Friday, 11 November 2016

War Diary and Pension Permatations ...

How remiss - again. I have just realised that the rather short entries for October and November of my War Diary have not been uploaded. Now I have done so. As I say, short and sweet!

Onto Pensions. Other than staying at home to bring DS up for a few years, I have always worked. Mostly 3/4 time i.e. 6-7 hours a day, sometimes part time - around 4 hours. Whilst abroad, I worked full time, still paying my N. I. contributions - luckily as it turned out!

Before retiring early, I made sure I was fully paid up, as in having the full 30 years contributions to receive the full pension when it becomes due. Then the government moved the goals posts - now I need to pay another 5 years of contributions, in order to receive what I was once entitled to:(

We have both saved hard throughout our lives and continue to do so. Any £'s on the day the next pension is due (DB not me yet) are transferred into a savings account - it all adds up over time. That is why we live a relatively frugal life, not as hard a life as we once had no alternative but to live, but a happy medium that allows us to be careful, save, and still enjoy ourselves occasionally.

I have already paid one of those five years. The annual payment rises every year that is left. If I had realised I could have started this process earlier it would have been cheaper!

Do we break into the savings and pay it all and be done? That would be the easiest option but we could pay it yearly (and I think you can do it monthly but am not sure). In that case, although the interest rate is low, we would be earning the interest on the amount still owed rather than the government. That is probably the best route.

Some would say "Why bother?" My answer is this, the difference in weekly payments if I don't pay those extra 4 years is £20. Not much to some but over a year, that is £1040 - a big difference. Every year that I pay gives me a few more pounds a week, for a lifetime.

"What if you die beforehand?" Well, none of us know when we will die. If I die before I receive my pension, I feel I would have contributed into a system that would ultimately benefit others. So hard luck for me but DB would financially be secure due to his own pension, so no worries there.

Next time - Can you afford to live on your pension if the government pension was all you had?

That is it for this week folks, have a good weekend.

10 comments:

  1. Yes, I've been affected by the 30-now-35 years rule. I also have to wait until I am 66 to get my pension. So, I won't get the full amount, but I do have a private pension to top up with - I am so grateful I took it out for a few years when we were both earning good salaries in UK. It is amazing that just a few years can make all the difference - I would urge any younger person to take steps now to ensure a pension - you just can't depend on governments to help you anymore!

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    1. Although I do have a tiny NHS pension I really need to top up I think.

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  2. It's so maddening (to say the least! ) when the goal post are forever being moved. I retired from my NHS job at 50 and I'm a year short on my NI contributions - only having 34 years. I still have a while to make it up as I'm now 52 but I bet they move the goal posts again before I get to 66. I do a bit of self employed work and submit a self assessment each year but I don't earn enough to pay NI, but I have the option of paying voluntary contributions which so far I've put off. It really is a minefield.

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    1. Voluntary contributions are possibly the way to go and your record should show which years would be cheaper. Could you pay a year of self employed stamp voluntarily?

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    2. Hi again, yes they give an option on the self assessment form for this but I've not done it yet, thinking I've got lots of time to do do. I'm not sure if there's any benefit in paying more years than necessary (once I've made up the short fall). I just wish i could ask someone in the NI dept and get a simple answer! They talk in riddles. Like you, I get a tiny NHS pension but it's not enough to live on.

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    3. Only 35 years required. Extra payments will not earn anymore pension, it says that on my pension forecast online.

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  3. Hi again and thanks for prompting me to look into it. I looked at my record on line. it predicts I can claim the state pension from she 67. If I don't add any more contributions (I've got 34 years) I'll get the lower rate of 141.81 a week. If I pay another 4 years between now and 2031 I'll get the maximum of 155.65 a week. Will be ringing them to see why another 4 years are required.

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    1. Yes, I would ring as well, how odd! As I mentioned, I have 31 years and my record states another 4 years to get the full amount. Mind you, I can pay those 4 years up to 2025 yet I would hope to be receiving my pension by then. Wonder how that works.

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  4. I am one of the fortunate ones in that I was born in 1951. (And also worked hard and SAVED). but I am so angry on behalf of many friends who are now stuck with the moving goalposts and the prospect of an extra 5 years at work. It is a wicked thing they have done - again. At the same time feather-bedding themselves with their golden handshakes and cast iron pensions. I am beyond angry. I hope whatever your decision you will have sufficient funds to continue a full and happy life for years to come! xx

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    1. It wasn't just the extra 5 years of payments but to add insult to injury, I have to wait 6 years longer than I was going to, to receive it:(

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