National Insurance & Pensions

hoof

Due to take early voluntary retirement and start receiving company pension. Not currently planning to work, so pension will be my main "income". Although I still have several years to go until state pension age I believe that although my pension will be suject to income tax, no national insurance contributions will be payable. Is this correct?

RichandJ

Yep, NI is not taken from any pension.

hoof

Presumably this will happen automatically (ie pension scheme will not deduct NI before paying me) and I do not need to contact any government department? Should receive documentation pack shortly to set up pension so maybe that will make things clearer.

RichandJ

Yep again. No need for you to do anything - whoever is paying your pension will not deduct NI from it, it simply isn't on the radar.

kidmugsy

Our experience has been that the income tax deducted from our pensions has been erratic - the fault of erroneous tax codes from HMRC, not of the pensions companies. It's worth checking your code carefully.

Loughton_Monkey

Just in case, make sure (the obvious) that you have your full 30 years qualification for full State Pension? I expect you do, but if not, you would be advised to pay voluntary Class 3 to make it up.

hoof

I do already have the full 30 years qualification for full state pension, as does my wife.
Regarding income tax deductions, I will need to have my current initial notice of coding for 2011/12 changed as I will be handing back company car and losing other BIK.
Just wondered whether I could do this via email or do I have to write to them with fetails or call (and potentially end up in inevitable long queue). Advice appreciated.

RichandJ

Revenue guidance here :

http://www.hmrc.gov.uk/incometax/starting-work.htm

Check with your employer/pension payer that a P46(PEN) is being actioned. Until they hear back from HMRC with a new code they will have to use either a Week/Month 1 basic code or the one currently applied to your salary.