Do you pay National Insurance contributions on your pension if you retire early?

whitesatin

I retired at 56 on a pension of £8000 plus and although I pay tax, no deductions are made for National Insurance. When I do some paid work, I automatically pay NI on my earnings.

My husband is hoping to retire at the end of March 2010, aged 51 and will have a pension of £13,000 plus. I know he will have to pay tax but will he have to pay National Insurance too? He will not get a state pension till at least 65 and has 34 qualifying years already.

dzug1

He will not pay NI on the pension

He should consider paying voluntary contributions - but with the number of qualifying years he has it may not be necessary - take advice.

jem16

whitesatin wrote: »

He will not get a state pension till at least 65 and has 34 qualifying years already.

Anyone who is due to get the state pension after April 2010 will only need 30 qualifying years.

He will not need to pay NI.

whitesatin

That's what we were hoping, Jem16. We were just a bit worried that it might not apply to him because he is going just before the change in early retirement rules next April.

Thanks.

jem16

whitesatin wrote: »

That's what we were hoping, Jem16. We were just a bit worried that it might not apply to him because he is going just before the change in early retirement rules next April.

Thanks.

What matters is when he gets his state pension, not when he retires from work. If, however, he does paid work he will have to pay NI as you have no choice in that.

whitesatin

That's fair enough, he would expect to pay NI if he works. I pay on my supply teaching salary and am happy to do so.

Thanks again.

anmarj

[QUOTE+
He will not need to pay NI.[/QUOTE]


althought the qualifing years are changing he would still need to pay NI if he did any work as these are used for other benefits like JSA etc

jem16

anmarj wrote: »

althought the qualifing years are changing he would still need to pay NI if he did any work as these are used for other benefits like JSA etc

Which I already pointed out in Post 5.

alanfp

You're obviously aware that if he misses the end of March deadline for retiring early, he won't be able to retire till he's 55.
I suggest that you/he carefully investigates the option of taking some of his pension as a tax-free lump sum. You need to be careful though, as although up to 25% of his total pension pot can normally be taken tax-free, the consequent reduction in the annual pension is, I believe, determined by the trustee(s) of his pension scheme, and the factors they use can vary a) between schemes, and b) over time.
If you do go down this route, the trustee should tell you what factors they would use to calculate the figures.

notahopeinhell

alanfp wrote: »

You're obviously aware that if he misses the end of March deadline for retiring early, he won't be able to retire till he's 55.

Hi.

I have a friend who plans to retire at 50 in 2012 on her company pension are you saying there is a new rule preventing this?

Cheers.

Debt_Free_Chick

notahopeinhell wrote: »

Hi.

I have a friend who plans to retire at 50 in 2012 on her company pension are you saying there is a new rule preventing this?

Cheers.

Yes. After April 2010 you can not draw your pension until you reach age 55.

There are a very tiny number of schemes which are exempt from this, so your friend should check with the pension scheme administrators.