Two reasons. One was I was trying to roughly work out whether (as someone now earning at or below the NI threshold) it was worth me paying voluntary NI contributions rather than putting £13.25 per week into some form of retirement saving (personal pension or ISA or whatever).
[In the end I struggled with what you might call the actuarial assumptions and put the calculation to one side. (Will there be a state pension when I retire? Will it be the same level it is now, or less? What would be a reasonable expectation of investment growth over the next 25 years in a) equities b) gilts? What will annuity rates be like in 25 years? That sort of thing. For once I didn't go so far as to make a spreadsheet, but my gut feel ceteris paribus is that £13.25 a week is actually a good deal for the current state pension but that there are certainly some plausible future positions of the assumptions that would make it less so. Since this is definitely more your field than mine, feel free to offer any advice...]
Oh, and the second reason is that my mother has always referred to this as 'stamp' and still does. In 18 years of accountancy, I've never met anyone else who uses this term (although admittedly I've never gone near payroll taxation). If anything, it's confusing when there is a completely different tax called 'Stamp Duty'. My impression is that this was a very archaic term dating back to when contributions were literally recorded with the purchase of special National Insurance stamps. My mum is 66 years old, but mostly not senile...
I was looking at this for a client recently. It's £660 or so to get about £150 of pension per annum, which is a good deal.
However, you only need 30 years of contributions to get full state pension and anything after that is wasted makes no difference. You probably have about 20 now, and nearly 30 years to get the remaining 10 or so. If you voluntarily pay now, and then pay employment or self-employment contributions in more years than you need, the voluntary ones would be better off in a private pension.
You can probably ignore voluntary contributions for the next 15 years or so at the very least.
Yeah, that was pretty much where I was heading. I think I have 19 years now. Of course that brings another assumption into play - that the requirement stays at 30 years, but I think I'll take those odds.
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timeasmymeasure
no subject
Date: 2012-11-27 04:06 pm (UTC)[In the end I struggled with what you might call the actuarial assumptions and put the calculation to one side. (Will there be a state pension when I retire? Will it be the same level it is now, or less? What would be a reasonable expectation of investment growth over the next 25 years in a) equities b) gilts? What will annuity rates be like in 25 years? That sort of thing. For once I didn't go so far as to make a spreadsheet, but my gut feel ceteris paribus is that £13.25 a week is actually a good deal for the current state pension but that there are certainly some plausible future positions of the assumptions that would make it less so. Since this is definitely more your field than mine, feel free to offer any advice...]
Oh, and the second reason is that my mother has always referred to this as 'stamp' and still does. In 18 years of accountancy, I've never met anyone else who uses this term (although admittedly I've never gone near payroll taxation). If anything, it's confusing when there is a completely different tax called 'Stamp Duty'. My impression is that this was a very archaic term dating back to when contributions were literally recorded with the purchase of special National Insurance stamps. My mum is 66 years old, but mostly not senile...
no subject
Date: 2012-11-27 05:08 pm (UTC)However, you only need 30 years of contributions to get full state pension and anything after that
is wastedmakes no difference. You probably have about 20 now, and nearly 30 years to get the remaining 10 or so. If you voluntarily pay now, and then pay employment or self-employment contributions in more years than you need, the voluntary ones would be better off in a private pension.You can probably ignore voluntary contributions for the next 15 years or so at the very least.
no subject
Date: 2012-11-27 06:58 pm (UTC)no subject
Date: 2012-11-27 06:25 pm (UTC)I may return to the actuarial aspects at some later point.