National Insurance credits/Self Employment

linlin_3

To 5 April 2006 my husband will have 41 'qualifying years'. In June 2006 he hopes to take early retirement aged 59. It seems he will get 5 years automatic NI credits, thus taking him over the 44 yrs needed for a full basic state pension.
If, after taking early retirement he chooses to become self employed in the hope of continuing to earn a small amount, and pays class 2 contributions, will this in any way affect his future entitlement to full state pension?

mrbnewc

Linlin

Even if your husband's Class 2 contributions are not enough during the age 60 - 65, his auto credits would cover his entitlement to the max basic State Pension.
Class 2 contributions only ever count towards the basic State Pension, so it doesn't really make any difference whether they're on his record or not. Obviously if he is self employed, the fact that auto credits have been applied would not exempt him from paying NI if he was liable.

MrB

CIS

As he'll be paying class 2 , he obviously not got small earnings exemption from class 2, so for any tax year that hes liable to pay the class 2 , he wouldn't get auto credits.