State Pension help please.

Dazed_and_C0nfused

nigelbb said:

Dazed_and_C0nfused said:

This is something DWP could really do with clearing up.

Someone paying voluntary Class 2 NI, who needs the final contribution year to increase their State Pension, and who reaches SPA in say May 2022 won't actually be asked to pay the Class 2 NI for 2021:22 until 31 January 2023, several months after the State Pension comes into payment.

Seems unfair that they wouldn't get the final years contribution to be effective from SPA just because they were paying Class 2 NI and not Class 1?

Why do you think that someone paying voluntary Class 2 NI contributions for tax year 2021-22 until 31 January 2023? Some people set up a direct debit to pay weekly throughout the tax year.

Since 2015 most people pay Class 2 NIC (whether voluntary or not) via Self Assessment and it isn't due to be paid until 31 January after the end of the tax year i.e. for the year to 5 April 2022 it's payable on 31 January 2023.

I don't HMRC do anything about it until after 31 January even if you actually send the payment earlier.

I think most Class 2 now paid by direct debit is by people living overseas.

Silvertabby

My original comment was in respect of someone paying voluntary class 3s more than 12 months after SPA.

It's quite possible that different rules will apply in Dazed's case?  After all, someone with an April/May birthday who works/ pays normal NI until SPA is likely to start drawing their pension before the final year NI catches up with them.  In that case, I believe I'm right in saying that the pension would be backdated.

It makes sense that post SPA voluntary class 3s only apply from the date of payment.  In my own case, I have paid 4 years of vol class 3s to take me up to the max when I reach SPA.  In round figures, that cost me £3K for an extra £20 per week/£1K per year State pension.  If I'd waited 4 years before making this payment then I would have paid £3K and immediately received £4K arrears.........

p00hsticks

After all, someone with a March birthday who works/ pays normal NI until SPA is likely to start drawing their pension before the final year NI catches up with them.  In that case, I believe I'm right in saying that the pension would be backdated.

As the tax year in which someone reaches SPA doesn't count towards State Pension entitlement, then someone with a March birthday is unlikely to be impacted, as their NI record years will be up-to-date when they retire. It's more likely to affect someone with a birthday soon after April 5th, who needed the year that was just ended in order to reach the maximum amount....

Silvertabby

p00hsticks said:

After all, someone with a March birthday who works/ pays normal NI until SPA is likely to start drawing their pension before the final year NI catches up with them.  In that case, I believe I'm right in saying that the pension would be backdated.

As the tax year in which someone reaches SPA doesn't count towards State Pension entitlement, then someone with a March birthday is unlikely to be impacted, as their NI record years will be up-to-date when they retire. It's more likely to affect someone with a birthday soon after April 5th, who needed the year that was just ended in order to reach the maximum amount....

Well spotted - I meant to say April !  Post corrected.

Audaxer

p00hsticks said:

After all, someone with a March birthday who works/ pays normal NI until SPA is likely to start drawing their pension before the final year NI catches up with them.  In that case, I believe I'm right in saying that the pension would be backdated.

As the tax year in which someone reaches SPA doesn't count towards State Pension entitlement, then someone with a March birthday is unlikely to be impacted, as their NI record years will be up-to-date when they retire. It's more likely to affect someone with a birthday soon after April 5th, who needed the year that was just ended in order to reach the maximum amount....

Does that mean someone who is still working and due to turn 66 next March, may have this year's NI contributions not counting towards their State Pension? If that is the case it seems a bit harsh if they need these contributions to count to get them to the maximum SP?

Silvertabby

Audaxer said:

p00hsticks said:

After all, someone with a March birthday who works/ pays normal NI until SPA is likely to start drawing their pension before the final year NI catches up with them.  In that case, I believe I'm right in saying that the pension would be backdated.

As the tax year in which someone reaches SPA doesn't count towards State Pension entitlement, then someone with a March birthday is unlikely to be impacted, as their NI record years will be up-to-date when they retire. It's more likely to affect someone with a birthday soon after April 5th, who needed the year that was just ended in order to reach the maximum amount....

Does that mean someone who is still working and due to turn 66 next March, may have this year's NI contributions not counting towards their State Pension? If that is the case it seems a bit harsh if they need these contributions to count to get them to the maximum SP?

It does indeed.