Paying multiple NI has messed up State pension

DazednConfused1980

Hello

I'm asking on behalf of a friend who has gone around in circles with the DWP.

The basic gist is this:

He paid NI (class 1) to two employers from 1983 until 2012 (when he reached state pension age). One employer had him in a contracted out pension scheme, but with the other employer he didn't join the scheme, and paid full NI. He has queried the contracted out deduction for his State Pension, and The Pension Service has said that those years were all contracted out. So, what happened to his second lot of full class 1 NI from his second job? Should they be including all those years as contracted out?

Any help much appreciated

drumtochty

We would need to know what the annual gross income was for each year in each job. For instance today if you earn less than approx £6032 a year gross as an emplyee, you do not get any NI credit for your pension.


Therefore if you cannot provide this infomation we cannot help you.



There are many ladies with kids that done an early morning job, got the kids to school and then did an other short time job but each salary was quite small and they got no pension NI credit for the year.


Info required or a waste of time.

badmemory

Please say he has kept his P60s!

xylophone

State Second Pension: Contracted-out deductions
Standard Note:
SN/BT 2674
Last updated:
10 March 2010
Author:
Djuna Thurley
Section
Business and Transport Section


However, for some people who have moved in and out of contracted out employment, and who have paid contracted in contributions at some period of their lives, it can mean that – in effect – they have no or reduced SERPS in return for these contributions. This can also apply to people who have been employed in two jobs at the same time – one in contracted in and one in contracted out employment. The reason is that pension entitlement is only calculated at the end of one’s working life when one retires. All the GMP one has accrued throughout that working life (revalued, in some cases, by the fixed rate) is compared with SERPS entitlement. If the GMP is bigger there will be no SERPS payable – even for periods when one was contracted in and paying full NICs.

Seems to be the answer?

DazednConfused1980

Thanks, Xylophone, that's useful - I'll look into it a bit further. I did ask him to check his P60s, but he said he was over the LEL at the time, so should've been paying NI to answer your point, drumtochty (this was also my first thought when he said his deduction seemed too high in the circumstances).