National Insurance and Not working

mortzy

I am so sorry to duplicate threads about the state pension but it does seem very confusing. I have just spoken to Future Pensions and they have told me that even though I retired in August 2022, don't reach state pension till 2032 and was contracted out for a period of time, I still do not need to pay anymore contributions as I have 43 full years. Yet the person who I mentioned that is now reaching state pension age has been told different, even though he has similar amount of full years….

molerat

The state pension for us that have a pre and post 2016 record is all down to very individual circumstances. The total number of full years is not the main deciding factor but a combination of pre 2016 years, post 2016 years, additional pension and contracted out service all combine in a mathematical equation to come out with the final answer. Loads of threads here on the subject.

xylophone

Have the rules around qualifying years changed recently as I have been made aware of someone who retired early and took his private pension. Now four years later, he has reached state pension retirement age and has been told that his state pension is reduced due to four years missing on his National Insurance Record, even though he has paid more than 35 years NI contributions over his working life

See (rather old now but explains the position).

https://assets.publishing.service.gov.uk/media/5a7a21fd40f0b66a2fc00201/single-tier-pension-fact-sheet.pdf

Your friend was still working (aged around 56?) at inception of NSP in 2016.

At 6 /4/16, two calculations were done to establish his New State Pension "starting amount" - it seems certain that during his working life he was contracted out of additional state pension through his private pension scheme and therefore he will have a deduction as explained below.

The starting amount was the higher of

Old Rules

NI years /30 (max) x  £119.30 (Full Basic OSP) + (Additional State Pension - Deduction for Contracting Out)

New Rules

{NI Years/35 (max) x £155.65 (Full NSP)}- Contracted Out Pension Equivalent.

Your friend's starting amount was under a full new state pension even though he may well have had 35 NI years plus at that time but he had the

opportunity to improve it through NI contributions/credits as appropriate.

It seems likely that he had around six more full years by the time he gave up work but still had not reached full NSP.

He can contact the Pensions Service concerning making voluntary contributions to cover the shortfall.

https://www.gov.uk/voluntary-national-insurance-contributions

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82003329#Comment_82003329

My maths isn't very good but if you reach 67 in 2032 and retired in 2022 that means you stopped work at 57. If you had 43 full years at 57 then that means you started work at 14! Not many people do that.

Anyway the takeaway for your friend ought to be that there may be something he can do about the missing 4 years and he should check that out.

mortzy

Started work 1980 fresh faced from school, retired in 2022 but the NI contributions took me to 2023 😊

QrizB

https://forums.moneysavingexpert.com/discussion/comment/82003187#Comment_82003187

It would have helped your friend/ acquaintance if they'd checked their state pension forecast prior to reaching state pension age. It would have told them how many more NI years they needed for a full state pension.

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

mortzy

I did say that to him and he replied that he had and it was showing he was due the full amount, which doesn't seem correct from what you all have been saying and what I was told today from the Future Pension people….

QrizB

I did say that to him and he replied that he had and it was showing he was due the full amount

The problem is that the headline amount in the green box is what you could get if you continue paying NI until state pension age.

The smaller print underneath the box says how much you've already earned and how many more years of NI you need in order to get the full amount.

Something like this (an example from a few years ago when the full SP was £203.85):

It sounds like he didn't read the small print properly.

molerat

https://forums.moneysavingexpert.com/discussion/comment/82003432#Comment_82003432

The "big green box" at the top would likely have stated the full amount 4 years ago and prior to that but that box only shows what you will likely get and the texts below that clarify everything, if anything, that needs doing.

mortzy

https://forums.moneysavingexpert.com/discussion/comment/82003460#Comment_82003460

I see, mine has always just shown the full amount and stated that I can't earn any more, so that is probably the bit he missed, thank you!