NI contributions and the state pension

kazca

Hi

I have 29 years of qualifying NI contributions torwards my state pension according to the pension calculator and would like to get the last required year for a full state pension as soon as possible.

I am usually self employed but my income has been very low for various reasons leading to a class 2 exemption certificate valid until 2015. Recently moved house into a new area with no work so signed on for JSA. I couldn't claim benefits because class 2 does not count for JSA but my NI was paid for a little over three months.

I am about to start self employment again and although my income will still be very low, I want to pay class 2 NI to get the 30th year out of the way.

Three questions please.
1) Would the class 2 NI exemption certificate still be in force, bearing in mind the NI benefit recently received?
2) Having had three months NI benefit am I correct in thinking that I can end the exemption and start to pay NI and after a further nine months of class 2 contributions, will have paid my 30 years?
3) If I do nothing will I be offered the opportunity of topping up for the tax year, ended 5/4/13 at the relevant class 2 NI rate?

Torry_Quine

It's changing/has changed to 35 years.

xylophone

It's changing/has changed to 35 years.

Thirty years currently but the single tier pension (from 2016?) will require 35 years. http://www.telegraph.co.uk/finance/budget/9935648/George-Osborne-brings-forward-major-pension-and-care-reforms-ahead-of-Budget.html

http://www.dwp.gov.uk/docs/single-tier-pension.pdf
http://www.hmrc.gov.uk/pensioners/paying-making.htm#1
Best to contact HMRC for information? http://www.hmrc.gov.uk/ni/intro/basics.htm

fruitypuds

A couple of years ago I spoke to a helpful woman at HMRC about Class 2, because my earnings are low enough for a Low Earnings Exemption Cert. She told me that policy on pension and other State benefits were in a state of flux (aren't they always) and that she & her colleagues all believed it best to forego the certificate and pay the Class 2, because the rate of State pension could depend on it. I kept paying

kazca

Thanks for the replies
Regrettably they don't answer my questions and raise further issues:-) - isn't that always the case when dealing with the UK as a business.

I think your advice re paying class 2 is probably correct. At £2.70 a week, the NI costs £140.40 a year. I will cancel the certificate next week - hopefully no hitches with doing this considering the JSA connection.

The 35 year issue is typical and who knows whether it will stop there. I did try to get some clear info from the links but would appreciate some guidance as to how the government intend to apply this. I am in my 50th year so a way off getting a state pension.

The dire state of UK finances and because I have some savings seriously minimises my chances of ever getting a state pension. This country has paid out too much money to people who will never contribute at the expense of those who have and furthermore have been prudent enough to consider their future and that of their dependants.

sundeck

I was wondering if I would be classed as self employed if my only income is from savings?

gadgetmind

sundeck wrote: »

I was wondering if I would be classed as self employed if my only income is from savings?

All you have to do is register as self employed and voluntarily pay class 2 via direct debit. Pick an occupation that makes you car insurance cheaper or at least no more expensive. Busker is bad so maybe try "sage". You may also find it better to start at the beginning of the tax year but you might be in time to backdate this year.

They will probably ask you to start doing Self Assessment but this is easy enough.

My wife has been paying class 2 this way for several years and HMRC don't seem to care one jot that her income (not counting savings) is only a couple of hundred quid a year.

Presumably the accept that it can take time to get a business off the ground. My wife is at 29 qualifying years so I think it'll be another 6 years or so before she decides to pack it in.

atush

The dire state of UK finances and because I have some savings seriously minimises my chances of ever getting a state pension.

this makes no sense whatsoever.

Your savings will have no affect on your state pension, and the dire state of UK finances is why they changed the retirement age (as people are living longer).

Hopefully you wil be able to pay more NI to get your full 35 years before retirement.

Perelandra

gadgetmind wrote: »

My wife has been paying class 2 this way for several years and HMRC don't seem to care one jot that her income (not counting savings) is only a couple of hundred quid a year.

Presumably the accept that it can take time to get a business off the ground. My wife is at 29 qualifying years so I think it'll be another 6 years or so before she decides to pack it in.

Ha!

Thanks- made me laugh.

Perelandra

atush wrote: »

this makes no sense whatsoever.

Your savings will have no affect on your state pension, and the dire state of UK finances is why they changed the retirement age (as people are living longer).

Hopefully you wil be able to pay more NI to get your full 35 years before retirement.

Certainly under the current rules, that might change, of course, if the state pension becomes means tested in due course.

I don't think it will do- too much of a 'sacred cow', and certainly the fear of this should stop people saving for retirement. I will be mightily ticked off, though, if the state pension were to go down this route.

Perhaps it would become the biggest insurance 'ppi' mis-selling event in history!