State Pension and NI contributions

graham44

My son-in-law, in his mid-30s and disabled, has been self-employed for a few years. Although he paid Class 4 contributions (which I understand don't count towards pension benefits), for a couple or so full years up to 2014/5 he was exempt from paying Class 2. If he was exempt, would that mean in that period he would or would not have had any qualifying years?


If he would not, does that mean he could claim error by retrospectively paying Class 2 or would he have to try to rectify the past by voluntarily paying Class 3?


He certainly wants to ensure that he pays sufficient NI to avoid him being adversely affected for future years. When his self-assessment return is calculated on-line in Jan. 2017 and 2018, I understand he will be charged Class 2 for 2015/6 (the old Pension scheme) and from 2016/7 (the new) so I assume that by doing so these years will certainly be fully protected. Am I right?


From what I also understand from this year's Budget, Class 2 is to be abolished from 2018/9 and beyond so how self-employed people will be eligible for pension from then on seems to me unclear. It seems pointless to make any voluntary payments for the past while that uncertainty prevails.


Any thoughts would be most welcome. Thank you.

xylophone

He would do well to obtain a state pension statement after 6 April.

https://www.gov.uk/check-state-pension

https://www.gov.uk/national-insurance-credits/eligibility

You mention that he is disabled - eligible for credits?

anmarj

If he was exempted from paying then they do not qualify as years for state pension purposes.

sheramber

iF your son in law was exempt from class 2 because of small earnings he would not have paid class4 nic which is only payable at a higher earnings figure than the small earnings exemption limit.

No definite decision has been made about what will happen if and when class 2 is abolished but A proposal is that small earners would have to pay voluntary contributions if earning below a certain limit. Between that limit and a higher one they would have zero rated class 4 NIC giving them credit for state pension.

https://www.gov.uk/government/consultations/consultation-on-abolishing-class-2-national-insurance-and-introducing-a-contributory-benefit-test-to-class-4-national-insurance-for-the-self-employed/the-abolition-of-class-2-national-insurance-introducing-a-benefit-test-into-class-4-national-insurance-for-the-self-employed

graham44

Thanks for all your input. Very helpful.