Payment of annual voluntary Class 3 contribution - are they worth it?

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RJR4809

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My wife and I applied for and paid for the lump sum back contributions via the CF83 form. I was Class 2 and my wife was Class 3.
My wife has now received the first annual letter giving the opportunity to pay £907.40 Class 3 contributions from 07/04/2024 to 05/04/2025.
My question is – are these Class 3 contributions worth paying at £907 per annum? How best to calculate what the annual payment will add to the end value of the UK pension?
We each have c. 18 years of contribution paid already in total (combination of payment at the time of work and back payments made).
Thank you.
 
I can't see why it's not a good idea. You make one payment of 907 a year now and then in the future you get paid something similar every single month.

For me the real beauty is that if you have UK and Irish state pension combined it's potentially enough for the slow go years, meaning you can concentrate your private funds on the go-go years instead of having to waste money 'covering' the later years.

I see Denmark have just raised their retirement age to 70 for anyone born after 1970. I expect UK will eventually do the same.

I my view the only chance of bad value is if you die too soon but it's not a major financial loss in any case.
 
The uk pensions calculator page shows what your max pension will be if you make the repayments. And I’m pretty sure also the pension based on current contributions.
I think mine is 190 based on current with a max of 212… if I keep up may contributions for the next few years. So 1,144 a year difference. Marginal for class 3 but grand for class 2. If I moved to class 3 I’d probably not bother. But your numbers will depend on ages, contributions so far etc. And if she was working again and became class 2 it’d definitely be worth it.

I assume you’re all caught up with the back years, that’s the 18 you referred to. So how many years in total have you got ?
35 is the number you need for the full pension.
 
Fibbernacci said:
Denmark have just raised their retirement age to 70 for anyone born after 1970. I expect UK will eventually do the same.
Click to expand...
I just googled that, yes, but it's 67 now goes to 68 in 2030 and 69 in 2035, so people born before 1970 won't enjoy a much longer retirement only a year or so.
How long can our lot maintain retirement at 66?
Once they don't try and bring in means testing which alot of left wing voices on media keep saying but that would undermine the whole prsi system and could cause mayhem as people would revolt over having prsi deducted with little or no universal benefits.
The universal state pension is the only benefit many get for prsi, so they would at least have to maintain a core universal prsi pension based on contributions
 
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RJR4809 said:
How best to calculate what the annual payment will add to the end value of the UK pension?
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As I understand it, the full UK pension is £230.25 per week if 35 years contributions, so each year 's contributions adds 230.25/35 = £6.58 per week or £342.09 per year. So for Class 3 payment of £907 for 1 year's contributions, you would need to live 2.65 years (907/342.09=2.65) after retirement to get your money back and thereafter you are in profit. Happy to be corrected on this!
 
How would it be possible to for someone to become Class 2 for later years, having been Class 3?

I figured someone is paying Class 3, then that remains so going forward, because based on your work status immediately preceding leaving the UK and immediately arriving in the other country. Not on any subsequent work status in the non UK country.
 
I think that was the original guidance but it has been updated since. But you may still need to have been employed in the 12 months before leaving UK. And at some stage later. I am aware of people paying different classes depending on their employment later in the non Uk country.

www.gov.uk

Voluntary National Insurance

National Insurance contributions you can choose to pay when you have a gap in your National Insurance record.
www.gov.uk www.gov.uk
 
sadie said:
How would it be possible to for someone to become Class 2 for later years, having been Class 3?

I figured someone is paying Class 3, then that remains so going forward, because based on your work status immediately preceding leaving the UK and immediately arriving in the other country. Not on any subsequent work status in the non UK country.
Click to expand...
Yes it is possible. My wife was working before leaving the UK but not immediately after. She paid class 3 for the years she wasn't working and class 2 going forward after she started working again outside the UK.
 
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Thanks all for the replies.
Annieindublin said:
I assume you’re all caught up with the back years, that’s the 18 you referred to. So how many years in total have you got ?
35 is the number you need for the full pension.
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Annieiedublin - we have 23 years in total, 18 back years + 5 working years. I think I have the information from the replies above to calculate what 23 years will give and to do the maths on paying more Class 3 contributions and what that will add. Thank you.
 
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