Maxing State Pension

Brie

I've done my forecast and according to the official website I will have the max SP if I continue to work until next April.  

The problem is I'm in the midst of being made redundant so will be unpaid as of August.  I'm assuming that 4 months of contributions will not be sufficient.  

So two thoughts:

• I apply for job seeker's allowance merely to get the credits towards my SP.  (does that actually work???)
• I take a small part time job that I've seen - pay is minimal but over NMW but it's only 10 hours a week.

If neither of those work then I will need to either get a better fuller job (how much better/fuller?) or simply pay the extra bit required.  

Any advice etc etc....

xylophone

https://www.litrg.org.uk/tax-guides/students/going-abroad/national-insurance

A ‘qualifying year’ sounds as though you might need to have 52 weeks of working for it to count. In fact, for Class 1 NICs (those payable by employees), any tax year where you receive a minimum amount of earnings or credits (which you receive for example, if you cannot work because you are bringing up children who are aged under 12) can be a qualifying year. The 2022/23 tax year could be ‘banked’ as a qualifying year provided you have earned the equivalent of 52 x £123 (this amount is the weekly Lower Earnings Limit) – total £6,396. Please note that any pay periods in which you have earned under the Lower Earnings Limit will not count towards the total.

You could also make up a qualifying year for 2022/23 by, say, earning £123 for 40 weeks and then receiving NIC credits for the other 12 weeks.

t0rt0ise

You can get job seekers just to get the credits although you still have to prove that you're looking for work by showing evidence every week. But you would be entitled to receive money for unemployment (contribution based) as well as getting the credits.

Brie

xylophone said:

https://www.litrg.org.uk/tax-guides/students/going-abroad/national-insurance

The 2022/23 tax year could be ‘banked’ as a qualifying year provided you have earned the equivalent of 52 x £123 (this amount is the weekly Lower Earnings Limit) – total £6,396. Please note that any pay periods in which you have earned under the Lower Earnings Limit will not count towards the total.

You could also make up a qualifying year for 2022/23 by, say, earning £123 for 40 weeks and then receiving NIC credits for the other 12 weeks.

Am I right in thinking this is the total amount earned in the year rather than actually 52 x £123?  So if I earn over £6396 in 4 months I will get a full year's credit?

And I think I'm right in that there is no NI on pensions in payment.

Dazed_and_C0nfused

And I think I'm right in that there is no NI on pensions in payment

Yes.  From April 2023 there will be a (helath and social care) "levy" which people above State Pension age will have to pay but only on earnings, not pension income.

Three of the four dividend tax rates have already been increased, wef 6 April 2022, by the same 1.25% levy rate as well and all individuals, irrespective of age, liable to those three rates will have to pay an extra 1.25% on any dividends above the 0% rate.

Marcon

Brie said:

xylophone said:

https://www.litrg.org.uk/tax-guides/students/going-abroad/national-insurance

The 2022/23 tax year could be ‘banked’ as a qualifying year provided you have earned the equivalent of 52 x £123 (this amount is the weekly Lower Earnings Limit) – total £6,396. Please note that any pay periods in which you have earned under the Lower Earnings Limit will not count towards the total.

You could also make up a qualifying year for 2022/23 by, say, earning £123 for 40 weeks and then receiving NIC credits for the other 12 weeks.

Am I right in thinking this is the total amount earned in the year rather than actually 52 x £123?  So if I earn over £6396 in 4 months I will get a full year's credit?

And I think I'm right in that there is no NI on pensions in payment.

No; income for NI purposes is only 'annualised' if you are a director. For employees, it is 'pay periods' when you earn an amount at least equal to the Lower Earnings Limit which will count.

Correct, no NI on pensions in payment.

Brie

Thanks all for the answers so far....hopefully this will be my final question (on this post at least...)

So if I work 4 months do I get 1/3 of a year credited to my SP and then (if i don't work or claim JS) just have to pay 2/3 of a year's amount to get the full year?  Or is it all or nothing?  (sorry - 2 questions, I know)

molerat

If you work 4 months there is the possibility you could earn a full year under the 52 x LEL rule.  If you don't make that then you could earn just 13 weeks and will need to make the remainder up, you don't lose it (unless you let 6 years pass).

SouthCoastBoy

It all depends on your salary from memory I think the upper earnings limit is around 4189 per mth and threshold for state pension around 6500. So you could make that in around 6 to 7 weeks.

p00hsticks

As I understand it (but others please correct me if I'm wrong)

If you are paid monthly, then you need to be earning at least the monthly LEL in a month for it to count, and then any salary below the upper earnings limit of £4189 a month goes towards your NI year. So as Southcoastboys says, depending on your salary you could quite possibly get a full NI year by August (I know I did when I got made redundant at the end of August a few years back, but I can;t remember the exact figures involved),