Pension queries over rule changes

By Jenny Culshaw
BBC News

The changes should help women who have taken time out of the workplace

A pensions helpline has been swamped with calls because of rule changes over the extra payments needed to secure a full state pension.

Next month, the cost of topping up national insurance contributions will go up by 49%, and the time over which top-ups can be made will increase.

Ministers say this will help women who made no payments when raising children.

The Pensions Advisory Service took 10 times the usual volume of calls on its helpline on 0845 601 2923 this week.

However, it says people should not rush to pay.

Letters have been sent to those who have a shortfall in their national insurance contributions which could mean they lose out on a full state pension.

I think it's worth my while me paying for my missing years Josh Doshi, accountant

These letters are sent annually but this year the cost of topping up missed contributions will increase to £12.05 a week from £8.10 a week from 6 April.

There will also be changes to the number of years people can back pay.

The right to make voluntary contributions for the period between 1996 and 2002 is being withdrawn for some people.

However, after April, some will be able to top up 12 years, where currently the maximum is six.

The new 12-year rule is particularly aimed at women who left the workforce to raise families or care for other relatives.

Pensions Reform Minister Rosie Winterton told the BBC that the changes would benefit more than 100,000 people.

Shortfall

Elspeth Moore is one of those who received a letter this year. She had a shortfall in contributions relating to two years after she left university during which she only worked in short spells.

But at 34, and with 12 years full time employment under her belt, she does not believe she needs to top up her contributions.

"They want a few hundred pounds from me but it doesn't seem worthwhile as I'm going to keep working. I'd rather save for a deposit on a house."

Accountant Josh Doshi is in a very different position.

He is 59 but due to the fact he has spent a number of years abroad, he has a shortfall in his National Insurance contributions.

He will not be able to make up them up automatically before hitting retirement age as it is too close.

He intends to pay for years he has missed.

"I think it's a good thing that there is a state pension scheme for people who haven't provided for themselves. I think it's worth my while me paying for my missing years".

Both Ms Moore and Mr Doshi need 30 qualifying years to claim a full state pension.

'Don't rush'

Malcolm McLean, chief executive of The Pensions Advisory Service, recommends people do not rush into paying just because they receive a letter.

"You need to calculate whether it is financially worthwhile."

"With just three weeks until the end of the financial year some may have left it too late to make use of this year's entitlements and lower rate, for anyone partly through the process though, it's possible that a payment now could prove a sound investment for their retirement."