Shortfall in National Insurance Contributions

seven-day-weekend

You only need 30 years of NI Contributions to qualify for your full State Pension (although if you are working you will continue to pay it even if you already have the thirty years), so if you are only 27 and your State Retirement date is 68 you have over 40 years to pay 23 years worth.

So no, it's not worth paying the shortfall now.

oldandgrumpy

Recent letters from HMRC
NI Contributions office,11th Dec 2007:quote "I am pleased to tell you that you are entitled to HRP for the tax year, from 6th April 2006 to 5th April 2007"
Same office, same people 5th September 2008: quote "We are writing to tell you that there is a gap in your NI contributions for the tax year 2006-07...:
Next sentence: "If you want to you can pay pay £392.60 to make 2006-07 count as well".
Next sentence: "Your record shows that you have HRP for 2006-07."
Next sentence "If you want to make up the gap.....send us £392.60...
What a rubbish organisation this is.

oldandgrumpy

If you are still there, Edinvestor, can you help solve this one?
My wife has 8 years HRP, and, if she continues as per till 2009 will have 26 qualifying years. That plus HRP should be 34 QYs.
She must have 39 for a full pension, in May 2009.
Therefore her % of Full basic should be 34/39 =87.179%..87%.
The basic data comes from her recent pension forecast. But the forecast goes on to say that "...you should have 26 qualifying years. With your HRP(8 years) this would give you 84%, ....£76.19 per week." Not £78.91.
Where am I going wrong?

EdInvestor

oldandgrumpy wrote: »

If you are still there, Edinvestor, can you help solve this one?
My wife has 8 years HRP, and, if she continues as per till 2009 will have 26 qualifying years. That plus HRP should be 34 QYs.
She must have 39 for a full pension, in May 2009.
Therefore her % of Full basic should be 34/39 =87.179%..87%.
The basic data comes from her recent pension forecast. But the forecast goes on to say that "...you should have 26 qualifying years. With your HRP(8 years) this would give you 84%, ....£76.19 per week." Not £78.91.
Where am I going wrong?

Under the old rules, you deduct HRP years from the number required, thus the calc is 39 minus 8 HRP = 31 yrs req for the full pension, so she is at 26/31.Does that help?

oldandgrumpy

Yes and no, thanks edinvestor. It solves the query but agrees the forecast pension, not my version.

sammyd864

I received a shortfall letter today saying that if I pay £15 I can include the year 2006/07 in my national insurance contributions.

What I'm wondering is where this figure came from. Is it based on total earnings for that year? In which case did they look at my annual earnings and realize that they hadn't taken enough NI and this payment will rectify that?

My other question is that as I understand it tax is calculated annually and NI weekly. Why is this? Say for example I earn £1000 in one week and nothing at all for the rest of the year. I wouldn't pay any tax on that, but I would pay national insurance. But if I earnt £50 a week for 20 weeks I would earn the same amount that year but I wouldn't pay any tax or NI. So in the first example can you claim a NI refund?

glitterkitty

sammyd864 wrote: »

I received a shortfall letter today saying that if I pay £15 I can include the year 2006/07 in my national insurance contributions.

What I'm wondering is where this figure came from. Is it based on total earnings for that year? In which case did they look at my annual earnings and realize that they hadn't taken enough NI and this payment will rectify that?

My other question is that as I understand it tax is calculated annually and NI weekly. Why is this? Say for example I earn £1000 in one week and nothing at all for the rest of the year. I wouldn't pay any tax on that, but I would pay national insurance. But if I earnt £50 a week for 20 weeks I would earn the same amount that year but I wouldn't pay any tax or NI. So in the first example can you claim a NI refund?

First of all, no you can't claim an NI refund. You havent 'overpaid' like you could do on tax.

Secondly, yes, the letter will have shown that you have only earned enough for 50 weeks worth of NI in 06/07. There is a set Lower Earnings Level which has a weekly, monthly and annual amount. You would have earned just below the annual amount, so your employer was only liable for 50 weeks worth of NI. if you paid the money shown, that year would then become a qualifying year for state pension and bereavement benefit purposes.

ashm1

http://news.bbc.co.uk/1/hi/uk/7687980.stm

Women in line for pensions boost


Hundreds of thousands more women will have the right to claim a full state pension from 2010, the government is expected to confirm later.
At present, 90% of men but just 35% of women qualify for the full £87 a week.
This is because many women who have given up work to have children or care for relatives have not paid National Insurance for the minimum 39 years.
Ministers are due to announce that the limit will be lowered to 30 years for men and women from April 2010.
In addition, those who have missed out on National Insurance payments will be able to buy an additional six years' contributions, giving many more people the chance of the full pension.
This will double the current amount people are able to buy in order to reach the minimum required for a full pension.
'Credits'
These moves will mean that by 2025, 95% of women reaching pension age will be entitled to a full state pension, ministers say.
BBC political correspondent David Thompson said the government had resisted such moves until now, despite a cross-party campaign led by former Labour minister Baroness Hollis.
But faced with mounting pressure - and the possibility of defeat when the Pensions Bill goes before the House of Lords next week - ministers have had a change of heart, he said.
Work and Pensions Secretary James Purnell is also expected to announce a new system of NI credits which will recognise caring for children or a disabled person in the same way as paid work.
Mr Purnell told the Daily Mail: "The Pensions Act will transform pension provision and finally bring equality for women and carers, so that by 2010 around 75% of women reaching state pension age will be entitled to a full basic state pension, rising to 95% by 2025."
Charity Age Concern told the newspaper it was "thrilled" with the decision.

glitterkitty

that is a really old news story... the white paper was passed through parliament 18 months ago and all of that in the story has been in place to change in 2010 since last year!

seven-day-weekend

Still helpful though for those who didn't know (who still appear to be many, for some unknown reason!).