national insurance

joesan

I dont work and hence have not paid NI for the past 8 years. I realised that i can pay upto 10 previous years NI as a voluntary contribution. Do you think its worth me doing that? it works out at over 2000. any suggestions greatly appreciated

building

hi there. this depends on your age. Otherwise depending on age paying national contributions pays towards your state pension when you retire, incapacity benefit etc. As a mum I got £1500 extra for paying for 2 years of national contribution as a self employed person when I needed to claim maternity. when I did the figures it was worth it!

CIS

you can only pay back for a maximum of 6 previous tax years before the current tax year.

If you have missed 10 yrs of NI, then the most yrs you can have to your pension if you have paid and will pay all of the other yrs in your working life is 39yrs, if you pay for the maximum 6 yrs backdated and all future yrs (assuming those 10yrs are the only ones you have/will miss) you could receive a full pension (you would have 45 yrs, only need 44yrs).

CIS

Quick addendum to above, if you are/have been receiving incapacity you will get credits towards your NI for the claim period.

contact the Pension Forecasting team on 0845 3000168, they can give you an idea where you stand.

If you need more info just post again, I used to work for pension forecasting and there was/is someone else who works for the pension service who frequents these boards.

joesan

Thanks CIS I am only 28 and havent paid any NI, well apart from mayb a few months when i did work. These days i play poker for a living so dont pay any taxes or NI. I guess its in my interest to pay the last 6 years then?

CIS

As long as you get in over 11yrs of NI, you will get a basic state pension.

You could get the 11yrs even if you never paid any future National Insurance. Back pay the 6 missing yrs you can and then providing you meet the conditions (not selfemployed or out of the country for more than 183 days of the tax yr), you can receive 5 yrs of automatic credits between 60 and 65.

EdInvestor

joesan wrote:

These days i play poker for a living

Does this count as self employed?

Milarky

joesan,

If not every year costs the same to make it paid-up [eg because of periods of work], then make volunarty contributions in respect of those years first.

The problem with this question is that no one knows for sure what qualification for a full state pension might be based on when you come to retire much later. They don't even know what age reitirement will be set at by that stage!

In general, then, you should seek out the 'cheapest' ways to meet the criteria on pensions. If possible, work in PAYE employment and earn at least the Lower Earnings Limit amount of £4208 pa. This is currently'way-and-ahead' the best option of all since as well as the flat rate pension this also qualifies you to an amount of 'Second' state pension [S2P] of almost as much again. And the crazy thing is, that you don't actually pay any national insurance on this level of earned income anyway. So this gets you twice as much for no payment - but only if you are in PAYE or if you have 'HRP' [for mothers staying at home minding their children]- otherwise it's voluntary NI or self-employed NI and neither of these will get you more than the basic state pension

Nutty_Netty

nutty netty here

I am a 45yr old single parent who hasn't worked for the last 9 yrs due to childs illness - i am now getting concerned about my pension status. I have contacted the pensions office for a forecast but found the info very confusing. I was told i could make a voluntary contribution but i didn't have to as i had home responsibility protection? No one i spoke to could tell me what to do for the best. I need to know if i need to return to work before it is too late! I worked from the age of 20 until 36 when i had my child so have paid some stamp. The whole thing is worring me very much. I could now return to part time work if necessary but will this be enough! I need some one who speaks plain english to explain it to me in simple terms so that i can work out what to do for the best! The trouble with a lot of these offices is that they get caught up in the technical terms and forget that us lay people haven't clue what they are on about!
Can any one out there help me? :(:doh:

CIS

Hi, if you give me a few details from your forecast I can help you a bit.

1) how may qualifying yrs do you have ?, your forecast should say, on the 2nd page usually, you have x number of qualifying yrs up until 5/4/2005.

2) how many yrs of Home responsibilities protection does it say you have ?

But,

As a quick guess with no further details, you say you have 16 qualifying yrs and 9 yrs of HRP. This would mean you need 35yrs for a full pension (44yrs - 9HRP yrs), 16 qualifying yrs out of 35yrs, gives 46% at present

As you have HRP covering for during the last 6 yrs you could pay for these or use the HRP, if you paid for them (approx £2100), it would give you 22 qualifying yrs out of 41 yrs needed (44yrs minus 3 HRP yrs used) or 54% at present.

You will also receive 5 yrs auto credits between 60 and 65, giving you 5 'free' yrs, so estimated on your present circumstances you could get 21 qualifying yrs out of 35yrs,74% without paying anymore NI or receiving anymore HRP. (If you paid for the backdating of NI you could get 27yrs out of 41yrs, or 66%.).

8% less pension, as a rough estimate is about £6 a week less , for an outlay of £2100.

Please feel free to pm me if you need more help.

margaretclare

Hi

You worked before you had your child. Since his birth you've been receiving Child Benefit - this entitles you to Home Responsibilities Protection. This can continue as long as you're getting Child benefit i.e. if he continues at school up to 18 (or 19?) the HRP will continue. Depends what you decide to do after that, if you return to work when he leaves school, you should be OK. So add those years of Child Benefit on to the 16 years you paid NI contributions and that gives the total you'll have had towards state pension.

HTH

Aunty Margaret