Qualifying year if employed only one month

JasonPr

I read the State Pension guide someone linked in another thread and it says:

Since April 1978 a qualifying year has meant a tax year in which a person received (or was treated as having received) qualifying earnings of at least 52 times the weekly Lower Earnings Limit set for that year.

My understanding so far has been that if you're employed you have to earn a certain amount every month, for every of the 12 months of a tax year.

Reading the paragraph above, it sounds like it's also a qualifying year if you were employed for only a single month in a tax year but earned 5772 or more in that month.

Is that correct?

Link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372563/dwp026-state-pension.pdf

saver861

JasonPr wrote: »

I read the State Pension guide someone linked in another thread and it says:



My understanding so far has been that if you're employed you have to earn a certain amount every month, for every of the 12 months of a tax year.

Reading the paragraph above, it sounds like it's also a qualifying year if you were employed for only a single month in a tax year but earned 5772 or more in that month.

Is that correct?

Link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372563/dwp026-state-pension.pdf

You dont have to earn every month to qualify. As long as you earn the £5772 that gives you the qualifying year - regardless of how many or few months you take to earn it.

jamesd

As saver86 wrote it's not time but the amount of earnings that matters. If you were to contact the Future Pension Centre they could tell you your earnings record, the minimum earnings needed and whether the year qualified for every year of your working life in the UK. They did for me. If you do this, take notes so they only do it once for you. If a year is short you can pay extra voluntary contributions to top it up to a sufficient level within a limited time of being told.

JasonPr

Thanks for the clarification. I guess I was confused because the Lower Earnings Limit is given as a weekly figure, so I assumed that you had to meet it 52x per year.

OldBeanz

Thanks for this. I too have been trying to work out what the minimum amount of NI that has to be paid each year to qualify towards a pension as I will leave employment before my state pension age. Difficult to know why this information is not clearly given.

saver861

OldBeanz wrote: »

Thanks for this. I too have been trying to work out what the minimum amount of NI that has to be paid each year to qualify towards a pension as I will leave employment before my state pension age. Difficult to know why this information is not clearly given.

I guess like all things, you don't look it up until you need it. Pensions etc was never on my list of must reads ...

Online does make it easier nowadays - however there is a myriad of info also and its wood for trees problem.

What I did do though, some years prior to my retirement was to create a file, got my pension forecasts etc and anything else I considered relevant. Went over facts and figures several times - in those latter working years - so when the opportunity for retirement came I knew pretty much precisely where I was in the grand scheme of things.

gadgetmind

OldBeanz wrote: »

I too have been trying to work out what the minimum amount of NI that has to be paid each year to qualify towards a pension

The minimum NI is zero.

Earnings above the LEL (Lower Earnings Limit) but below the PT (primary Threshold) gain you a qualifying year despite you paying no NI.

Difficult to know why this information is not clearly given.

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

https://en.wikipedia.org/wiki/National_insurance

greenglide

Earnings above the LEL (Lower Earnings Limit) but below the PT (primary Threshold) gain you a qualifying year despite you paying no NI.

But the PT figure is used for each payment period, unlike the LEL, so a single payment of £1,000 in a week will mean you pay NI but the almost equivalent £20 per week for a year you don't and neither make it a qualifying year.

OldBeanz

So you earn circa £3k pcm how long does it take you to pay enough NI to count as a year's contributions for pension purposes?

noh

OldBeanz wrote: »

So you earn circa £3k pcm how long does it take you to pay enough NI to count as a year's contributions for pension purposes?

Two months in one tax year.

zagfles

JasonPr wrote: »

I read the State Pension guide someone linked in another thread and it says:



My understanding so far has been that if you're employed you have to earn a certain amount every month, for every of the 12 months of a tax year.

Reading the paragraph above, it sounds like it's also a qualifying year if you were employed for only a single month in a tax year but earned 5772 or more in that month.

Is that correct?

Link: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/372563/dwp026-state-pension.pdf

I don't think it would be a qualifying year, since some of that month's earnings will be above the UEL. See http://www.parliament.uk/briefing-papers/sn03111.pdf

What counts as earnings for basic State Pension?
Earnings on which Class 1 and Class 2 contributions have been paid, and Class 3 contributions, will count towards State Pension. Earnings on which full rate Class 1 contributions have been paid or are treated as having been paid count as qualifying earnings. Earnings on which Class 1 contributions have been paid or treated as paid (up to the Upper Earnings Limit (UEL) of [£805 a week in 2014/15]) and Class 2 and Class 3 contributions count towards State Pension. Each Class 2 or 3 contribution counts as one week's earnings at the Lower Earnings Limit.[...]