Retirement, how much?

yello

Legendary Member
Location
France
I asked a financial advisor about this - is it worth paying to complete and get a full state pension. She said it wasn't worth doing. I'd double check your thinking. I can't remember her explanation sadly.
I'd be intrigued to know why she said it wasn't worth doing, if you can remember, and the circumstances she was referring to. Because that certainly runs contrary to what I've been told, and indeed done. I've bought gap years and brought up my state pension to full qualifying years. For what it cost me in comparison to what I'd get, it really was a 'no brainer' (unless of course I pop my clogs before state pension age)

The only thing I can think of is, as in my case, whilst you have the required years it doesn't give the full amount - due to the way it's all calculated (a magic black box formula that takes into account additional contributions, contracted out, etc)

In my case, I'll get around £1 a month less than the full amount and I cannot get any more than that. Buying any further gap years (and I could, they are there) above my 35 would be pointless, or a waste of money if you like, as I already have the maximum pension I can get.
 
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ColinJ

Puzzle game procrastinator!
I remember discussing NI top-ups with my sister a few years ago when I thought I might be a couple of years short. She told me not to bother because not only would pension credit top up a lot of the difference, but that would also be a gateway to other benefits.

As it turned out, I had actually got enough years of contributions anyway.
 

david k

Hi
Location
North West
I'm two years from paying full NI contributions for my state pension, but I'll still be 17 years away from receiving it. I started full time work at 15.

In two years time will my NI contributions reduce or remain the same but just not go to my pot?
 

DCLane

Found in the Yorkshire hills ...
@david k - you still keep paying. Your current payments go towards those who get state pensions currently, and any payments beyond your 35 years cover any shortfalls for others.

So you, like me, will soon be entitled to full state pensions but keep paying until you receive it in 17 years' time. And in my case that's at 13.8% for everything I earn :blink: on top of my tax rate.

And hope that any retired CC members you meet return the thanks for you paying their pensions with cake :okay:
 
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PaulSB

Legendary Member
I'm two years from paying full NI contributions for my state pension, but I'll still be 17 years away from receiving it. I started full time work at 15.

In two years time will my NI contributions reduce or remain the same but just not go to my pot?
Two points here; as far as I'm aware there is no method of reducing NI contributions for us ordinary mortals on PAYE etc. There may for those with greater resources able to take advantage of loopholes etc.

The second point is NI payments do not go to a "pot." This may just be your phrasing but if not be aware the state pension doesn't create a pension pot. NI payments give future entitlement to the state pension and current entitlement to job seekers allowance, ESA, maternity allowance and bereavement support.

Current NI payments are used to support those entitled to the pensions and benefits today. By making NI contributions today you're providing the finance for those currently receiving those benefits and having done so will be entitled to receive the same support when you reach SP age.

This is the problem we face in an ageing society and, in my view, the logic behind changes in SP age.
 

Drago

Flouncing Nobber
Location
Poshshire
The logic is fine in isolation.

However, when weighed against government soending policy in other areas, and the fact that in NET terms were the highest taxed populace in the World (all forms of both income and consumer taxation accounted for), rises are unjustified.

Suffice to say Paul is correct, the population is ageing and that brings fiscal pressure, but the government take more off of us individuals per capita that just about any other nation so should be giving more, not less. Thats as far as I'll go down that one because it verges on political.
 

Alex321

Über Member
Location
South Wales
I'm two years from paying full NI contributions for my state pension, but I'll still be 17 years away from receiving it. I started full time work at 15.

In two years time will my NI contributions reduce or remain the same but just not go to my pot?
They never have gone into your "pot". You don't have a "pot".

And NI contributions don't just pay for your pension, although they do qualify you for State Pension. NI contributions just go into the general taxation pot, and are used along with all other taxation that is not specifically hypothecated to pay for all government spending. That does, of course, include pensions.
 

david k

Hi
Location
North West
@david k - you still keep paying. Your current payments go towards those who get state pensions currently, and any payments beyond your 35 years cover any shortfalls for others.

So you, like me, will soon be entitled to full state pensions but keep paying until you receive it in 17 years' time. And in my case that's at 13.8% for everything I earn :blink: on top of my tax rate.

And hope that any retired CC members you meet return the thanks for you paying their pensions with cake :okay:
It's the least they can do 😂
We need to set up a direct debit to our accounts from those who are taking advantage of our kindness 😂😂
 

david k

Hi
Location
North West
They never have gone into your "pot". You don't have a "pot".

And NI contributions don't just pay for your pension, although they do qualify you for State Pension. NI contributions just go into the general taxation pot, and are used along with all other taxation that is not specifically hypothecated to pay for all government spending. That does, of course, include pensions.
I'm fairly sure there's a room in London with pension pots in, someone puts the cash in mine each month, used to be weekly but now I'm salaried it's monthly, another saving for them 👍

I do wonder why you work hard to pay for stuff when you can take it easy and it doesn't always seem to make much difference in the end, not the ultimate end the retirement stage of life
I have a teacher's pension, over pay by just £50 a month but about to increase that. It is tax free when going in, so may work out better long term
 

david k

Hi
Location
North West
Two points here; as far as I'm aware there is no method of reducing NI contributions for us ordinary mortals on PAYE etc. There may for those with greater resources able to take advantage of loopholes etc.

The second point is NI payments do not go to a "pot." This may just be your phrasing but if not be aware the state pension doesn't create a pension pot. NI payments give future entitlement to the state pension and current entitlement to job seekers allowance, ESA, maternity allowance and bereavement support.

Current NI payments are used to support those entitled to the pensions and benefits today. By making NI contributions today you're providing the finance for those currently receiving those benefits and having done so will be entitled to receive the same support when you reach SP age.

This is the problem we face in an ageing society and, in my view, the logic behind changes in SP age.
I wasn't fully aware of that no, thanks.

My teacher's pension does have a claim half function, my current thinking is to go part time at around 62 and take half my pension, then reduce hours until I've had enough.
I would think the state pension could do similar to allow those 60+ to reduce working hours rather than stop, then five full pension at 70 which should average out, just a though rather than have a single day when you can claim
 

PaulSB

Legendary Member
I wasn't fully aware of that no, thanks.

My teacher's pension does have a claim half function, my current thinking is to go part time at around 62 and take half my pension, then reduce hours until I've had enough.
I would think the state pension could do similar to allow those 60+ to reduce working hours rather than stop, then five full pension at 70 which should average out, just a though rather than have a single day when you can claim
That's a nice idea. I like it.
 

mikeIow

Veteran
Location
Leicester
I asked a financial advisor about this - is it worth paying to complete and get a full state pension. She said it wasn't worth doing. I'd double check your thinking. I can't remember her explanation sadly.
I’d hope that financial advisor is no longer providing financial advice…..it is almost always advantageous to complete that state pension if you can afford to. More reading here….

Of course, a further tweak is that every year you defer your taking of that state pension, it increases by 5.8%
That is a harder one to decide…..if you get to that age and don’t need it, it could be a benefit….but remember the state pension stops when you do 🪦, whereas any unused DC pots can be passed on….
 

Sterlo

Early Retirement Planning
Location
East Yorkshire
Does anyone know, when they say about the 35 years contribution, does it matter when those 35 years are? I want to retire early and don't want to have to pay NI if I'm not working and I've already got my 35 years in (just waiting for a statement from them at the moment).
 

yello

Legendary Member
Location
France
Of course, a further tweak is that every year you defer your taking of that state pension, it increases by 5.8%
That is a harder one to decide…..if you get to that age and don’t need it, it could be a benefit…
That's the biggy isn't it? Many are not in the position to defer and do need it, and need it NOW - sooner in fact.

When the govt allowed people early access to personal pensions, quite a high number took lump sums (and not always to have a holiday, or buy a Porsche as some thought) but simply because they needed it to bridge the gap until the (pushed back) state pension kicked in.

Lord knows I've thought about cashing in a personal scheme, just to ease our path before retirement, but it really doesn't make financial sense... unless you have to of course. And that 'have to' is forcing peoples hands.

Edit: this is where a IFA might be of real use, in that 'have to' situation... to know how much to take (some? your max tax free? all & keep some and re-invest the rest elsewhere?) There are many variables and options, tax considerations etc, that your average bod in the street doesn't really understand (and understandably so) It bugs me to be honest.

Bugs me that there's a 'built in' complexity to many schemes that almost demands you need advice. The cynic in me sees it done simply to fund an industry and you have little choice in it. Everyone wants a slice of you it seems..... sorry, rant over :laugh:
 
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