National insurance payments and retirement

C_Mababejive

I'm sure this will have been asked before but couldnt find anything on a quick search.

If i retire early in my late 50s, do i still have to pay NI out of my company pension? I've had 42 years continuous employment  albeit that a good proportion of that was in a contracted out DB scheme, now contracted back in under the changes a short while back.

I did read that you only needed 35 ? years for a full state pension. This is clearly inaccurate as im still employed and still paying NI.

I think i am in line for the "new" state pension . My state pension age is 67.

I just had a look at the government state pension forecast page and its currently showing a figure of £9371.27 pa

Thanks all

Aretnap

C_Mababejive said:
I did read that you only needed 35 ? years for a full state pension. This is clearly inaccurate as im still employed and still paying NI.

National insurance is not a payment towards your state pension. It's mostly just a payroll tax, albeit your eligibility for certain welfare benefits (including state pension) is linked to your contributions record. It's payable on all salaried income until you reach state pension age, regardless of whether or not paying any more will increase your state pension entitlement. So you get to stop paying it at 67, or when you stop earning a salary, not when you hit full state pension entitlement. 

It's not payable on income from pensions. If you retire early it May be a good idea to keep making voluntary contributions anyway if this will boost your state pension entitlement. Someone more knowledgeable about such things than me can advise on whether it will - the new state pension will require 35 years but transitional arrangements and contracted out years may make things more complicated. 

unforeseen

You stop paying at SPA regardless of whether you are still earning or not. 

Dazed_and_C0nfused

unforeseen said:

You stop paying at SPA regardless of whether you are still earning or not. 

But from 6 April 2023 you would start paying the new social care levy if still earning enough to reach the National Insurance thresholds even when you are above SPA.  

You wouldn't pay National Insurance as well, just the new levy (1.25%).

And of course from April ,2022 there is the extra 1.25% added to all the dividend rates (except the nil rate which remains 0%).

Dazed_and_C0nfused

I did read that you only needed 35 ? years for a full state pension. This is clearly inaccurate as im still employed and still paying NI.

Either you misunderstood or found a bad article/website.

You are under transitional rules, the 35 years is for people starting to pay NI from April 2016.

If your weekly pension already accrued is £179.60 or more then you cannot improve it any further.  But it will increase each year by the triple lock inflation proofing.

Audaxer

C_Mababejive said:

I did read that you only needed 35 ? years for a full state pension. This is clearly inaccurate as im still employed and still paying NI.

I think i am in line for the "new" state pension . My state pension age is 67.

I just had a look at the government state pension forecast page and its currently showing a figure of £9371.27 pa

Thanks all

What does it show on your statement under "Estimate based on your NI record up to 5 April 2021"? If that shows under £179 per week, you may still have to make several years voluntary NI payments to get up to your Forecast amount, even if you have over 40 years of full contributions.

C_Mababejive

Audaxer said:

C_Mababejive said:

I did read that you only needed 35 ? years for a full state pension. This is clearly inaccurate as im still employed and still paying NI.

I think i am in line for the "new" state pension . My state pension age is 67.

I just had a look at the government state pension forecast page and its currently showing a figure of £9371.27 pa

Thanks all

What does it show on your statement under "Estimate based on your NI record up to 5 April 2021"? If that shows under £179 per week, you may still have to make several years voluntary NI payments to get up to your Forecast amount, even if you have over 40 years of full contributions.

It says £167.86 then on the next line it says

Forecast if you contribute another 3 years before 5 April 2030 £179.60

C_Mababejive

Dazed_and_C0nfused said:

unforeseen said:

You stop paying at SPA regardless of whether you are still earning or not. 

But from 6 April 2023 you would start paying the new social care levy if still earning enough to reach the National Insurance thresholds even when you are above SPA.  

You wouldn't pay National Insurance as well, just the new levy (1.25%).

And of course from April ,2022 there is the extra 1.25% added to all the dividend rates (except the nil rate which remains 0%).

I suspect a lot of pensioners are blissfully unaware that they are about to be made to pay 1.25% of their pension for the new social care levy. I suspect that most people have only heard that there will be a "temporary" increase in NI contributions.

Will the 6/4/2023 social care levy be taken from ALL retirement income ie state and company pension?

draiggoch

I believe the levy will not be payable on your pensions only on earned income e.g. a wage. So if you are still working after NRA then you will have to pay the levy where as now you do not pay any NI at all past NRA .

xylophone

But it will increase each year by the triple lock inflation proofing.

Well.........

https://www.thetimes.co.uk/money-mentor/article/pensions-triple-lock/#:~:text=The current Conservative government pledged,and pay for the pandemic.

Dazed_and_C0nfused

I suspect a lot of pensioners are blissfully unaware that they are about to be made to pay 1.25% of their pension for the new social care levy. I suspect that most people have only heard that there will be a "temporary" increase in NI contributions.

There is no 1.25% levy on pension income, it only applies to earnings.