Shortfall in National Insurance Contributions

mystic_trev

I'm after some help!

I retired in 1996 aged 42 yeah, I know how lucky can you get!

I've not been paying any Class 3 contributions since then, and have just received my forecast.

"The latest information we have on your NI contribution record shows that, up to 5th April 2006 you have 27 qualifying years on which you get a basic State Pension of 62% of the full rate"

I'm wondering what I ought to do? Pay three years taking me up to 30 or pay for the whole 9 years backlog? My thoughts are to just pay the last three years, does this seem the sensible thing to do?

EdInvestor

Just pay three, since you will retire later than 2010, that should give you the full basic.

jamesd

If you are a man aged 60 to 65 and you are not paying contributions on earnings (because, for example, you have taken early retirement), you will get NI credits.

It appears that those credits will get you over 30 years but I'm not sure of the rules so you should check to ensure that they will.

Personally, if ample money is available, I'd go with the pay three years and be certain of it option. Of those years I'd pay the oldest, not the most recent, assuming that if there is any extension of time to pay and you have a reason to change your mind, the more recent years are more likely to still be payable than the older ones.

Phil3822

I got one of these letters last year saying I owe around £50 NI contributions. Im only 22 so am wondering if its worth paying or not. This all makes very little sense to me! Looking for an easy answer...

jamesd

That sounds worthwhile to give you more flexibility for working abroad later in life, perhaps. It's pretty unlikely that you'll actually need it to get the full basic state pension unless you do something like workiing abroad.

squirrl

It seems to me that the Government is about to create a date of birth lottery. A male born in 1944, with 30-43 years of NI contributions, will not receive a full state pension. On the other hand, a male born in 1945 or later, with 30 years of contributions, will receive a full state pension.

EdInvestor

That's right.There have been some complaints about this "cliff edge" but the Government is unmoved, as it wants to get the problem sorted now in one hit.It mostly affects women, and the quid pro quo is that most of those who still need the full number of years at least get their pension paid from 60 so will benefit that way.

Any man caught in this should check to see if he has any missing years he can catch up on. There won't be many - 87% of men are eligible for the full basic state pension now, with women it's more like 35%, the new rules will increase that to 70%.

jamesd

squirrl, yes, it's a lottery of sorts. On the other hand, those who are not in the group that benefits from this reduction are in the group that wasn't paying enough to cover the longer life expectancies that they have, so they have gained in that way instead.

Prior to the change it was impossible for me to qualify for the full basic state pension even by paying voluntary class 3 contributions for all years from 1996 to 2001.

dweep

I have a question about continuing NIC's until I retire on my 60th birthday in 2009. ( I am female)
I have left my job and intend to spend my time up to my retirement date working for a total of about 5 months of each tax year earning just enough to pay the bills.
I anticipate earning a minimum of £4700 each tax year and probably a maximum of £6000.
I want to continue paying NIC's towards my pension.

EdInvestor

Not clear what your question is? You will need to keep paying unless you already have 39 years as the 30 year rule applies only to those retiring after 2010.