National Insurance Underpayment

DragonDosh

Hello,

Can anyone advise whether it's worth repaying a National Insurance underpayment?

My partner has been advised that he has underpaid N.I contirbutions by around £500 for the previous tax year. Not surprising since he works as a supply teacher and had an erratic working pattern over the past year for family and other reasons.

He's all fired up and ready to pay the amount back in full.

However I don't think it's worth it, since there seems little benefit in the short term (unless he needs to sign on) and by the time he reaches pensionable age .... there may not be a stae pension anyway. That's the advice I was given when I had an underpayment a year or so ago - but they wrote again later to say it was now up to date as I continued to work.

I think it makes more sense for him to retain the money to live on and earn whatever interest he can. Especially since I don't think there is any legal action that can result from him not paying, just the suggestion it may affect future pension entitlement.

Can anyone help? I've got him to agree to hang fire until I can find out more so if anyone can offer help today, that would be greatly appreciated.

Thank you!

Rolo_Tomasi

First of all I would double check that there was an underpayment. Even as a supply teacher he would have had nic deducted unless he was earning below the threshhold.

If there is an underpayment then the main effect will be on his state pension. I think that you now need 30 years of contributions to become entitled to the full basic pension - is he likely to achieve this if you do not include last year?

I think there will always be some form of state pension - can you really see a government abolishing it? but in the end it is up to you whether to make up the contributions.

chappers

As above, it's all about the amount of pension you may or may not recieve and then balancing it against how much you are short against the amount of time you may live after pensionable age. They will write to you when you come close to pensionable age telling you if there is ashortfall and giving you the chance to make it up before a certain date.
This happened to my Dad , as he was living in the USA and had a shortfall, he worked out how many years he and his wife would have to live for it to be worth paying up and decided it was worth it as barring serious illness or afreak accident it would probably be worth it.
I wouldn't worry about it too much at the moment, unless he is coming close to pensionable age.

alared

From NEXT year the amount of NI contributions you have to make over your working life to get a full state pension,is being lowered to 30 years from 44, as at present, for a man.
If he has plenty of time to accrue 30 years,then don`t pay it.