Will i qualify for a UK state pension?

PGD

After looking on the government site it looks fairly simple to qualify for a state pension. So far as i can see you only have to have paid NI contributions for 30 years+ that must total £5000 or more (over the 30 years i'm guessing).

I'm 32, have been self employed for 10 years paying class 2 contributions of around £10 per month plus about £300 per year in a lump alongside my tax. Before that i was employed for 5 years paying NI and tax.

Many people keep telling me that self employed people don't qualify for a state pension but i don't think that's correct. If i carry on paying class 2 for the next 35 odd years surely i must qualify for the full state pension? My house will be paid off by age 45 at most so it'll be more than enough for me if i live that long!

westy22

Self employed get the basic state pension if they have 30 years contributions but not the SP2 enhancement. It is academic anyway as the Government has confirmed its intention to move to a Minimum State Pension before you will be retiring.

PGD

Thanks for the reply. I understand lots could change over the next 30 years but after being told by a pension company that i'd have to pay £500 a month for 35 years to get the same as a state pension i'm wondering why anyone would bother doing that?!?

srcandas

PGD wrote: »

Thanks for the reply. I understand lots could change over the next 30 years but after being told by a pension company that i'd have to pay £500 a month for 35 years to get the same as a state pension i'm wondering why anyone would bother doing that?!?

For sure the state pension is cheaper in most cases than any personal pension. For example my wife has the option of buying a few missed years to get her entitlement up. To get just over £200 inflation protected pension per year her state cost will be £600, to get the same from a private pension would cost over £3000.

But the problem is "can you live on a state pension??". If you can't you need to find someway of getting additional retired income.

atush

PGD wrote: »

Thanks for the reply. I understand lots could change over the next 30 years but after being told by a pension company that i'd have to pay £500 a month for 35 years to get the same as a state pension i'm wondering why anyone would bother doing that?!?

Why would they bother? Well, that is easy.

It is a way to save in equities (which outperform cash and property over periods of longer than 10 years) with tax reief (so you get more in your pension than you pay in as the govt tops it up by BRTax). While these savings cannot be accessed until age 55, they are sheltered not just from tax (and spendthrift impulses) they are sheltered in most cases from debt, bankruptcy, and means tested benefits.

Then, you have have to look at your actual retirement- can you live on the basic state pension?

I can't, so unless you want to be poor in retirement you need to save in pensions, ISAs and pay off amy mtg you may have before retirement.

Starbrite

I got my state pension forecast through last week, I'm due to get £108 a week I think it said and I need to pay in for another 13 years to qualify for this.

I also have a personal pension to top up my state pension. In 2043 £108 will be like a fiver in todays money!

warwicktiger

Yes but how much will your state pension be? The forecast of £108 pw will be in 2012 money.

mgdavid

warwicktiger wrote: »

Yes but how much will your state pension be? The forecast of £108 pw will be in 2012 money.

with an ever-ageing population and ever-decreasing jobs in the developed/western world it is likely there will be little or no state pension in 30-odd years time. Not taking bets as I won't be around to collect my winnings...

Jennifer_Jane

mgdavid, the one thing that is sure is that you will need to have 'bridging' pension savings for the time between wanting to leave work and getting the State Pension. I would not be able to live on the State Pension alone (that's why many pensioners struggle), so whatever you do, do have additional pension savings.

With the 'Magic of Compound Interest' the more you invest now at a young age, the less you would be required to invest closer to the time you no longer work. Remember, circumstances change and you may be unwell later in life, hate the job, the boss, whatever! Best to have money available for those unforeseen events.

Jennifer_Jane

Starbrite wrote: »

I got my state pension forecast through last week, I'm due to get £108 a week I think it said and I need to pay in for another 13 years to qualify for this.

I also have a personal pension to top up my state pension. In 2043 £108 will be like a fiver in todays money!

As warwicktiger says, this is in today's money. Your future Basic State Pension has just been increased by 5.2% (September's CPI rate), so every increase current pensioners receive, mean that your future pension is also increasing.