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State Pension : Top Up WARNING !!! - Carers UK Forum

State Pension : Top Up WARNING !!!

All about money
More on the State Pension fiasco :

http://www.dailymail.co.uk/money/pensio ... comes.html

The state pension top-up fiasco: Savers are paying to boost their incomes only to find payouts don't rise and they can't get a refund

Savers pay up to £2,000 extra to boost weekly pension payouts
They say they are being led to believe they have gaps in their NI records
But many find the payment makes no difference to their state pension at all

Today This is Money and Money Mail call for an overhaul of the state pension top-ups offered to millions of savers.

We have received a deluge of complaints from readers who have fallen foul of complex rules and poor advice.

Savers in their 50s and 60s are paying up to £2,000 extra in taxes to boost their weekly retirement payouts.

They say they are being led to believe they have gaps in their National Insurance records and that a one-off payment will give them a higher income for life.

But many are then finding the payment makes no difference to their state pension at all. And, even worse, they are being denied a refund by the taxman.

Those affected say they feel misled by staff at both the Department for Work and Pensions, which runs the Class 3 National Insurance top-up scheme, and HM Revenue & Customs, which collects the payments for the Government.

Since This is Money and Money Mail first raised the alarm in November,as more people came forward following our investigations in September, the taxman has started routinely issuing refunds — in some cases to savers it had fobbed off for months.

Our joint investigation today reveals HMRC has been forced to issue new guidance to staff over fears they have been wrongly rejecting refunds.

We also found HMRC has rebuffed customers by saying they acquired 'bereavement benefits' through the payments, even though these have proved worthless.

The official websites detailing the Class 3 NI top-up scheme fail to warn savers when their payments won't make any difference to their payouts.

And, alarmingly, officials say they do not track how many people get a pension boost after paying Class 3 NI.

This raises the prospect that some of the estimated 12,000 people who top-up their state pension every year have lost out without realising, or have given up after repeatedly being denied a refund.

Now, This is Money and Money Mail want HMRC to examine every top-up payment to make sure no saver has been left out of pocket.

And we want the taxman to issue automatic refunds to anyone whose state pension did not increase, or increased by less than they were led to expect.

Both the DWP and HMRC must also give clearer risk warnings online and over the phone when customers apply.

Neil Duncan-Jordan, of campaign group the National Pensioners Convention, says: 'The Government needs to get a grip on this.

The top-up is practically a lottery at the moment and people must be given their money back if it is not going to do any good.'

How the state pension top-ups are meant to work

The voluntary Class 3 NI contributions scheme lets you fill in gaps in your NI record from the past six years (in rare cases, ten) by paying a lump sum.

The cost should be a maximum of £741 a year, which buys £237 a year income for life. It is a vital scheme that, in particular, helps women who took time out to look after children.

But a quirk in the system means savers are able to pay into the scheme even if it doesn't boost their state pension.

The confusion has arisen due to the arrival of the single-tier state pension, worth £159.55 a week, in 2016.

To qualify for this amount, savers need 35 years of full NI contributions. By comparison, they only required 30 to get the full basic £122.30-a-week pension under the old scheme.

To ensure no pensioner loses out, the Government works out if you would have been better off on the old scheme. If it finds you would have been, and you already had the full 30 years of NI contributions by April 2016, any attempt to boost your pension will be futile.

However, if you have a gap from April 2016 and anticipate future gaps, such as if you have recently stopped working, it is possible to buy these additional years and boost your state pension. But you should still check before paying.

Savers denied refunds by HMRC

Savers say the risk of payments failing to boost pensions is not being explained by the DWP and HMRC officials or on their websites. Often, they only realise something is wrong when they check their projected state pension and find it has not increased.

In many cases, HMRC is fobbing off savers who try to claim a refund by saying the extra payments help boost their entitlement to bereavement benefits.

These pay a set amount to a spouse or civil partner if you die before state pension age.

But those who pay for Class 3 NI are typically within a few months of state pension age. Others are beyond it, so their spouse could never claim. Some have no spouse or civil partner at all.

All those denied refunds say they would never have paid in for bereavement benefits alone.

I've been fighting for a refund for almost a year

Retired office manager Lesley Plater, 64, has been battling for a refund since April last year.

After calling the DWP and HMRC, she sent a cheque for £308. Lesley says she was never told the money might not boost her pension.

In April 2017, she discovered her pension had not increased and tried to recover the cash.

HMRC refused, saying the extra NI years would pay for bereavement benefits. But Lesley, who lives in Gosport, Hampshire, had already reached state pension age, so her husband Roy, 58, was ineligible for the money if she died.

'It is not a huge amount, but I can't afford to lose it,' says Lesley. 'It would go towards a holiday or all kinds of things.'

Lynne Pilcher, 60, found three years of gaps in her NI record after checking her state pension forecast on the DWP website last July.

It said she would get about £120 a week, rather than the £159.55 maximum. The retired customer service manager, who lives in Valencia, Spain, with husband Terence, says she wasn't warned that her £2,067 payment might not improve her income.

When she logged on a few months later, her forecast was unchanged. She spent six months battling with the taxman, before winning a payout in January.

'The system is a mess,' says Lynne. 'It seems as though the right hand does not know what the left is doing.'

Former teacher Gillian Armstrong, from Tring, Hertfordshire, also tried to recover money from HMRC.

The 64-year-old says it told her the £733 would pay for bereavement benefits even though she was already beyond state pension age. 'I have received contradictory advice at every turn,' she says.

In response to a Freedom of Information request by former pensions minister Sir Steve Webb, now of insurer Royal London, HMRC said it 'does not hold' records of how many refund requests have been made, how many were successful or what the amount refunded was.

A spokesman for HMRC says it has received a 'few dozen' requests for a refund and all but one has been paid.

New applicants should get a decision within 15 working days and a payment seven to ten working days after that.

HMRC refused to review all payments of Class 3 NI contributions. 'We're sorry some customers had to wait a little longer than we would like to get their money back,' adds the spokesman.

A spokesman for the DWP says: 'Voluntary contributions might not be right for everyone. This is why the online 'Check your State Pension' service signposts anyone with gaps in their record to speak to the Future Pension Centre to find out more about the scheme.'

Yet another " Smoke / mirrors " situation ?

Always " Mines " in any complex sysyem.

To simplify a system is ... too simple ???

Certainly not in the Civil Service's / Legal fraternity's interests to do so ???
A little more from the Daily Chuckle :

http://www.dailymail.co.uk/money/pensio ... -work.html

Officials admit they can't say if your state pension top-up will work and tell savers to seek expensive financial advice.

Savers are being told by the Government to seek expensive financial advice if they want to top up their state pensions — or risk losing thousands.

Officials have told Money Mail they are unable to tell savers if the voluntary payments they make to boost their retirement income will make a difference.

Instead, savers are being told to ask a professional adviser, at an hourly cost of up to £200, to find out if they'll benefit.

The revelation has emerged as part of a joint investigation into the state pension top-up scheme by Money Mail and its sister website thisismoney.co.uk.

Some savers in their 60s claim to have been misled by officials who told them they could buy extra National Insurance (NI) years to increase their state pension.

Some have spent thousands from their life savings to do so, only to fall foul of a quirk in the rules which means their pension does not rise after all.

And even worse, they have been denied a refund from the taxman, who takes the payments.

The Future Pension Centre, part of the Department for Work and Pensions, specialises in helping those yet to claim their state retirement income. But it has emerged this body can only give customers an 'estimate' of the difference the top-up 'may' make to payouts.

The DWP confirmed officials cannot confirm whether the saver will receive a benefit until after they have made the payment.

The taxman insists it does not have access to that information, it only collects the money.

If HMRC has turned down your refund request, get in touch with tanya.jefferies@thisismoney.co.uk and r.lythe@dailymail.co.uk.

A DWP spokesman says: 'We cannot provide advice. The Future Pension Centre gives an estimate of the impact on someone's pension by paying voluntary NI contributions. It can guide that paying X years may impact the pension by Y.'

Around 12,000 people a year use the Government's voluntary Class 3 NI contributions scheme to fill in gaps in their NI records from the past six years (in rare cases, ten) by paying a lump sum.

This should be a maximum of £741 a year, which buys an extra £237 a year income for life. But savers can pay in even if it doesn't boost their payout.

Six months after we launched our investigation, we are still being contacted by readers struggling to recoup thousands of pounds in useless payments.

Mary O'Connor has spent six months chasing £3,398 she paid. In 2015 she asked the DWP how to boost her pension and says she was told she should make the payments.

However, Mary, 64, only discovered last year, after reading Money Mail's investigation, that the years she bought were worthless.

She had no response to her HMRC refund request in November. When she rang the taxman this month, staff admitted her letter had not been acted on.

The former pharmacist, who has lived in northern Greece for 20 years, says: 'It's disturbing for the money to disappear.

'I was not told these contributions were unnecessary. I had no other source of advice. It's not easy to find a financial adviser with knowledge of the British system here.'

The confusion around the scheme has come from the arrival of the single-tier state pension, now worth £164.35 a week, in 2016.

To qualify for this amount, savers need 35 years of full NI contributions. They only required 30 to get the full basic £125.95-a-week pension under the old scheme.

If the Government works out you would have been better off on the old scheme, and you had 30 years of NI contributions by April 2016, attempts to boost your pension may be futile.

The Future Pension Centre can identify savers with missing NI years, but can't say if they will benefit by buying more.

Often HMRC denies refunds, saying the money will instead pay for bereavement benefits for the customer's spouse or partner if they die before state pension age.

However, these seem pointless to savers who are just a few years away from getting their pension.

Mike Fleming, 59, paid £2,728.40 in June 2016 for five years of top-ups after speaking to Pension Wise, the Government organisation which gives pension help.

Mike, an IT consultant from Romford, East London, realised his income had not risen a few months later. For 18 months he has made requests for his money back, but has been refused and passed between the DWP and HMRC.

The bereavement benefits are of no use to him as he is single. 'I've found the whole thing frustrating,' Mike says. 'I don't know who I could have spoken to for help.'

After Money Mail intervened, both Mike and Mary got a refund.

Patrick Connolly, of advice firm Chase de Vere, says: 'Helping people boost their pension by filling in NI gaps is something financial advisers can help with, but it's the kind of work that could cost around £200 an hour. For someone who is planning to rely on the state pension, that is very expensive.'

An HMRC spokesman says: 'We are sorry some customers had to wait a little longer than we would like to get their money back. All those due repayments should have received them by now.'

I feel sorry for the word FARCE after this continuing debacle ?
Im a person who has gaps in their contributions over 15 years ago. I will allegedly(according to DWP) get the full pension at 66 (I am currently 59) but they wont seem to reply to my questions by email I send asking what if I retire at 60?
This will probably be neccesary, and I need to know if there is a way to top up if I need to

Cheers all

Yes ... there are several way to do precisely that.

Will it be worth it ?

Which? probably the best out there for guidance :

https://www.which.co.uk/money/pensions- ... 0q09p37nsj

ThisIsMoney coutesy of the Daily Chuckle :

https://www.thisismoney.co.uk/money/pen ... on-up.html

MoneyWise for a third opinion :

https://www.moneywise.co.uk/news/2019-0 ... hike-april
You can read more about this and any other pension issues at pensionadvisers.co.uk