National Insurance and State Pension

jim8888

In the always helpful MSE newsletter this morning, we were urged to check our projected state pension. I did so and seem to be in line to achieve the maximum amount as I must have made 35 years worth of contributions. I'm 58, but it seemed that if I continued working, I would still be paying my NI contributions in for the next 9 years but that would get zero back for it in terms of my final pension. Is this correct, or do you stop paying those contributions when you've reached the maximum put in?

DE_612183

NI doesn't just go towards your state pension - so no if you are earning you still pay into it - it's not like a private pension plan.

xylophone

I did so and seem to be in line to achieve the maximum amount as I must have made 35 years worth of contributions. 

The 35 years is not directly relevant in your case as you are one of the majority who is affected by transitional rules.

Your starting position  in respect of NSP was determined on 6/4/16 when two calculations were done for you.

Old Rules

NI years/30 x (Full Basic SP) +  (Additional State Pension -  (if applicable) Deduction for Contracting Out)

New Rules

(NI years/35 x Full New State Pension) - (if applicable) Contracted Out Pension Equivalent.

Your "starting amount" for new state pension was the higher of the two.

If your starting amount was equal to or greater than a full new state pension,  you would still have been required to pay NI if earning the relevant amount, even though this would not improve your state pension.

If it was less than a full NSP, further contributions/credits could improve the pension but only up to the amount of a full NSP.

Once that threshold was reached, NI contributions would still be payable (if earning the relevant amount) even though it would nit improve the pension.