35 years contribution

Missy712

Hi
Sorry if this question has already been discussed but I am doing a bit of a financial health check. I have looked up my state pension which tells me that my ''forecast is £175.20 if you contribute another 2 years before 5 April 2036''.  It also tells me that ''If you’re working you may still need to pay National Insurance contributions until August 2036 as they fund other state benefits and the NHS''.   The website quotes I have been ''in a contracted-out pension scheme'' 
Does this mean I am expected to continue paying NI for an extra 14 years even thought I have done my 35 years contribution for the full amount?  The reason I ask is becuause it says I ''may'' need to pay NI until Aug 2036, therefore is this an option?  If so what is the process to stoppaying it once my 35 years are 'up' so to speak.  Any advice??

bowlhead99

Missy712 said:

Does this mean I am expected to continue paying NI for an extra 14 years even thought I have done my 35 years contribution for the full amount?  

Only if you continue to work and are earning more than the threshold.

The reason I ask is becuause it says I ''may'' need to pay NI until Aug 2036, 

You 'may' need to pay NI if you're still working, because they fund other state benefits and the NHS, not just state pension, so anyone earning over the primary threshold of £183 a week or £792 a month needs to pay employee's NI. If you work but don't earn very much, you won't need to pay. So you 'may' need to pay. If you only work one or two 9-5 days a week at a tenner an hour, you wouldn't need to pay. If you work thirty hours a week at a tenner an hour, you would pay on your earnings over the threshold.

therefore is this an option? If so what is the process to stoppaying it once my 35 years are 'up' so to speak.  Any advice??

It's an option - feel free not to work if you already have enough money and are happy just to retire and live off your savings and investments until state pension kicks in. You can stop paying it by simply stopping working, or by reducing the amount you earn so that you're below the threshold.

Whether giving up work is 'advisable' depends on your personal financial circumstances, but it's certainly true that not everyone keeps working full time until the day they can draw their pension. If you've 'banked' enough years of NI contributions to max out the state pension you could get, you can just stop working and still get your full pension once you're old enough. 

Anonymous101

Pretty comprehensive answer from bowlhead there.
I'd only like to add that you can reduce your taxable income through contributing to a pension through salary sacrifice if that is an option to you. By contributing more into your pension you're able to avoid paying the NI and will almost certainly be better off from a tax perspective in the long run. I found many people do not understand that they are able to manipulate their income, and therefore tax and NI bills, in this way. 

Paul_Herring

Missy712 said:

Does this mean I am expected to continue paying NI for an extra 14 years even thought I have done my 35 years contribution for the full amount?  The reason I ask is becuause it says I ''may'' need to pay NI until Aug 2036, therefore is this an option?  If so what is the process to stop paying it once my 35 years are 'up' so to speak.  Any advice??

Apart from the other good stuff given in the other comments, unless you were born in 2000, that "35 years" requirement doesn't strictly apply to you. That's only for people with NI contributions starting in 2016. If you're older, you'll be on a mixture of the old and new state pension schemes.

People who contracted out, for example, may have to make more than 35 years' contributions just to get back to 'full' state pension, others who didn't may be able to get more than 'full' state pension even though they've contributed for less than 35.

xylophone

The website quotes I have been ''in a contracted-out pension scheme'' 

Do you understand this?

Is a COPE shown on your forecast?