Shortfall in National Insurance Contributions

GrannyKate

This may seem a daft question but can anyone clarify please

I worked full time from age 19 to 22 paying full NI contributions then became a housewife/mother for the next 13 years (did do some occasional part time work and paid NI) I have worked for the last 23 years paying full NI. When I am 60 at the end of this year do I stop paying NI even though I am continuing working.

Hubby was 60 last week and has worked full time since age of 16 - does he have to continue paying the full NI rate until he is 65 even though he will have paid 44 years this year (planning to retire 63/64 if possible)

Ta

jarviser

Grannykate, as far as I know you carry on paying NI whilst you are working, until you get to state retirement age. I retired at 54 and stopped paying NI immediately. I had enough NI in the old rules to get over 80% of a pension so decided not to pay Voluntary class 3 (£30 a month). Good job, looking at the new rules, BUT the new rules are for people who will reach retirement age after 2010, whereas you still need 39 years and Hubby 44 years contributions. You get credits for looking after your children - at least 8 years maybe more, but a call to the folk in Newcastle will tell you straight away what credits you have.
http://www.hmrc.gov.uk/helplines/individuals-ni-helpline.htm
and rules here
http://www.hmrc.gov.uk/nic/class1.htm
Unfortuntely the online forecast is closed til the autumn for computer rewrites for the new rules!
My neighbour is 60, she is continuing to work, but she has also decided to draw her pension, and has stopped being deducted NI. However her tax code dropped from 500 to 44 - in other words her pension is all taxed at whatever the top rate is for her (I think it's 23% which will drop to 20% in April).
If Hubby retires at 63 he will stop paying NI immediately and with 44 years should get full pension. I don't think he has any choice but to continue paying NI until then.
None of the above constitutes financial advice, personal opinions stated.

EdInvestor

GrannyKate wrote: »

I worked full time from age 19 to 22 paying full NI contributions then became a housewife/mother for the next 13 years (did do some occasional part time work and paid NI) I have worked for the last 23 years paying full NI.

Contact https://www.thepensionservice.gov.uk for a forecast of how much you will get.They will do this for people retiring before 2010.It may be worth your while paying additional NI to get more years if you are short the full 39. You are not however required to pay NI after claiming your state pension if you are still working.

Hubby was 60 last week and has worked full time since age of 16 - does he have to continue paying the full NI rate until he is 65 even though he will have paid 44 years this year (planning to retire 63/64 if possible)

IIRC men get the years between 60 and 65 credited for free so he shouldn't have to pay, but worth checking.

jamesd

Your husband should get the years between 60 and 65 credited but this is being phased out as the new 30 years of contributions rule is introduced so it is worth checking at the Pension Service to verify that he'll be credited for all of them, or that he needs no more because he already has enough.

GrannyKate

Thanks for replies - I am waiting for a pin number to get a quote from pension service as to exact status of NI contributions. I have been reading round and understand that my record will be short of the 39 years because Home Responsibilities Protection only started in 1978 and I was at home with children between 1971 and 1985. I had a couple of letters back in 1985/6 stating that my NI contributions for those 2 years were not enough but as my youngest was still only 5 would I not get HRP even though I was doing some part time work? I also wondered about the NI contributions made between 1972 and 1974 when I worked about 10 hours per week.

Will see what happens with OH NI on his next pay slip.

bobmccluckie

I took early retirement in 2003. I am currently aged 56. I was told this week by the Pension service that I will be credited with 5 years from age 60 to 65, and that I can reclaim all the voluntary contributions I have made since 2006. They calculated it all for me and the form went off to them this morning.

Furthermore surely the HRP allowance limit of 19 years is for one child. We have 3 , born since 1986, and I believe my wife gets HRP from 1986 until the youngest leaves full time education. That's 23 years, not 19. That's what her pension forecast letter says anyway.

Finally don't forget registered carers receive full protection as well for as long as they are carers.

sharnad

bobmccluckie wrote: »

I took early retirement in 2003. I am currently aged 56. I was told this week by the Pension service that I will be credited with 5 years from age 60 to 65, and that I can reclaim all the voluntary contributions I have made since 2006. They calculated it all for me and the form went off to them this morning.

Furthermore surely the HRP allowance limit of 19 years is for one child. We have 3 , born since 1986, and I believe my wife gets HRP from 1986 until the youngest leaves full time education. That's 23 years, not 19. That's what her pension forecast letter says anyway.

Finally don't forget registered carers receive full protection as well for as long as they are carers.

Pensions services are not supposed to advise on what refunds can be made as they do not decide on them

19 is the full amount you can claim with HRP

GrannyKate

Re my earlier posts - I got a pension forecast and assuming I retire later this year at 60 I will have 30 qualifying years and 8 years HRP giving me 38/39 of state pension (97%)

As I will not be retiring for another 3 years approx, I would want to defer the pension. Deferring the pension gives me some extra or a taxable lump sum when I take it.

Now this is the bit I do not understand with regard to NI.
Do you automatically stop paying at state pension age?
If not can I pay for one more year to give me the 39 years for the full state pension and, if this is allowed, is it worth doing?

EdInvestor

bobmccluckie wrote: »

I took early retirement in 2003. I am currently aged 56. I was told this week by the Pension service that I will be credited with 5 years from age 60 to 65, and that I can reclaim all the voluntary contributions I have made since 2006. They calculated it all for me and the form went off to them this morning.

As you retire after 2010, you will only need 30 years NI conts for the full BSP and thus will have overpaid: pleased to hear they will refund conts paid since the pensions Bill announcemenet of potential change on this in 2006.

EdInvestor

GrannyKate wrote: »

As I will not be retiring for another 3 years approx, I would want to defer the pension. Deferring the pension gives me some extra or a taxable lump sum when I take it.

Now this is the bit I do not understand with regard to NI.
Do you automatically stop paying at state pension age?

Yes, but you can still pay additional voluntary contributions

If not can I pay for one more year to give me the 39 years for the full state pension and, if this is allowed, is it worth doing?

The same effect might be obtained by deferring, but hard to know which would be more cost effective..