National Insurance Contribution Queries

Spidernick

Yes, I cannot see it being abolished entirely, but what chance it being means tested like Child Benefit? That would really grate as it would mean that those who had planned for their retirement might be penalised. You are also correct in that the retirement age will continue to creep up (funny how the Germans actually put theirs down recently!).

Personally I am playing it safe and working on the basis that any state pension I get will be a bonus due to the reasons cited above. Pessimistic, I know, but I don't want to be caught out.

atush

I dont think it will be means tested either. More likely to stop or limit increases, once auto enrollment people begin to retire?

jamesd

Nothing to prevent it being means tested but it's worth knowing that one of the reasons for the flat rate change is to get more people above the point where they would qualify for means tested topups due to the Minimum Income Guarantee.

That's been done by taking state pension money from long term employees that they would get under current rules and giving it to those with poorer contributions records under the new rules. The cap of only £144/155 a week is the key tool for this, depriving even low full working life people who might end up with more like £190 a week under current rules. Those close to retirement won't be affected much but those who have a foundation amount that is at the flat rate or higher will not get any more even though under the current system they would continue to get more additional state pension for as long as they worked and paid NI.

gadgetmind

The point at which myself and spouse hit full flat rate is the point at which HMRC won't get a penny more NI from us ever again.

My pension will be cost neutral for them anyway as I'll be paying more in tax in retirement than I'll be getting in pension, and long before SP kicks in. How many times over do they want me to pay for my state pension?

jamesd

I thought you might "opt out" of income tax courtesy of VCTs and such.

For others, you can't opt out of income tax but you can pay into pensions or VCTs and get tax relief, then withdraw some (pension) or all (VCT) of the money later tax free. VCTs are relatively high risk so it takes a while to accumulate enough money for it to be sensible to use them and you also need to be able to leave the money invested for at least five years, better 7-8 or more.

Spidernick

gadgetmind wrote: »

The point at which myself and spouse hit full flat rate is the point at which HMRC won't get a penny more NI from us ever again.

The only way to do that is to give up work, or only earn a very small sum working (insufficient to pay employees' NI). Isn't that a little extreme if that's the only reason you'll be giving up work?

We all have to pay into things we don't get the full benefit from - that's life. People without kids have to pay towards education, for example. There's more to consider than just our own personal circumstances, surely?

gadgetmind wrote: »

My pension will be cost neutral for them anyway as I'll be paying more in tax in retirement than I'll be getting in pension, and long before SP kicks in. How many times over do they want me to pay for my state pension?

For that to happen an awful lot of your income will presumably be in the form of investment income (unless my brain is completely addled tonight!)? Or when you say 'getting in pension' do you just mean the state pension and you'll be getting a decent occupational or private pension on which you'll pay tax in excess of your state pension?

gadgetmind

Spidernick wrote: »

The only way to do that is to give up work, or only earn a very small sum working (insufficient to pay employees' NI).

Yup, that's the plan!

People without kids have to pay towards education, for example.

And many people with kids pay to educate their kids, but still have to pay huge taxes to educate the kids of others. Perhaps we could all get an education voucher that we could use at a state school, use as part payment at a fee paying school, or flog on ebay?

Or when you say 'getting in pension' do you just mean the state pension and you'll be getting a decent occupational or private pension on which you'll pay tax in excess of your state pension?

All of our retirement income will be from investments, some in pension wrappers, some not. Tax on income from these will exceed our state pensions and kick in 12 years before SP does.