NICs following withdrawal of ESA - medicals and work capability assessments

Parsimonia

My husband has lost his final appeal against the withdrawal of his ESA, and his benefit ends on 19th March 2014.

He's not entitled to JSA as I work full time.

We received a letter today that says: "When your contribution-based Employment and Support Allowance ends you will not receive any money. We will continue to credit you with National Insurance contributions. These credits can help you to quality for benefits in the future, including your State Pension.

In order to continue being credited with National Insurance contributions you may be required to provide medical evidence or attend Work Capability Assessments."

We're a bit worried about this last bit. We accept that we lost the appeal and we lose his £110 benefit, but he is definitely unable to work regardless of what the panel may think. His vascular consultant has given us written confirmation of this.

In order to quality for the NICs, what may he have to prove from a medical point of view? Will he continually have to attend Work Capability Assessments even though he's not getting a penny in benefit?

When we typed in his details in the pension calculator on the .gov website, we had the following outcome:

"You already have enough qualifying years for the full basic State Pension of £110.15 a week. Your State Pension age is 66 years.
You’ll reach State Pension age on 20 November 2028."

Does this mean we don't need to worry?

Or is there a risk that, if he fails a medical, he won't get a state pension?

Is there any way we can mitigate this risk? Can we pay the NICs ourselves???

We're really worried, so any advice you can give would be greatly appreciated!

greenglide

If you request a statement of his national insurance contributions from HMRC you can find out how many qualifying years he has.

Remember than in 2016 the number of years for 100% pension goes up from 30 to 35. None of the notifications from DWP or the pensions forecast will state this as the legislation has not yet been passed (but it 100% will be).

In the days of Incapacity Benefit there was a level of "Contributions Only" - maybe they reckon he qualifies on a similar basis.

If he is "seeking work" he would also qualify but receipt of benefit would require to be "actively seeking work" and would be means tested. Failure to accept a job etc would result in benefit being withdrawn. Having been rejected on the health from he should be able to claim unemployed?

Oh - he will qualfy for pension a year later as well

Parsimonia

This is quite complicated to understand... (I'm sorry to be such a dunce!!)

To clarify whether I've understood correctly:

As he's been declared fit for work, he needs to actively seek work in order to continue to have his NICs paid, and if he's offered a job but feels unable to do it because of his health issues, he will become ineligible to have his NICs paid, which will mean he won't have accrued enough NICs to earn a full basic state pension when he's 67?

Have I understand that right?

So, even though we won't get a single penny in benefit from now onwards, he will have to 'sign on' and apply for jobs he possibly can't do in order to continue accruing NICs so that, eventually, at the age of 67, he'll receive the basic state pension.

One further question:
If he doesn't get any more NICs paid with effect from 19th March 2014, will he get the equivalent of 31/35th of the basic state pension when he's 67 (presupposing that HMRC say he's accrued 31 years)? Or will he not get anything at all?

I really appreciate your help!

atush

One further question:
If he doesn't get any more NICs paid with effect from 19th March 2014, will he get the equivalent of 31/35th of the basic state pension when he's 67 (presupposing that HMRC say he's accrued 31 years)? Or will he not get anything at all?

I really appreciate your help!

Yes, if he fails getting a further 4 years Nics thru his health problems. But I wold investigate how often then would require " provide medical evidence or attend Work Capability Assessments." as if once pre year this could well be preferable to paying voluntary nics.

Does he have any S2P?

Parsimonia

atush wrote: »

Yes, if he fails getting a further 4 years Nics thru his health problems. But I wold investigate how often then would require " provide medical evidence or attend Work Capability Assessments." as if once pre year this could well be preferable to paying voluntary nics.

Does he have any S2P?

First question: How do you pay voluntary NICs? If the worst came to the worst, is that something we could consider? Is it expensive?

Second question: What does S2P mean? If it refers to a private pension, he has a frozen private pension from when he was a printer....

Torry_Quine

I could be wrong but I think he's in the position I am in that he is in the WRAG and as such his year of contribution based ESA is finished and he isn't able to get income based. His appeal to get into the support group failed so although he is still in the WRAG group will only get NI credits towards his future state pension.

As such he will still have to fill an ESA 50 when asked and may need to attend a WCA. Also should he get into the support group at a future assesement his payments will re-commence.

I don't think from what you say that he has been passed as fit to work or they wouldn't be giving him NI credits and he would have to apply for JSA which he wouldn't get any money for the same financial reasons.

xylophone

has a frozen private pension from when he was a printer....

Do you mean that he has a deferred final salary pension from an old employer?

Or that he has an old pension policy to which he no longer contributes?

Is there a possibility of early payment of this pension on the grounds of ill health?

Regarding SERPS/S2P http://www.financialadvice.net/state_earnings_related_pension_scheme_2002/zone/350

SeekTruth

First of all I should admit that I know absolutely nothing about ESA, JSA and such like, but I am (slowly) building up an understanding of the State Pension system.

So this post is purely about the OP's husband's State Pension entitlement.

The OP's husband reaches State Pension Age (SPA) in November 2028, sometime after the proposed introduction of the Single Tier State Pension. This means the DWP will perform a calculation for him as at April 2016 to calculate the initial amount of his entitlement (the Foundation Amount) under the new system.

His Foundation Amount will be the higher of the following two figures:
1. His entitlement under the current system (Basic Pension plus State Second Pension (S2P))
2. His entitlement under the new, Single Tier, system. This will be 1/35 (one divided by thirty-five) of the full Single Tier amount for each year of NI contributions paid or credited, up to a maximum of 35 years; minus an adjustment for any years of Contracted Out service.

The full Single Tier weekly amount is expected to be about £144 (in 2012/13 money).

If his Foundation Amount is less than the full Single Tier amount then for each year's NI contributions after 2016 and before SPA he will receive a further 1/35 of the full Single Tier amount - but he cannot build up to more than the Single Tier amount by this method.

In practice, the OP's husband will probably not know the precise effect of the switch to Single Tier until after April 2016 and so at the moment it is difficult to know whether or not it would be worthwhile paying voluntary NI contributions. Fortunately HMRC recognise this problem and have said (see this link, particularly the bit headed 'Extended time limits for the tax years 2006-07 to 2015-16') that people reaching SPA after April 2016 won't lose out provided they pay by April 2019.

My suggestion is that the OP's husband should certainly not pay any voluntary NI contributions until after April 2016, when hopefully the situation should be clearer.

In the meantime if he hasn't already done so then it may help to get a State Pension Statement (see this link). His Foundation Amount for the Single Tier pension will be at least the amount on the State Pension Statement, and may be higher. He may also be interested in getting a National Insurance Contributions Record (see this link) that, amongst other things, will show how much he would have to pay to fill in missing years, if any.

Parsimonia

Torry_Quine wrote: »

I could be wrong but I think he's in the position I am in that he is in the WRAG and as such his year of contribution based ESA is finished and he isn't able to get income based. His appeal to get into the support group failed so although he is still in the WRAG group will only get NI credits towards his future state pension.

As such he will still have to fill an ESA 50 when asked and may need to attend a WCA. Also should he get into the support group at a future assesement his payments will re-commence.

I don't think from what you say that he has been passed as fit to work or they wouldn't be giving him NI credits and he would have to apply for JSA which he wouldn't get any money for the same financial reasons.

Yes, that's his situation. He scored enough points to be considered as having a genuine incapacity, but not enough to remain in the support group. So, once his 12 months are up, he could theoretically get JSA whilst he looks for work, except he's not entitled to any means tested benefits as I work full time.

xylophone wrote: »

Do you mean that he has a deferred final salary pension from an old employer?

Or that he has an old pension policy to which he no longer contributes?

Is there a possibility of early payment of this pension on the grounds of ill health?

Regarding SERPS/S2P http://www.financialadvice.net/state_earnings_related_pension_scheme_2002/zone/350

He has an old, private pension that he no longer makes payments to, and he also has an old work-related pension from his last employer, to which he also no longer contributes either. It's not a deferred final salary pension.

I'm not sure how you apply for early payment of a pension on the grounds of ill-health ...I'll have to look into that! I didn't even know it was a possibility!

Thank you!

Parsimonia

SeekTruth wrote: »

First of all I should admit that I know absolutely nothing about ESA, JSA and such like, but I am (slowly) building up an understanding of the State Pension system.

So this post is purely about the OP's husband's State Pension entitlement.

The OP's husband reaches State Pension Age (SPA) in November 2028, sometime after the proposed introduction of the Single Tier State Pension. This means the DWP will perform a calculation for him as at April 2016 to calculate the initial amount of his entitlement (the Foundation Amount) under the new system.

His Foundation Amount will be the higher of the following two figures:
1. His entitlement under the current system (Basic Pension plus State Second Pension (S2P))
2. His entitlement under the new, Single Tier, system. This will be 1/35 (one divided by thirty-five) of the full Single Tier amount for each year of NI contributions paid or credited, up to a maximum of 35 years; minus an adjustment for any years of Contracted Out service.

The full Single Tier weekly amount is expected to be about £144 (in 2012/13 money).

If his Foundation Amount is less than the full Single Tier amount then for each year's NI contributions after 2016 and before SPA he will receive a further 1/35 of the full Single Tier amount - but he cannot build up to more than the Single Tier amount by this method.

In practice, the OP's husband will probably not know the precise effect of the switch to Single Tier until after April 2016 and so at the moment it is difficult to know whether or not it would be worthwhile paying voluntary NI contributions. Fortunately HMRC recognise this problem and have said (see this link, particularly the bit headed 'Extended time limits for the tax years 2006-07 to 2015-16') that people reaching SPA after April 2016 won't lose out provided they pay by April 2019.

My suggestion is that the OP's husband should certainly not pay any voluntary NI contributions until after April 2016, when hopefully the situation should be clearer.

In the meantime if he hasn't already done so then it may help to get a State Pension Statement (see this link). His Foundation Amount for the Single Tier pension will be at least the amount on the State Pension Statement, and may be higher. He may also be interested in getting a National Insurance Contributions Record (see this link) that, amongst other things, will show how much he would have to pay to fill in missing years, if any.

Thank you so much!!! We've filled in the form today to get a state pension statement, and we'll do the same for his NIC record. We'll peruse all that information, but hold fire on making any voluntary NICs until after we know the lay of the land in 2016. I'm much obliged for your help and advice -thank you!

Torry_Quine

Parsimonia wrote: »

Thank you so much!!! We've filled in the form today to get a state pension statement, and we'll do the same for his NIC record. We'll peruse all that information, but hold fire on making any voluntary NICs until after we know the lay of the land in 2016. I'm much obliged for your help and advice -thank you!

At the moment though he is till getting his NI credits so doesn't need to make any voluntary NI payments. This will only change if he either fails an ESA asessement or decides not to continue with the claim.