Shortfall in National Insurance Contributions

EdInvestor

donaldtramp wrote: »

Well my mum has her prediction in and she has 21 years worth.

What year does she retire ?

It is well worth her buying the six years worth of NI stamps that she is entitled to do.

At the moment she should be entitled to buy 10 back years - from 1997-2007.From next April, she may be entitled to buy another 6 years on top of that.

My mum is also entitled to some married womans contributions when my dad hits 65.

This would only be relevant if her state pension in her own right is worth less than 60% of his state pension.

Could I suggest you confirm what you've been told with www.thepensionservice.gov.uk This is the Govt department which works out how much you are due.

Once you hit 60 it's too late

Not so - you can buy up extra years after starting to draw state pension.

glitterkitty

jennyjerome1 wrote: »

When I rang the pensions office, they advised that four of the years in my pension record are "junior" credits. I assumed they are awarded in the tax year following a 16th birthday and for subsequent years whilst in full time education.

Today I checked my figures. As I had five full tax years between my 16th birthday and starting full time work immediately after college at age 21, I'm wondering if there is an error. Can anyone explain how these credits are worked out? I thought I'd check here as I'm impatient. Otherwise I'll have to wait until the office opens again on Monday!!

Thanks

you get 3 years of juvenile credits from the age of 16 to the age of 18, that is all that is you dont get credits for being a student, once you hit 19 you become liable for your own national insurance. The 4th year is probably the first year you worked full time, or had a part time job earning over £4500 in a year.
A lot of people assume being a student qualifies you for NI credits, but it doesnt.

donaldtramp

Thanks for your input Edinvestor! Much appreciated.

Quote:
Originally Posted by donaldtramp
Well my mum has her prediction in and she has 21 years worth.

What year does she retire ?

My mum is 60 next year in October. So I think she'll retire Oct 2009.

Quote:
It is well worth her buying the six years worth of NI stamps that she is entitled to do.
At the moment she should be entitled to buy 10 back years - from 1997-2007.From next April, she may be entitled to buy another 6 years on top of that.

I didn't know about being able to buy back 10 years . I thought you could only buy back 6!

Quote:
My mum is also entitled to some married womans contributions when my dad hits 65.
This would only be relevant if her state pension in her own right is worth less than 60% of his state pension.

My dad is only 4 months NI sort of a full state pension and won't be 65 for another 5 years. He also has a final salary pension from his work and is already receiving it. He took early retirement. He is off the opinion that it aint worth buying up these NI stamps as he is taxed on his other pension and anything he tops up will just be eaten away by tax.

Could I suggest you confirm what you've been told with www.thepensionservice.gov.uk This is the Govt department which works out how much you are due.

Quote:
Once you hit 60 it's too late
Not so - you can buy up extra years after starting to draw state pension.

Oops, sorry I didn't know that about being able to buy after 60. I'll edit my previous post!

She has the prediction in from the pension service. 21 years worth of NI contributions so 21/30 x the pension.

Oh and I've been thinking....
Is it not sexist the way pensions are set out? Mum receives at 60, Dad at 65. A male also needs way more NI years to get a full pension. How can this be? Especially as woman out-live men. Seems a bit like sex discrimination to me!!

Cheers
DT

seven-day-weekend

donaldtramp wrote: »

Thanks for your input Edinvestor! Much appreciated.

My mum is 60 next year in October. So I think she'll retire Oct 2009.
I didn't know about being able to buy back 10 years . I thought you could only buy back 6!

My dad is only 4 months NI sort of a full state pension and won't be 65 for another 5 years. He also has a final salary pension from his work and is already receiving it. He took early retirement. He is off the opinion that it aint worth buying up these NI stamps as he is taxed on his other pension and anything he tops up will just be eaten away by tax.
Oops, sorry I didn't know that about being able to buy after 60. I'll edit my previous post!

She has the prediction in from the pension service. 21 years worth of NI contributions so 21/30 x the pension.

Oh and I've been thinking....
Is it not sexist the way pensions are set out? Mum receives at 60, Dad at 65. A male also needs way more NI years to get a full pension. How can this be? Especially as woman out-live men. Seems a bit like sex discrimination to me!!

Cheers
DT

Anyone whose retirement date is after April 6th 2010, will only need 30 years' worth of contributions to draw their State pension, whatever their gender.

Also from that date, women's' retirement age gradually starts to increase so that anyone born after April 6th 1955 will have a retirement date of 65, equal to men's.

This is a much fairer system for both genders, for different reasons.

EdInvestor

donaldtramp wrote: »

My mum is 60 next year in October. So I think she'll retire Oct 2009.

That's correct.

I didn't know about being able to buy back 10 years . I thought you could only buy back 6!

As you mention in your post aove she will be buying back years starting from 1997. Then just recently the Govt has allowed some women to buy back an additional 6 years and if she already has 20 years she should be eligible for that..

My dad is only 4 months NI sort of a full state pension and won't be 65 for another 5 years. He also has a final salary pension from his work and is already receiving it. He took early retirement. He is off the opinion that it aint worth buying up these NI stamps as he is taxed on his other pension and anything he tops up will just be eaten away by tax.

Well it will be affected by tax ( but he pays 20% and gets 80%, so still worth it, unless he is on a borderline tax band. After he's 65 his tax free allowance will be around 10k p.a as well, which would help.

She has the prediction in from the pension service. 21 years worth of NI contributions so 21/30 x the pension.

That's not correct if she is retiring in 2009.She needs 39 years, it's only those retiring after April 2010 who need 30 years.

Is it not sexist the way pensions are set out? Mum receives at 60, Dad at 65.

As you probably know it's being equalised. Also a woman's state pension at present has none of the benefits of a man - no spouse pension, no widowers or dependant's pension, no retired tax allowance.Apparently the original idea was brought in after WW2 when the average age gap between married couples was 5 years.This was so they could both retire together.

A male also needs way more NI years to get a full pension.

No, the last five years of men's NI are free if they are not working (otherwise they would suffer unfair discrimination.) :rolleyes: Of course anyone who works has to pay NI regardles sof how many years they already have .

glitterkitty

jennyjerome1 wrote: »

A very useful and informative answer to my query. I think you must be right. Three credits and one year full NI before that pointless (as far as contributing to a pension) period of paying "small stamp".

Thank goodness I changed to full stamp later - at least now I've only got a couple of years shortfall to fund to get a full pension.

Many thanks!!

you're welcome i work for the national insurance contributions office! glad i could help!

donaldtramp

Cheers Edinvest,

Quote:
I didn't know about being able to buy back 10 years . I thought you could only buy back 6!
As you mention in your post above she will be buying back years starting from 1997. Then just recently the Govt has allowed some women to buy back an additional 6 years and if she already has 20 years she should be eligible for that..

So I take it she should look into buying as many years as she can?

Quote:
She has the prediction in from the pension service. 21 years worth of NI contributions so 21/30 x the pension.
That's not correct if she is retiring in 2009.She needs 39 years, it's only those retiring after April 2010 who need 30 years.

So she looks like she's actually going to lose out slightly by retiring next year instead of the year after. Is this correct?

If she buys back the ten years that she can, that would be 31/39 x the pension?
If she retired 6 or 7 months later she'd get the full pension for the same buyback of NI years.:rolleyes:

seven-day-weekend

Donaldtramp, whether you need 39 or 30 years depends upon when your retirement date actually IS, not upon when you chose to retire.

See here for retirement dates:

http://www.thepensionservice.gov.uk/state-pension/age-calculator.asp

EdInvestor

donaldtramp wrote: »

So she looks like she's actually going to lose out slightly by retiring next year instead of the year after. Is this correct?

Yes

If she buys back the ten years that she can, that would be 31/39 x the pension?
If she retired 6 or 7 months later she'd get the full pension for the same buyback of NI years.:rolleyes:

She can probably buy a total of 16 - 10 now and 6 next year, so she will have very close to a full state pension.

donaldtramp

Edinvest, just off the phone to my mum, she quoted this article at me from thisismoney.co.uk

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=456043&in_page_id=6

The amendment will allow people to buy another six years with a one-off payment. The change will apply to both woman and men who reach state pension age between April 6 this year and April 5 2015 and who have managed to notch up 20 years plus on their National Insurance record.

The changes mean that the qualifying period for women will be cut down from 39 to 30 years. In addition it will also introduce new weekly national insurance credits which will recognise caring for children or the severely disabled in the same way as paid work.

and

What's it worth?

The change in the qualifying period essentially means that a woman retiring on April 6, 2010, with 30 years' contributions would get the full basic pension of £87.30 a week but prior (my emphasis) to today's announcement one retiring just a day earlier would get only £67.23 a week.

What do you think??