State Pension if disabled person never worked?

PSG

Hi there,

I hope someone can help me here. My niece is in her 20s and is autistic. Her mother (my sister) is trying to prepare for her future and is wondering what will happen when she reaches State Pension age in the distant future. What happens if a disabled person has never worked and never paid National Insurance Contributions? Is it worth paying into a private pension fund? I have already done some research into this but the only information I have found says that people who are on ESA (which I think she is currently) have their NI contributions paid automatically. But I haven't been able to confirm that on a uk.gov website.

Many thanks for any info and pointers about where to seek more information.

Mary

molerat

Yes many benefits do come with NI credits which will count towards the state pension.  She needs to open a personal tax account through Government Gateway which will show her NI record and state pension forecast and any taxation details. https://www.gov.uk/check-state-pension

kuratowski

According to this page, if your niece is on ESA then she should be getting NI credits:

https://www.gov.uk/national-insurance-credits/eligibility


There is also another gov.uk page where she (or her carer) can check her NI record to confirm she is getting them:

https://www.gov.uk/check-national-insurance-record


The full new state pension is about £9300 a year.  If money is available, and you wanted to boost her income in retirement, it is possible to make private pension contributions as a non-earner, up to £2880 a year, which is then topped up by the government:

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

However, she would not be able to these funds until 30-40 years' time, so you may also wish to consider whether an alternative form of investment allowing earlier access (such as S&S ISA) would be better.

SomeMadeUpName

kuratowski said:

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

However, she would not be able to these funds until 30-40 years' time, so you may also wish to consider whether an alternative form of investment allowing earlier access (such as S&S ISA) would be better.

Also she is in the right age range to open a LISA for similar tax benefits as the pension, with slightly different (but similarly onerous) access conditions.

WillowCat

SomeMadeUpName said:

kuratowski said:

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

However, she would not be able to these funds until 30-40 years' time, so you may also wish to consider whether an alternative form of investment allowing earlier access (such as S&S ISA) would be better.

Also she is in the right age range to open a LISA for similar tax benefits as the pension, with slightly different (but similarly onerous) access conditions.

Be aware that if she is on income based ESA (which she probably is unless she first made her claim prior to 2012 and satisfied the youth conditions for contributions based ESA) that any savings that are not in a pension will count towards the £6,000 limit before benefits are reduced (at £16,000 savings they cease).

So LISA/ISA etc not necessarily the best option.  Even if she is on contributions based ESA then if she were to move into her own rented property at some point she would need to claim UC and the savings would then be taken into consideration.

ewaste

The short answer is yes they will get a state pension as it stands at the moment. However that is such a long way into the future I'd certainly recommend starting private pension provision. The decades until possible access help to compound growth reducing the overall cost of provision.

I would avoid holding much in the way of savings outside of a pension due to the impact on means tested benefits, although perhaps best to also double check with folk on the relevant part of the forum as they'll better understand the technicalities. Therefore I'd avoid a LISA unless specifically saving for a house deposit and instead opt for a SIPP or similar.

If they are in their 20's it should be reasonably clear by now if they are capable and likely to functionally enter and stay in the world of work. As you'll be aware many people on the spectrum can remain in employment with varying levels of support.

Edit:- WillowCat pretty much covered it while I was making an attempt to type on a smartphone 😄

SomeMadeUpName

Good points in the two posts above, I hadn't considered the effects of having 'too much' savings.  What a messed up system we really have.

NedS

SomeMadeUpName said:

Good points in the two posts above, I hadn't considered the effects of having 'too much' savings.  What a messed up system we really have.

As a non-earner, she can contribute £2880 per year into a private pension (SIPP, for example) and the government will make it up to £3600 with tax relief (even though she doesn't pay any tax), and pension savings are excluded from means tested benefits so will not affect any future claim. However, she will not normally be able to access the money until aged 55 (increasing to age 57 in 2028, I believe). This will likely be the best way for her to save for her future.

kaMelo

SomeMadeUpName said:

Good points in the two posts above, I hadn't considered the effects of having 'too much' savings.  What a messed up system we really have.

I'm sure we'd all like to save up to spend on nice things whilst the taxpayers funded our day to day living expenses, unfortunately that's not how it works. Those with the means should support themselves  and the state helps those who can't do so, How is that a messed up system?

bostonerimus

It's great that you can now build up NI in ways other than PAYE employment. Be careful about putting too much directly in your nieces name as this could affect her eligibility for benefits. This is where trusts come in useful.

PSG

Thanks so much everyone for your very helpful comments. 

Mary