NI contributions / shortfall if unemployed and not seeking work

Cas

Can anyone help me get my head around my NI record and state pension please? 

I was contracted out for several years whilst in a defined benefit scheme.  I currently have a SIPP which I can access when I reach 55 in a couple of years time (assuming the rules don't change).

I was made redundant in April 2021.  I haven't worked since, nor am I seeking employment, however I'm not registered as unemployed.  I'm not entitled to benefits as both my savings and my husband's salary are above the statutory limits. 

My NI record currently shows 36 years of full contributions and 1 year where I didn't contribute enough (2021/22 - the tax year I lost my job).  The suggestion on the government website is that to make up the full year a voluntary contribution of £369.60 would be required by 5 April 2028.

Based on my current NI contributions my state pension forecast is £175.74 pw and if I contribute another 2 years before 5 April 2036 I would receive £185.15 pw.

If I register as unemployed does that help with plugging the NI contributions gap even though I'm not entitled to any benefits?  Or am I better to contact the Future Pension Centre to see if making up the shortfall for 2021/22 plus buying an additional year would mean I receive the maximum £185.15 pw?

Thanks in advance.

Marcon

Cas said:

Can anyone help me get my head around my NI record and state pension please? 

I was contracted out for several years whilst in a defined benefit scheme.  I currently have a SIPP which I can access when I reach 55 in a couple of years time (assuming the rules don't change).

I was made redundant in April 2021.  I haven't worked since, nor am I seeking employment, however I'm not registered as unemployed.  I'm not entitled to benefits as both my savings and my husband's salary are above the statutory limits. 

My NI record currently shows 36 years of full contributions and 1 year where I didn't contribute enough (2021/22 - the tax year I lost my job).  The suggestion on the government website is that to make up the full year a voluntary contribution of £369.60 would be required by 5 April 2028.

Based on my current NI contributions my state pension forecast is £175.74 pw and if I contribute another 2 years before 5 April 2036 I would receive £185.15 pw.

If I register as unemployed does that help with plugging the NI contributions gap even though I'm not entitled to any benefits?  Or am I better to contact the Future Pension Centre to see if making up the shortfall for 2021/22 plus buying an additional year would mean I receive the maximum £185.15 pw?

Thanks in advance.

See https://www.gov.uk/national-insurance-credits

molerat

I assume that £175.74 is your accrued amount up to April 2022 ?  If so then yes it is a simple case of adding 2 more years.  Signing on purely for the NI credits seems, from reports from others on here, like incredibly hard work as you still have to jump through all the hoops and it is hit and miss if you actually receive the credits without a fight.  You cannot simply register as unemployed and sit back and watch the NI credits roll in.

That £369.60, 24 weeks, will increase in price in April 2024 to £418.80  + Sept 23 cpi which is forecast at 7% so around £448.

Cas

Marcon said:

Cas said:

Can anyone help me get my head around my NI record and state pension please? 

I was contracted out for several years whilst in a defined benefit scheme.  I currently have a SIPP which I can access when I reach 55 in a couple of years time (assuming the rules don't change).

I was made redundant in April 2021.  I haven't worked since, nor am I seeking employment, however I'm not registered as unemployed.  I'm not entitled to benefits as both my savings and my husband's salary are above the statutory limits. 

My NI record currently shows 36 years of full contributions and 1 year where I didn't contribute enough (2021/22 - the tax year I lost my job).  The suggestion on the government website is that to make up the full year a voluntary contribution of £369.60 would be required by 5 April 2028.

Based on my current NI contributions my state pension forecast is £175.74 pw and if I contribute another 2 years before 5 April 2036 I would receive £185.15 pw.

If I register as unemployed does that help with plugging the NI contributions gap even though I'm not entitled to any benefits?  Or am I better to contact the Future Pension Centre to see if making up the shortfall for 2021/22 plus buying an additional year would mean I receive the maximum £185.15 pw?

Thanks in advance.

See https://www.gov.uk/national-insurance-credits

Thanks Marcon however I've gone through that as well as the MSE guide and I'm still scratching my head!  I don't think I'm entitled to NI credits because I'm not claiming / not entitled to benefits but I have older relatives who insist that I should receive NI credits if I'm registered as unemployed.

Grumpy_chap

molerat said:

I assume that £175.74 is your accrued amount up to April 2022 ?  If so then yes it is a simple case of adding 2 more years.  Signing on purely for the NI credits seems, from reports from others on here, like incredibly hard work as you still have to jump through all the hoops and it is hit and miss if you actually receive the credits without a fight.  You cannot simply register as unemployed and sit back and watch the NI credits roll in.

That £369.60, 24 weeks, will increase in price in April 2024 to £418.80  + Sept 23 cpi which is forecast at 7% so around £448.

The OP may be able to receive the "contributions based" element of JSA, which might well make it worth signing on for the credits.  If I understand correctly, there needs to have been contributions made as per normal within the previous two years, which would seem to be the case as only 2021-22 and current year are short.  There might be someone with more accurate / complete knowledge for the eligibility for the "contributions based" JSA and associated NI credits.

calcotti

Cas said:

Marcon said:

Cas said:

Can anyone help me get my head around my NI record and state pension please? 

I was contracted out for several years whilst in a defined benefit scheme.  I currently have a SIPP which I can access when I reach 55 in a couple of years time (assuming the rules don't change).

I was made redundant in April 2021.  I haven't worked since, nor am I seeking employment, however I'm not registered as unemployed.  I'm not entitled to benefits as both my savings and my husband's salary are above the statutory limits. 

My NI record currently shows 36 years of full contributions and 1 year where I didn't contribute enough (2021/22 - the tax year I lost my job).  The suggestion on the government website is that to make up the full year a voluntary contribution of £369.60 would be required by 5 April 2028.

Based on my current NI contributions my state pension forecast is £175.74 pw and if I contribute another 2 years before 5 April 2036 I would receive £185.15 pw.

If I register as unemployed does that help with plugging the NI contributions gap even though I'm not entitled to any benefits?  Or am I better to contact the Future Pension Centre to see if making up the shortfall for 2021/22 plus buying an additional year would mean I receive the maximum £185.15 pw?

Thanks in advance.

See https://www.gov.uk/national-insurance-credits

Thanks Marcon however I've gone through that as well as the MSE guide and I'm still scratching my head!  I don't think I'm entitled to NI credits because I'm not claiming / not entitled to benefits but I have older relatives who insist that I should receive NI credits if I'm registered as unemployed.

You can register as a jobseeker and then get NI credits. The point molerat is making is that if you do that, in order to get the NI credits, you will have to do everything somebody claiming JSA or UC will have to do which means demonstrating that you are spending 35 hours/week looking for work. Do you want to put yourself through that? 

is possible to claim and receive new style JSA for 6 months if your NI record for the tax years 2019-20 and 2020-21 are complete. This applies up to to next weekend. After that the relevant tax years will be 2020-21 and 2021-22 and, from what you have said, will no longer qualify. But ifyou claimed now this is only going to give roughly 14 weeks of credits in 2022-23 and 12 weeks in 2023-24. You would get £77/week for those 26 weeks but will have to demonstrate you are spending 35 hours/week looking for work.

I think you also need to put this in context. You only need an extra 2 years of credits or contributions to get your full pension have 15 or 16 years before you reach pension age. Unless you are intending to no longer at work all you have plenty of time to make up the missing 2 years. You only have to earn £123/week to be treated as if you have paid Class 1 contributions even though you wouldn’t actually pay any at that level of pay. 

Further more during the remaining years you might become entitled to NI credits if you became ill and unable to work or if you became a carer for somebody.

As far as registering as self employed you can only do this if you intend to be self employed and there will be annual accounts to prepare etc. if self employed you can, currently, pay Class 2 voluntary NI contributions which are much cheaper than voluntary Class 3 contributions but that situation may change.

squirrelpie

It's a good idea to get both years that you need for a full pension; the cost will be returned many times over when you claim your state pension. I suggest purchasing the missing part of 21/22 before next April for reasons already given. Depending on how rich you feel, versus how much hassle you're happy to deal with, you can then either register for JSA or pay for another year at some time during the next ten to fifteen years (I can't be bothered to work out the exact period). It will be cheaper to buy it sooner if you don't plan to get it by getting another job or becoming self-employed.

Cas

molerat said:

I assume that £175.74 is your accrued amount up to April 2022 ?  If so then yes it is a simple case of adding 2 more years.  Signing on purely for the NI credits seems, from reports from others on here, like incredibly hard work as you still have to jump through all the hoops and it is hit and miss if you actually receive the credits without a fight.  You cannot simply register as unemployed and sit back and watch the NI credits roll in.

That £369.60, 24 weeks, will increase in price in April 2024 to £418.80  + Sept 23 cpi which is forecast at 7% so around £448.

Thanks Molerat. Yes, that's my accrued amount to April 2022.  My understanding is, as you've pointed out, it's either sign up for JSA or pay the missing for the missing years.  The latter's my preferred option.

Cas

calcotti said:

You can register as a jobseeker and then get NI credits. The point molerat is making is that if you do that, in order to get the NI credits, you will have to do everything somebody claiming JSA or UC will have to do which means demonstrating that you are spending 35 hours/week looking for work. Do you want to put yourself through that? 

is possible to claim and receive new style JSA for 6 months if your NI record for the tax years 2019-20 and 2020-21 are complete. This applies up to to next weekend. After that the relevant tax years will be 2020-21 and 2021-22 and, from what you have said, will no longer qualify. But ifyou claimed now this is only going to give roughly 14 weeks of credits in 2022-23 and 12 weeks in 2023-24. You would get £77/week for those 26 weeks but will have to demonstrate you are spending 35 hours/week looking for work.

I think you also need to put this in context. You only need an extra 2 years of credits or contributions to get your full pension have 15 or 16 years before you reach pension age. Unless you are intending to no longer at work all you have plenty of time to make up the missing 2 years. You only have to earn £123/week to be treated as if you have paid Class 1 contributions even though you wouldn’t actually pay any at that level of pay. 

Further more during the remaining years you might become entitled to NI credits if you became ill and unable to work or if you became a carer for somebody.

As far as registering as self employed you can only do this if you intend to be self employed and there will be annual accounts to prepare etc. if self employed you can, currently, pay Class 2 voluntary NI contributions which are much cheaper than voluntary Class 3 contributions but that situation may change.

Thanks calcotti, that's really useful. You're right, I don't want to be in the position of trying to demonstrate that I'm spending 35 hours pw looking for work and, as you say, I've got about 15 years to make up the missing 2 years contributions. 

Cas

squirrelpie said:

It's a good idea to get both years that you need for a full pension; the cost will be returned many times over when you claim your state pension. I suggest purchasing the missing part of 21/22 before next April for reasons already given. Depending on how rich you feel, versus how much hassle you're happy to deal with, you can then either register for JSA or pay for another year at some time during the next ten to fifteen years (I can't be bothered to work out the exact period). It will be cheaper to buy it sooner if you don't plan to get it by getting another job or becoming self-employed.

Thanks squirrelpie.  I'll probably buy the missing credits sooner rather than later - it seems like the simplest option!

retiringtoosoon

Do you have any grandchildren to look after?