Level of NI for a qualifying year?

catherine12345_2

I hope someone on here can answer a simple(?) question. I have gone round and round in circles trying to understand this and am none the wiser!

I have just gone back to work part-time after maternity leave. I don't earn enough to pay tax and NI but I earn more than the Lower Earnings Limit, currently set at £5304. According to Direct Gov, this level of income counts as a qualifying year for state pension entitlement. However, what is confusing me is I keep reading that a qualifying year is one where a person pays NI. £5304 is below the threshhold to pay NI so isn't this information contradictory?!

xylophone

http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm#5
http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_183760
might be of interest.

catherine12345_2

Thanks Xylophone, however I've also read that for child benefit to count towards a qualifying year you have to be a full-time stay-at-home parent....which I'm not. I'm therefore assuming that the child benefit credits don't apply to me and I need to earn a qualifying year based on my salary. Hence my original question.

Norman_Castle

http://search2.hmrc.gov.uk/kb5/hmrc/contactus/view.page?record=Kybg-pFAYcQ

noh

catherine12345 wrote: »

I hope someone on here can answer a simple(?) question. I have gone round and round in circles trying to understand this and am none the wiser!

I have just gone back to work part-time after maternity leave. I don't earn enough to pay tax and NI but I earn more than the Lower Earnings Limit, currently set at £5304. According to Direct Gov, this level of income counts as a qualifying year for state pension entitlement. However, what is confusing me is I keep reading that a qualifying year is one where a person pays NI. £5304 is below the threshhold to pay NI so isn't this information contradictory?!

You are OK.
Because of your income level you are treated as if you have paid NI contributions.

From http://www.nidirect.gov.uk/index/information-and-services/pensions-and-retirement-planning/pensions-and-retirement/state-pension/basic-state-pension/qualifying-for-basic-state-pension.htm

"Will you get a basic State Pension?

You can get a basic State Pension by building up enough qualifying years before State Pension age.
A qualifying year is a tax year where one of the following applies:

• you have sufficient income to pay National Insurance contributions
• you are treated as having paid National Insurance contributions
• you are credited with enough contributions

In 2011-12, you need to have £5,304 or more of such earnings if you are an employee or £5,315 or more if you are self-employed."

xylophone

From link given in post 2 http://www.hmrc.gov.uk/childbenefit/start/claiming/protect-pension.htm#5

If you have a child under 12 - and you're either looking after them at home or you work but don’t earn enough to pay National Insurance contributions - Child Benefit can help you qualify for ‘credits’ for being a parent or a carer. These credits count towards your State Pension.

From other link in post 2 http://www.direct.gov.uk/en/Pensionsandretirementplanning/StatePension/DG_183760

You may get credits if you are:
getting Child Benefit for a child under 12
a registered foster carer
caring for one or more sick or disabled people for at least 20 hours a week
This entitles you to basic and additional State Pension. The credits are also worthwhile if you are self employed or you have low earnings because they help you build up additional State Pension.
The government recently announced changes to who can claim Child Benefit. The full implications of the change, including how to make sure that those affected continue to receive credits towards their State Pension, are being considered. Further information will become available in due course.

catherine12345_2

Great, looks like I have 2 bases covered so all is ok.

Thanks for taking the time to respond again Xylophone, my head was spinning with all the webites I trawled through - your last post was just what I needed.