I have 20 years pension contributions paid in UK. Got a pension forecast from Uk. Living in Ireland permanently now. Will be 65 Jan 2014 just under 4 years time. How will the following effect me, or could anyone explain further what the paragraph below means.
Want to give your pension income a massive boost without it costing you a fortune?
The Government is offering thousands of people a terrific chance to boost their incomes in retirement. The returns available are as high as 27% a year – more than five times the best savings rates at the moment, and almost ten times the inflation rate.
What is happening?
This offer is on the table because of changes ministers are making to the UK’s state pension system.
Basically, it involves giving people who have spent several years out of the workforce – bringing up a family, for example, or caring for older relatives – the chance to boost the amount of state pension they receive by making up some of their missing National Insurance contributions (NICs).
When people reach the state retirement age – 65 for men and, currently, 60 for women – the amount of state pension they get is based on how many full years’ NICs they have made.
The full state pension at the moment is £95.25 a week per individual, rising to £97.65 from next month. But not everyone gets this much.
To qualify for this full weekly payment, men have until now been required to accrue 44 years of NICs and women 39 years by the time they reach retirement age. From 6 April this will be cut to 30 years for both men and women.
What’s the deal?
Anyone is allowed to buy a year’s worth of missed NICs for the most recent six years, provided they have already accrued at least 20 years’ worth of NICs.
This means paying a lump sum now in return for larger state pension payments from the time you retire until you die. You can do this even if you have already reached the state retirement age.
Using current figures, buying a year’s NICs costs £626.60, and for someone retiring in the 2010-11 tax year (beginning 6 April) this would generate an additional 1/30th of the full basic state pension. This is £169.26 a year, based on the 2010-11 weekly pension of £97.65.
That’s the same as buying an annuity for £626.60 which paid out £169.26 a year for the rest of your life. This is a fantastic return of 27%. In today’s depressed annuity market, you would be lucky to get more than £30 a year (a return of 4.7%) for the same initial sum.
• Join our Get ready to retire goal Extra opportunity
Want to give your pension income a massive boost without it costing you a fortune?
The Government is offering thousands of people a terrific chance to boost their incomes in retirement. The returns available are as high as 27% a year – more than five times the best savings rates at the moment, and almost ten times the inflation rate.
What is happening?
This offer is on the table because of changes ministers are making to the UK’s state pension system.
Basically, it involves giving people who have spent several years out of the workforce – bringing up a family, for example, or caring for older relatives – the chance to boost the amount of state pension they receive by making up some of their missing National Insurance contributions (NICs).
When people reach the state retirement age – 65 for men and, currently, 60 for women – the amount of state pension they get is based on how many full years’ NICs they have made.
The full state pension at the moment is £95.25 a week per individual, rising to £97.65 from next month. But not everyone gets this much.
To qualify for this full weekly payment, men have until now been required to accrue 44 years of NICs and women 39 years by the time they reach retirement age. From 6 April this will be cut to 30 years for both men and women.
What’s the deal?
Anyone is allowed to buy a year’s worth of missed NICs for the most recent six years, provided they have already accrued at least 20 years’ worth of NICs.
This means paying a lump sum now in return for larger state pension payments from the time you retire until you die. You can do this even if you have already reached the state retirement age.
Using current figures, buying a year’s NICs costs £626.60, and for someone retiring in the 2010-11 tax year (beginning 6 April) this would generate an additional 1/30th of the full basic state pension. This is £169.26 a year, based on the 2010-11 weekly pension of £97.65.
That’s the same as buying an annuity for £626.60 which paid out £169.26 a year for the rest of your life. This is a fantastic return of 27%. In today’s depressed annuity market, you would be lucky to get more than £30 a year (a return of 4.7%) for the same initial sum.
• Join our Get ready to retire goal Extra opportunity