A couple of questions on my wife's national insurance record and ongoing NI contributions.

vacheron

Hi all.

My wife is 36 and we have been recently checking her national insurance record as part of our retirement planning.

I was pleased to see that despite her only working on and off since she graduated in 2007, followed by being a full time mum since 2012, she has managed to qualify for a respectable 13 years of full contributions to date.

The only 2 years which are not full since 2007 are 09-10 and 11-12. Both these years state that we can contribute £780 before April 2023 to make up the shortfall.

So this brings me to my questions:

1. Would there be a measurable benefit if we paid the £1560 before April 2023 in order to guarantee an extra couple of years NI? and if paying would be beneficial, would there be any advantage / disadvantage to paying in March 2023 as opposed to right now?
   
   
2. I was under the impression that people generally had about 6 years to pay, but this forecast suggests that she has until 2023 to pay for the 2009-10 contribution year which is 13-14 years after the event? Is there a reason for having such an apparently long time to make these contributions?
   
   
3. Finally, what constitutes a qualifying year? I understand that you have to be paying NI, but as her work tends to be short term contracts, do you have to pay for 12 months? 1 month, more than 50% of the year?
   

Thanks in advance.

Tom99

Has she claimed child allowance since 2012?
If so that would explain the 13yrs.
If she is claiming child allowance she will get a credit for each year until your oldest child is age 12.
You would need a state pension forecast to help tell you whether paying for pre 2016 years would add anything to her state pension.

zagfles

vacheron wrote: »

Hi all.

My wife is 36 and we have been recently checking her national insurance record as part of our retirement planning.

I was pleased to see that despite her only working on and off since she graduated in 2007, followed by being a full time mum since 2012, she has managed to qualify for a respectable 13 years of full contributions to date.

How many more years does she need for a full state pension? It should say, something like she'll get £168.60 if she contributes xxx more years. That's the more relavent figure.

The only 2 years which are not full since 2007 are 09-10 and 11-12. Both these years state that we can contribute £780 before April 2023 to make up the shortfall.

So this brings me to my questions:

1. Would there be a measurable benefit if we paid the £1560 before April 2023 in order to guarantee an extra couple of years NI? and if paying would be beneficial, would there be any advantage / disadvantage to paying in March 2023 as opposed to right now?

1. Crystal ball time. If she needs say 22 more years and she gets 22 or more qualifying years, then paying will have been a waste of money

2. I was under the impression that people generally had about 6 years to pay, but this forecast suggests that she has until 2023 to pay for the 2009-10 contribution year which is 13-14 years after the event? Is there a reason for having such an apparently long time to make these contributions? ISTR there was an issue with a certain periods when people hadn't been told or been told something wrong so they allowed more time. Could be that.

3. Finally, what constitutes a qualifying year? I understand that you have to be paying NI, but as her work tends to be short term contracts, do you have to pay for 12 months? 1 month, more than 50% of the year?For class 1 (employment), having qualifying earnings of at least 52 times the weekly LEL (£118 this year). Qualifying earnings ignore anything above the UEL (£962 a week) in any pay period, and also any pay period with earnings below the LEL. See here for monthly equivalents https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions
4. But if she is claiming child ben for a child under 12 she'll get credits anyway.

molerat

The claim back 6 years was relaxed on the introduction of the 2016 scheme so that everyone had the opportunity to get the minimum 10 required to get a pension, all years going back to 2006-07 were treated as 2016-17. She has 30 years to get another 22? and those 2 are full price so there is no real benefit to buying them.

colsten

vacheron wrote: »

2 I was under the impression that people generally had about 6 years to pay, but this forecast suggests that she has until 2023 to pay for the 2009-10 contribution year which is 13-14 years after the event? Is there a reason for having such an apparently long time to make these contributions?

It's a rule brought in as part of the transition from the old to the new state pension. If you’re a man born after 5 April 1951 or a woman born after 5 April 1953, you have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016.

https://www.gov.uk/voluntary-national-insurance-contributions/deadlines

As already mentioned, your wife should get a state pension forecast before making extra NI payments. Being 36 now, she is likely to need 35 full NI years to qualify for a full SP, at age 68. This would mean she needs another 22 NI years, and that she could achieve her 35 NI years by age 58, provided she continues to get NI credit / NI from work or from voluntary contributions each year between now an then.

Note that, under current rules, you don't qualify for contributory ESA/JSA (and probably UC?) unless you have got 2 immediate previous full NI years. So she may well need to / chose to pay up to age 68, anyway, meaning she'd have a total of 45 NI years by the time she reaches her SPA. In this case, there'd be no point making voluntary payments now for 09-10 and 11-12. If, on the other hand, your plan is to drop all NI payments as soon as she has 35 NI years, then it would definitely be worth to buy those 2 years now.

Hope this makes sense

p00hsticks

Tom99 wrote: »

If she is claiming child allowance she will get a credit for each year until your oldest child is age 12.

I think you mean 'until your youngest child is age 12' ?

Tom99

p00hsticks wrote: »

I think you mean 'until your youngest child is age 12' ?

Just testing if anyone was paying attention!

vacheron

Thank you everyone for your responses, that has really cleared things up.

To answer a few of the questions:

Yes, we are claiming child support, however, the payment is made under my name and I work full time so I have transferred some of my "double earned" NI credits over to her record a couple of years ago but wasn't sure how far they would backdate.

zagfles: Her record shows the £168.60 with 33 years left to pay. Thanks for clarifying what constitutes a qualifying year. So if I am reading your response correctly, HMRC won'r care if she earns 52 weeks pay at £118 (£6136) or 7 weeks at £876 (6136) in order to qualify?

Thanks again to all, and apologies for not responding sooner as I've just noticed that my phone has not been receiving any e-mails since Wednesday!... I guess that is now the next job on the list!!

p00hsticks

vacheron wrote: »

Yes, we are claiming child support, however, the payment is made under my name and I work full time so I have transferred some of my "double earned" NI credits over to her record a couple of years ago but wasn't sure how far they would backdate.

Any reason why the benefit can't be in her name ? It would save you the hassle of having to do the transfer and ensure she doesn't miss out on the credits.

molerat

vacheron wrote: »

Yes, we are claiming child support, however, the payment is made under my name and I work full time so I have transferred some of my "double earned" NI credits over to her record a couple of years ago but wasn't sure how far they would backdate.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/768843/CF411A.pdf You need to claim by 5 April following the end of the year in question so for 2018-19 you need to claim by 5 April 20. They have the discretion to go back further though.

vacheron wrote: »

Her record shows the £168.60 with 33 years left to pay.

It shows a lot more than that, how many years does it show she needs to achieve that amount ?

vacheron

molerat wrote: »

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/768843/CF411A.pdf You need to claim by 5 April following the end of the year in question so for 2018-19 you need to claim by 5 April 20. They have the discretion to go back further though.

It shows a lot more than that, how many years does it show she needs to achieve that amount ?

Thanks. And it states 21 years needed before the 5th of April 2051.