Should I pay £1,300 to get a bigger state pension?

I AM a 58-year-old woman with 32 years of National Insurance contributions. I don’t know how to ensure I get the maximum state pension when I retire at 66 in 2023.

It seems I can pay for two missing years (2011/12 and 2012/13) before April 6, 2016.

This would cost £655.20 and £649.25 respectively, and would increase my current state pension forecast by £3.86 a week for each year, giving me a total of £127.52 (including the £7.72 top-up).

But then, some of that would be taken away — and I don’t know how much — because I was contracted out for around 11 or 12 years.

However, I could also wait until after April 6, 2016, to pay the two missing years. This would give me a top-up of £8.64, based on two years at £4.32 per year.

It would make my total pension £128.44 but, again, an unknown amount would be taken away from my contracted-out years.

I’ve been told by the Department For Work And Pensions (DWP) that if I pay the two extra years now, it will not increase the amount of pension I take across as my starting amount on April 6, 2016.

But my state pension is £119.80 before any top-up, compared with the current state pension of £115.95. It really makes no sense to me.

K. P., Stirling. JoiN the club! i have yet to meet a single person, aside from a few industry experts, who understands these new state pension forecasts. i fail to see how you and millions like you can make sensible decisions based on the complex and confusing numbers being pushed out by DWP.

i put your case to Alan higham who runs PensionsChamp, giving guidance to both the individual and industry. he says he has seen cases like yours time and time again.

Basically, it’s unlikely you can improve your pension by filling gaps before April 6, 2016 — though he can’t say for sure, because we do not know how big your contracting-out deduction is going to be.

i suspect the confusion comes because two calculations are being performed.

You get the better of the two amounts as a starting point for building more pension after April 6, 2016.

The first calculation looks at where you stand now. With more than 30 years’ National insurance, you have the maximum basic state pension under the current rules, so paying extra now won’t boost your pension.

The little extra you have on top of the basic state pension is likely to be from the state second pension or its forerunner, serps.

The second calculation looks at how you’d fare under the new regime. This simply gives you an amount for every year you’ve contributed Ni, but then makes deductions for each year contracted out.

it’s almost certain you would start off with much less under this calculation. Paying more now would boost this calculation, but it would be unlikely to be enough to give you a bigger pension than you already have under the current regime.

You will continue to contribute Ni until you retire in 2023. These contributions will continue to boost your pension, as you have not yet reached the maximum 35 years stipulated under the new regime. The problem is, the contractingout deduction is not shown clearly on the pension statements, making it impossible for people to make informed decisions. EIGHTEEN months ago, I switched away from energy supplier Scottish Power. Last February 25, the firm sent me a letter saying I still owed £43.29, which was actually due on March 25, 2014.

I ignored this, having assumed any outstanding money had been sorted out during the changeover.

I then received a letter from a debt collector, suggesting my nonpayment could be taken to court.

I immediately wrote to the Energy Ombudsman to query the payment of this now-increased amount. I was told I would receive a gesture of goodwill amounting to £121.09.

On July 28, I received a cheque for £77.80 from Scottish Power. Presumably, the money originally demanded was an oversight.

However, I have not received the promised gesture of goodwill.

B. S., Harpenden, Herts. i Took a closer look at your dispute with scottish Power. it seems that, although it was overeager to set debt collectors on to you, you did, in fact, owe it some money. scottish Power issued a final bill for £43.29 on March 11, 2014. This was never paid, hence the further demand you received.

The decision by the energy ombudsman was actually for £121.09 goodwill payment to be applied to your account. This, minus the £43.29 you owed, comes to £77.80, which was the amount you received. scottish Power has now called to explain this, and you are happy with the outcome.

incidentally, your issue seems to have stemmed from the belief that, when you move from one energy company to another, the amounts outstanding will all come out in the wash.

in fact, money does not transfer between the companies. it is up to each customer to pay the bill outstanding to that existing supplier and get any money owed to them — which can, at times, prove tricky.

it is useful to keep your direct debit open a month or so after you move, so cash can be taken from or transferred to your account.