Minimum earnings for qualifying for Basic State pension?

Marvqn1

Today, I read an article on the Daily Express website. It said for National Insurance Contributions to count as a qualifying year towards the basic State pension, for the self employed it requires minimum earnings of £129 per week or £6,725 per year.

I've never heard about this before and it wasn't mentioned in the letter when I requested a state pension forcast.

Does this mean that there is no point in paying voluntary class 2 NIC's unless your earnings are at least £6,725 per year as it won't count as a qualifying year towards the State pension?

Dazed_and_C0nfused

You've either misunderstood the article or its typical tabloid journalism.

You don't have to make any profit to pay voluntary class 2 NI.

You do have to be register as self employed and complete a Self Assessment return.

This is a better read.

https://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#toc-why-might-i-choose-to-pay-class-2-nic-even-if-my-earnings-are-below-the-small-profits-threshold-

Marvqn1

Dazed_and_C0nfused said:

You've either misunderstood the article or its typical tabloid journalism.

You don't have to make any profit to pay voluntary class 2 NI.

You do have to be register as self employed and complete a Self Assessment return.

This is a better read.

https://www.litrg.org.uk/tax-guides/self-employment/what-national-insurance-do-i-pay-if-i-am-self-employed#toc-why-might-i-choose-to-pay-class-2-nic-even-if-my-earnings-are-below-the-small-profits-threshold-

The article didn't mention anything about voluntary class 2 NICs, which caused the confusion. It just said that all NI contributions are not equal so some won't be counted as a qualifying year for the State pension.

Do voluntary class 2 NICs count towards a qualifying year and do not require a mimimum yearly earning amount?

Dazed_and_C0nfused

They count for State Pension purposes and no there is no qualifying yearly earning amount.

NB.  Class 4 NI does not count for State Pension purposes.

You don't have to make any profit to pay voluntary class 2 NI.

Marvqn1

This is the article I'm talking about.

https://www.express.co.uk/finance/personalfinance/1649867/state-pension-payments-national-insurance-contributions-amount-UK-2022

Dazed_and_C0nfused

It's lazy journalism.  Or maybe more charitable you could say its a very short article to cover a very complex subject.

It gets very close to perpetuating the 35 year myth without explaining that the vast majority of its readers will fall under transitional rules.

Those hopeful of securing the full state pension sum will typically need 35 qualifying years.

As far as Class 2 NI is concerned you could read what those who have to implement the legislation have to say i.e. the notes for the self employment page of the Self Assessment return.

https://www.gov.uk/government/publications/self-assessment-self-employment-short-sa103s

molerat

Marvqn1 said:

Today, I read an article on the Daily Express website. It said for National Insurance Contributions to count as a qualifying year towards the basic State pension, for the self employed it requires minimum earnings of £129 per week or £6,725 per year.

I've never heard about this before and it wasn't mentioned in the letter when I requested a state pension forcast.

Does this mean that there is no point in paying voluntary class 2 NIC's unless your earnings are at least £6,725 per year as it won't count as a qualifying year towards the State pension?

The SP forecast does not tell you how to achieve the required years, it just gives you a factual statement of what you have and what you need.

From the 2022-23 tax year the rules of class 2 changed to bring them roughly in line with the employed.

In simple terms for class 2 :

If your annual profits are below the SPT, £6725, you receive no entitlement to state pension but can purchase voluntary class 2 contributions which count towards your pension.

If your annual profits are between the SPT, £6725, and the LPL, £11908, you are credited with class 2 which count towards your pension.

If your annual profits are above the LPL, £11908, you pay compulsory class 2 at a set weekly amount which counts towards your pension (as well as class 4 at 10.25%)

What precisely does your pension forecast show ?

eskbanker

Dazed_and_C0nfused said:

It gets very close to perpetuating the 35 year myth without explaining that the vast majority of its readers will fall under transitional rules.

It wouldn't surprise me to learn that the vast majority of Daily Express readers were already receiving state pensions in 2016....  

Marvqn1

molerat said:

Marvqn1 said:

Today, I read an article on the Daily Express website. It said for National Insurance Contributions to count as a qualifying year towards the basic State pension, for the self employed it requires minimum earnings of £129 per week or £6,725 per year.

I've never heard about this before and it wasn't mentioned in the letter when I requested a state pension forcast.

Does this mean that there is no point in paying voluntary class 2 NIC's unless your earnings are at least £6,725 per year as it won't count as a qualifying year towards the State pension?

What precisely does your pension forecast show ?

Its a few years since I last got a pension forecast. It just shows the number of qualifying years of NI contributions I have.

molerat

Marvqn1 said:

Its a few years since I last got a pension forecast. It just shows the number of qualifying years of NI contributions I have.

It shows an awful lot more than that !

Anyway, you need to get one annually if you really want to know your state pension situation and check how your contributions are doing.

The easiest way to do this is through your on line HMRC account.

How old are you ?

April 2023 is an important date for paying backdated contributions so getting your ducks in a row now could be beneficial.

xylophone

Have you tried here for a state pension forecast?

https://www.gov.uk/check-state-pension