Opt out of state pension?

zagfles

westv wrote: »

Of course it's stupid to want to opt out of NI
It's stupid because everybody who can should contribute
It's stupid because opting out of the State Pension is crazy even if you think you might not get it.
It's stupid because, if people could opt out, how would today's pensioners be paid along with everything else that NI funds?

Of course it's not stupid. Most self employed people seem to opt out of paying NI by paying themselves mainly in dividends. Others use salary sacrifice to opt out of paying a large chunk of NI. You can get NI credits towards the state pension without paying any NI.

In answer to the OP's question - NI is levied like a tax, if you have certain types of income (mainly employment income), NI is levied on that income and you can't just opt out. The only way to avoid it is to not have that type of income.

As above self employed people might set up a limited company and pay themselves a low wage and take dividends as their main income (NI is not levied on dividends).

Other people in ordinary jobs might have an employer with a salary sacrifice scheme, where you sacrifice income and the employer puts it into your pension instead, saving them and you NI. There are limits to this due to the minimum wage so this doesn't usually avoid NI entirely. But these are a couple of ways to reduce NI.

Mutton_Geoff

I wish I could opt out. I am nearing retirement and have paid in more than enough qualifying years but having a good salary means the doubling of NI and removing of income CAP means I pay quite a lot each month into the government’s own Ponzi scheme with talk that it may be means tested by the time I reach their moving goalposts in 6 years (or more).

shinytop

removing of income CAP means I pay quite a lot each month into the government’s own Ponzi scheme

Relax. NI is just another tax on earnings. It all ends up in the same bucket.

bostonerimus

"From each according to his ability, to each according to his needs." This doesn't need to be followed throughout the economy, but it's a very good principle to use when providing things like social insurance, education and the delivery of healthcare. Having to pay a lot of tax or NI is a problem many people would like to have...

sevenhills

westv wrote: »

Of course it's stupid to want to opt out of NI
It's stupid because everybody who can should contribute
It's stupid because opting out of the State Pension is crazy even if you think you might not get it.
It's stupid because, if people could opt out, how would today's pensioners be paid along with everything else that NI funds?

I would love to opt out, I have paid NI for over 40 years, well past the 35 years required.

lisyloo

sevenhills wrote: »

I would love to opt out, I have paid NI for over 40 years, well past the 35 years required.

Most people are net takers.
If you are rich enough to help those more vulnerable/less able does that mean you don’t want to?

Nick_C

On a related matter, I've never had need to call the Fire Brigade, and doubt I ever will. Can anyone advise how I go about opting out of the Fire Service element of Council Tax?

I also don't want to give money to India or China. How do I opt out of this element of Income Tax?

DairyQueen

It puzzles me that those who want to opt-out of paying NI, but only when they believe that it no longer benefits them personally, don't generalise this to other aspects of the tax system. For example, why would working adults wish to fund the NHS for 40+ years before they receive most benefit?

Presumably, those who are keen to opt-out of NI (but only when they can no longer add to their SP) are equally keen that youngsters foot the bill for the NHS services that are primarily used by older generations.

I am now imagining a nation where, for example, parents opt-out of paying for education once their own kids have left school. The child-free, of course, would never contribute. This would be equally nonsensical as providing an opt-out for NI.

There is no ring-fencing of tax revenue. Tax-is-tax.

Collectivism is a necessary part of our social structure and everybody pays and benefits one-way-or-another. Unfettered capitalism has a nasty way of benefiting a very few at the expense of the majority. Total collectivism, ironically, has the same effect. Only the names at the top change.

Having said that.....

In this utopian world where opt-outs exist, first on my hit-list would be funding for my local planning authority. My opt-out would remain until such time as a new model was in place. No idea what that would be but it couldn't be any worse than the current system.

What else? :think:

Howzabout we opt-out of funding all MPs' salaries until they agree a joint Brexit plan and strategy. That may concentrate their minds beyond party politics and personal ambition.

I am a little tired of this polarisation of our society. We appear to be increasingly divided by the selfish wants of individualists and the unrealistic ideals of extreme collectivists. Whatever happened to the middle way?

(Jumps off soapbox).

JezR

NI pays for other insured benefits as well as the state pension.

Once the money reaches the NI Fund it can't be used by law on other things, but it can be top-sliced before it gets there.

The NIF more often than not though needs to be topped up from the Consolidated Fund each year.

Prism

westv wrote: »

Of course it's stupid to want to opt out of NI
It's stupid because everybody who can should contribute

Fill yer boots paying more tax if you like. I 'choose' not to pay and NI while still fully benefiting from it. Am I stupid?