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  • FIRST POST
    • Twonko
    • By Twonko 16th Sep 17, 2:35 PM
    • 10Posts
    • 0Thanks
    Twonko
    The National Insurance Gravy Train
    • #1
    • 16th Sep 17, 2:35 PM
    The National Insurance Gravy Train 16th Sep 17 at 2:35 PM
    I have thirty-five years NI in the bag, so in theory, I am entitled to a full State pension. Because I opted out of SERPS for nearly all that time, I know I'm going to get the lower 'full' rate of something like £115 a week or thereabouts. However, although I have retired and taken my work pension, I still do a fair amount of contract work on which I pay a fortune in NI contributions. Does my final State pension get bumped a bit for these generous additional payments or am I just getting stiffed by HMG?
    The online calculator suggests I will get a bit more but since that is wrong on just about everything else, I don't believe it.
    Any informed advice welcome. Thanks in advance.
Page 1
    • Paul_Herring
    • By Paul_Herring 16th Sep 17, 2:47 PM
    • 6,152 Posts
    • 2,823 Thanks
    Paul_Herring
    • #2
    • 16th Sep 17, 2:47 PM
    • #2
    • 16th Sep 17, 2:47 PM
    or am I just getting stiffed by HMG?
    Paying national insurance doesn't just give you credits towards a state pension.

    http://www.bbc.co.uk/newsbeat/article/10078062/why-do-we-pay-national-insurance

    National Insurance is now used to pay for:
    • The NHS
    • Unemployment benefit
    • Sickness and disability allowances
    • The state pension [i.e. what's currently being paid to current pensioners]
    Conjugating the verb 'to be":
    o I am humble
    o You are attention seeking
    o She is Nadine Dorries
    • Dazed and confused
    • By Dazed and confused 16th Sep 17, 2:49 PM
    • 1,691 Posts
    • 736 Thanks
    Dazed and confused
    • #3
    • 16th Sep 17, 2:49 PM
    • #3
    • 16th Sep 17, 2:49 PM
    If you look at your personal tax account (log in on gov.uk) that will show your current entitlement and how much you can build it upto by retirement age.

    Be very careful that you read it properly as at first glance it might imply you are going to get £159/week but, based on your op, this will almost certainly only be true if you continue paying sufficient NI to get additional years.

    Below the £159 (or whatever the maximum you can get) it will say what you have actually earned to date (probably to 05:04:2017).

    I would class you as a winner with the change to State Pension, lower NI paid for many years but now with the opportunity to increase it from £120+/week to £159
    • xylophone
    • By xylophone 16th Sep 17, 2:58 PM
    • 22,855 Posts
    • 13,208 Thanks
    xylophone
    • #4
    • 16th Sep 17, 2:58 PM
    • #4
    • 16th Sep 17, 2:58 PM
    Have you obtained a state pension statement?

    https://www.gov.uk/check-state-pension
    • Twonko
    • By Twonko 16th Sep 17, 3:00 PM
    • 10 Posts
    • 0 Thanks
    Twonko
    • #5
    • 16th Sep 17, 3:00 PM
    • #5
    • 16th Sep 17, 3:00 PM
    Thanks for the replies. I know why NI is paid but as a retiree, I would get those benefits anyway without any further contributions. Therefore my additional contributions are solely to my benefit only if they result in an increase in my State pension. I should make clear that I have no fundamental objection to paying more. I can afford it, but it does seem rather punitive.

    As I said in my OP, the gov.uk calculator suggests my State pension will increase as a result of additional NI contributions but this is a far from reliable calculator and I do not believe it and would like to be able to calculate my own figures, particularly as my employment income now is not regular.

    Does anyone know what the maths are relating to additional contributions so that I can calculate my own figure?
    • Dazed and confused
    • By Dazed and confused 16th Sep 17, 3:12 PM
    • 1,691 Posts
    • 736 Thanks
    Dazed and confused
    • #6
    • 16th Sep 17, 3:12 PM
    • #6
    • 16th Sep 17, 3:12 PM
    Your personal tax account shows your entitlement immediately, no waiting for a paper statement or anything and no calculator involved.

    If you read it correctly you will know your guaranteed amount earned so far (to 05:04:2017 probably) and how many years you can earn additional amounts.

    Each additional year adds £4.55/week up to the maximum of £159 (unless your starting amount already exceeded £159 which seems unlikely from your op).
    • kidmugsy
    • By kidmugsy 16th Sep 17, 3:18 PM
    • 9,596 Posts
    • 6,355 Thanks
    kidmugsy
    • #7
    • 16th Sep 17, 3:18 PM
    • #7
    • 16th Sep 17, 3:18 PM
    Consider doing your contract work as a limited company.
  • jamesd
    • #8
    • 16th Sep 17, 3:28 PM
    • #8
    • 16th Sep 17, 3:28 PM
    Because I opted out of SERPS for nearly all that time, I know I'm going to get the lower 'full' rate of something like £115 a week or thereabouts. However, although I have retired and taken my work pension, I still do a fair amount of contract work on which I pay a fortune in NI contributions. Does my final State pension get bumped a bit for these generous additional payments or am I just getting stiffed by HMG?
    The online calculator suggests I will get a bit more but since that is wrong on just about everything else, I don't believe it.
    Originally posted by Twonko
    Believe it.

    A foundation amount was calculated for everyone as of April 2016. For a person who was contracted out all the time that would be about £120-125 because the S2P system added small amounts of earnings-related extra even for people who were contracted out.

    For years starting from April 2016 that count, your state pension will be increased by 1/35th of the full flat rate until you reach that level. So 1/35th of £159.95 a year extra for life at the moment, with triple lock as long as that lasts.

    The flat rate system is an excellent deal for people who were contracted out a lot and who are still able to get more years from April 2016. The ones who didn't contract out are already at the cap but the ones who did get their private pension and also still the chance to increase their state pension.
    • Twonko
    • By Twonko 16th Sep 17, 3:31 PM
    • 10 Posts
    • 0 Thanks
    Twonko
    • #9
    • 16th Sep 17, 3:31 PM
    • #9
    • 16th Sep 17, 3:31 PM
    Thanks Dazed. That kind of gets me to where I want to be. At least I can get a rough projection. It seems you don't have to earn much to get a full years NI contribution.

    And I would love to operate as a Limited Company but the tax man no longer likes such things since earlier this year. Now I can either work as an employee (my preferred option) or through an umbrella group, which does have certain advantages, but also means that I am liable for both the employers and employees NI contributions. It ain't nearly so good as it used to be.
    • Twonko
    • By Twonko 16th Sep 17, 3:36 PM
    • 10 Posts
    • 0 Thanks
    Twonko
    Thanks also James. That is helpful.
    • msallen
    • By msallen 16th Sep 17, 3:42 PM
    • 526 Posts
    • 439 Thanks
    msallen
    It ain't nearly so good as it used to be.
    Originally posted by Twonko
    You mean you aren't able to stiff HMG any more. Disgraceful.
    • jerrysimon
    • By jerrysimon 18th Sep 17, 9:36 AM
    • 236 Posts
    • 149 Thanks
    jerrysimon
    I am in the same position. I have been on line and looked at how much I will get. Its around £125/per week with nearly 40 years of contributions. Whilst my latter payements of NI where very high (nearly £400/month) before I retired early this year, when I look back to the late 70s and 80s NI contributions these were very small.

    Assuming I get to 66.5 years of age I consider myself a winner. A Type 1 diabetic since my late 20s, I have also benefitted greatly (again way beyond how much I have contributed) in terms of ongoing health care for the last 25+ years!

    Of course I could contribute more by choice if I wish to increase my SP when I finally get it. I probably wont, instead I will pay another 3 years for my wife who will then get the full £159/week and with her small pension pay no tax
    • sIMON
    • By sIMON 18th Sep 17, 12:45 PM
    • 1 Posts
    • 0 Thanks
    sIMON
    I'm in a similar situation but with 47 years full contributions that make my SP projection £130 at 66. this no doubt is because of a work pension and contracting out of SERPS.
    However Ive been told that you can buy NI top ups to cover the serps years so that you can achieve the Full state pension- or am I being ill advised?
    • molerat
    • By molerat 18th Sep 17, 1:18 PM
    • 16,988 Posts
    • 11,174 Thanks
    molerat
    I'm in a similar situation but with 47 years full contributions that make my SP projection £130 at 66. this no doubt is because of a work pension and contracting out of SERPS.
    However Ive been told that you can buy NI top ups to cover the serps years so that you can achieve the Full state pension- or am I being ill advised?
    Originally posted by sIMON
    You are correct. If you have less than the full £155.65 then you can increase that with post April 2016 credits either by working, some benefits or voluntary contributions.

    A one off payment of £741 (for the current year) will give you £231.40 a year for the rest of your life so paying back in 3 to 5 years depending on your tax situation.
    Last edited by molerat; 18-09-2017 at 1:23 PM.
    www.helpforheroes.org.uk/donations.html
    • jerrysimon
    • By jerrysimon 18th Sep 17, 1:30 PM
    • 236 Posts
    • 149 Thanks
    jerrysimon
    Yep that is what I will do for my wife.
  • jamesd
    I'm in a similar situation but with 47 years full contributions that make my SP projection £130 at 66. this no doubt is because of a work pension and contracting out of SERPS.
    However Ive been told that you can buy NI top ups to cover the serps years so that you can achieve the Full state pension- or am I being ill advised?
    Originally posted by sIMON
    Yes, but in your case only years starting from April 2016 will help because you already have the maximum number of beneficial years before that. So don't buy any years 2015 or earlier.
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