National Insurance Contributions Shortfall - To pay or not to pay?

andy768

Hi,
I recently received a letter saying I had a shortfall of ~£200 for my national insurance contributions for the tax year 2005-2006. I have no complaints with that figure (I was in uni), however when I rang the NI office to ask if there were any other years, it turned out I was also short the year before (again in uni), this time it was ~£400. When I asked him for an total for both figures, he said I would be best leaving them as I am only 24 and I only need 30 years to qualify (I already have 6). Does he have a point or should I top up my contributions?
Secondly, is it a case of reaching 30 years and then that is it, or do you get a larger income based on the more years you have achieved?
Thanks, and apologies if these are stupid questions!

david78

You only need 30 years to qualify now. If you are working and expect to do so until you are 60 then I wouldn't bother topping up now.

They send these out every year. See the following.

http://www.thisismoney.co.uk/retirement/article.html?in_article_id=412293&in_page_id=6

seven-day-weekend

You only need 30 years NI to qualify for your full State Pension. However, if you are working you have to keep paying NI as it also qualifies you for other contributory benefits such as State Second Pension and Incapacity Benefit.

royeee

What happens to men who normally/usually retire at 65 and take State pension having worked at least 44 qualifying years but retire at 60 on company pension and not working the full 44 years?

seven-day-weekend

royeee wrote: »

What happens to men who normally/usually retire at 65 and take State pension having worked at least 44 qualifying years but retire at 60 on company pension and not working the full 44 years?

If your State Retirement date (not your company one) is before 6th April 2010 you still have to pay/be credited with 44 years (or 39 for a woman) to get full State Pension.

Sorry!

(But I'm in that bracket too!).

royeee

seven-day-weekend wrote: »

If your State Retirement date (not your company one) is before 6th April 2010 you still have to pay/be credited with 44 years (or 39 for a woman) to get full State Pension.

What if 65 after 6th April 2010?

seven-day-weekend

royeee wrote: »

What if 65 after 6th April 2010?

If your State Pension retirement date is after this date, then you need only pay NI for 30 years to get a full State Pension,

If you retire at 60 with a Company Pension and you have already paid your 30 years, then if you are not working then you do not need to pay any more, although you can't draw your State Pension until your normal retirement date.

If you are working, then you continue to pay them.

Example, my husband is 58 and draws his Teachers' Pension. He has already paid 36 years worth of contributions. He is not working. His State Retirement date is 2014. He does not need to pay any more NI to get his full State Pension, which he will draw in 2014.

royeee

That explains it as someone told me I wouldn't have any shortfall as I'm not 65 till after 2010. Its quite a big drop from 44 qualifying years to 30 (almost 1/3 rd)and wonder how that is funded.

seven-day-weekend

I think unfortunately it is partly funded by removing the 10% tax bracket from low-income people.

So although my husband will benefit by not having to pay 44 years NI, he'll have to pay more tax on his Teachers' Pension.

EdInvestor

Minister admits some advice to women on paying back contributions was wrong.

http://news.bbc.co.uk/2/hi/programmes/moneybox/7065387.stm

And also says they are looking into ways of helping women qualify who retire before 2010

seven-day-weekend

EdInvestor wrote: »

Minister admits some advice to women on paying back contributions was wrong.

http://news.bbc.co.uk/2/hi/programmes/moneybox/7065387.stm

And also says they are looking into ways of helping women qualify who retire before 2010

I'll hold off paying my final year's voluntary contributions then.........:rotfl: