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Will you pay Class 3A NI to top up your Pension?

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This is exactly how I pictured the partners lounge

From 12 October 2015 to 5 April 2017 you’ll be able to make a ‘Class 3A voluntary contribution’ to top up your State Pension by up to £25 per week.

You can choose to top up your State Pension by between £1 and £25 per week. How much you’ll need to contribute depends on:

  • how much extra pension you want to get each week
  • how old you are when you make the contribution

Example You are 68 years old in October 2015. You decide that you want to get an extra £5 per week (£260 a year) on top of your pension.

The cost of an extra £1 per week for a 68 year old is £827, so you multiply £827 by 5.

You’ll make a lump sum payment of £4,135.

You can use this calculator to see how it works…

https://www.gov.uk/state-pension-topup

Here is a link to the legislation…

http://www.legislation.gov.uk/ukdsi/2014/9780111121689/contents

steve@bicknells.net


2 Comments

  1. jamesjdcc says:

    Steve, I have seen this post from you before and firstly I note you do not say one should or should not do this as every individual needs to look at their circumstances (and the male in your example needs to be born before 6/4/51 to be able to top up). However, the picture would give the subliminal message that this is the right thing to do.
    If it was my 68th birthday and I had £4,135 I could top up as suggested but would need to wait until I was 83 yrs and 10 months to get my capital back in the form of enhanced pension.
    Alternatively I could pay into an account that didn’t attract tax (if I was not a tax payer then any account) and use £5 per week myself, taking me to 86 yrs 10 months before running out (assuming interest at 2% – Santander 123 pays 3%)
    a) I still get access to all the capital if I need it.
    b) If I don’t reach 86 (average UK male life expectancy is 80) then my next of kin get the unused balance.
    Down side would be if I lived past 87 but then I’m not saying one shouldn’t top up, I’m just saying there are alternatives.
    It will be interesting to see if paying into a pension and drawing back out will be an option after this week’s budget.

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