checked my state pension, looks like i have 18 more years to pay 12 more years NIC payments , then i am entitled to £175 a week which i believe is the current max state pension

Ive been SE'ed for close to 30 years, so just pay what the HMRC tell me to at the end of the year, these are the NIC i need to pay to continue with building my years up ( as above ) ? ? ?

If you're self employed then yes, you will be paying Class 2 (and maybe Class 4) national insurance, so every year will be counting towards the magical 35 that you need. Going backwards can be done, but only if you have missing years in the last few - which it sounds like you don't. As long as you keep paying NI for 12 more years you should be fine!

[Michael Morris]

I've had an interesting morning on the phone to my pension providers. I had no idea that the letters I get each year with all these projected figures and plans actually have real value. Given me loads to think about and helped me to start to understand what I have and what I can do with it.

Thanks again for all the contributions.

[IanD]

I think they allow you to go back as far as 6 years to repay missed years. I was procrastinating a few years back, at a time when it was 300GBP for me to make up missing years - now it is 795GBP a year!
As you probably know, you need a total of 35 years for a full state pension.

A few years back?! Last century, maybe. Pay as soon as you can.

[blue matt]

I think they allow you to go back as far as 6 years to repay missed years. I was procrastinating a few years back, at a time when it was 300GBP for me to make up missing years - now it is 795GBP a year!
As you probably know, you need a total of 35 years for a full state pension.

thanks
yes 2017 says " we are looking into if you paid enough " i did, as i paid what they told me to at the end of the tax year, but i dont know if that year will change

i didnt know it was 35 years, I always presumed i wouldnt get to pension age, so it never really worried me, when i got to a age where you start to think about it ( think it was my 40th ), i looked into a private pension and the amount per month it would cost was stupidly high ( i would prefer to spend it on holidays and take my chance with the poor state pension )

If you're self employed then yes, you will be paying Class 2 (and maybe Class 4) national insurance, so every year will be counting towards the magical 35 that you need. Going backwards can be done, but only if you have missing years in the last few - which it sounds like you don't. As long as you keep paying NI for 12 more years you should be fine!

thanks

a few missing years when i started work, i spent a few months in Ibiza one year and of course that year is missing, the only recent year is 2017, which i know i paid as i pay it as my tax return, yes from memory its class 4 NIC's

[Gofer Blue]

Great that you got the opportunity for advice via work. I run retirement courses for staff at a few Universities and they are always really well received. It’s the sign of a caring employer.

Income Drawdown is the route where probably 90% of my clients go down - suitable if they have the capacity to tolerate investment fluctuations, both financially and emotionally!

The last 10 or so years for investments have been generally really good ... the next couple of years could be more interesting, although the trajectory is always up if you can leave it long enough.

A key approach is to have a strategy of not being forced to sell during a period temporary decline - I always recommend that a cash / very cautious buffer within a pension fund is held. This is exclusively there to pay income and cover charges for a couple of years. This means that you don’t need to worry about the short term fluctuations we’ve seen over the last few months as the only part that is exposed to these, won’t be needing to be touched for a while.

Currently I have a cash buffer equivalent to about 8 months more pension payments. My IFA advised increasing the amount of cash just prior to Brexit in January in case things got a bit hairy, which worked out well as this has seen me through the immediate aftermath of the COVID outbreak as well. Hopefully in eight months time we will be in post-COVID mode and the market jitters will have eased a bit. The tricky bit is to determine which stocks will recover quickest so we could sell the laggards and get some of the former whilst they are cheap!

[Hot Shot Hamish.]

thanks
yes 2017 says " we are looking into if you paid enough " i did, as i paid what they told me to at the end of the tax year, but i dont know if that year will change

i didnt know it was 35 years, I always presumed i wouldnt get to pension age, so it never really worried me, when i got to a age where you start to think about it ( think it was my 40th ), i looked into a private pension and the amount per month it would cost was stupidly high ( i would prefer to spend it on holidays and take my chance with the poor state pension )




thanks

a few missing years when i started work, i spent a few months in Ibiza one year and of course that year is missing, the only recent year is 2017, which i know i paid as i pay it as my tax return, yes from memory its class 4 NIC's

Make sure that you have paid the class 2 nic, as class 4 doesn't count towards contributions paid. I know of quite a few people who were happily paying class 4 through their tax return thinking that was going to count when in actual fact it doesn't. Hmrc changed their system about 3 years ago and started collecting the class 2 contributions through self assessment. Prior to that however class 2 contributions had to be paid monthly or quarterly to Hmrc Nic department and was not part of your annual self assessment bill.

[IanD]

thanks
yes 2017 says " we are looking into if you paid enough " i did, as i paid what they told me to at the end of the tax year, but i dont know if that year will change

i didnt know it was 35 years, I always presumed i wouldnt get to pension age, so it never really worried me, when i got to a age where you start to think about it ( think it was my 40th ), i looked into a private pension and the amount per month it would cost was stupidly high ( i would prefer to spend it on holidays and take my chance with the poor state pension )




thanks

a few missing years when i started work, i spent a few months in Ibiza one year and of course that year is missing, the only recent year is 2017, which i know i paid as i pay it as my tax return, yes from memory its class 4 NIC's

If you worked in an EU country and have pay slips to prove it, you may be able to claim that year through HMRC. Depends on how many months you worked in Ibiza and whether you returned to UK and worked/paid NI contributions for the rest of that year. For a fiver (or so) a week extra, Index Linked, for the rest of your pensionable life it may be worth persuing with HMRC. My sister worked in Spain for a year in the 70s and she managed to get that year credited to her pension.

[life on mars]

Great that you got the opportunity for advice via work. I run retirement courses for staff at a few Universities and they are always really well received. It’s the sign of a caring employer.

Income Drawdown is the route where probably 90% of my clients go down - suitable if they have the capacity to tolerate investment fluctuations, both financially and emotionally!

The last 10 or so years for investments have been generally really good ... the next couple of years could be more interesting, although the trajectory is always up if you can leave it long enough.

A key approach is to have a strategy of not being forced to sell during a period temporary decline - I always recommend that a cash / very cautious buffer within a pension fund is held. This is exclusively there to pay income and cover charges for a couple of years. This means that you don’t need to worry about the short term fluctuations we’ve seen over the last few months as the only part that is exposed to these, won’t be needing to be touched for a while.

This is great advise ( A key approach is to have a strategy of not being forced to sell during a period temporary decline) as we do become a bit panicky on times of crises , I know it off topic but I didn't sell my endowment mortgage plan when others were advising to do so , I kept it as it also had lie assurance attached to it , and simply increased my repayments contributions year on year to make up for shortfall , its been tough and tempting to sell buy hey it has paid off after 20 years ,yes slightly reduced but still performed better than a lot of saving plans .

There is an argument that you may make something in 5 to 10 years as markets recover , if your careful or picking the right pension

[IanD]

This is great advise ( A key approach is to have a strategy of not being forced to sell during a period temporary decline) as we do become a bit panicky on times of crises , I know it off topic but I didn't sell my endowment mortgage plan when others were advising to do so , I kept it as it also had lie assurance attached to it , and simply increased my repayments contributions year on year to make up for shortfall , its been tough and tempting to sell buy hey it has paid off after 20 years ,yes slightly reduced but still performed better than a lot of saving plans .

There is an argument that you may make something in 5 to 10 years as markets recover , if your careful or picking the right pension

Not that off topic....pension planning is part of overall financial planning for the future. Paying off a mortgage (which is what I presume the endowment was for) should free up some income to pay for NICs if needed, ISAs, private pension?, STs. Even changing all the lightbulbs to LEDs will shave a few £ a month off utility bills. Changing to a condensing boiler does the same. Look after the pennies etc