Minimum salary required for state pension

chrismriley

Hi 

I will likely earn a low salary this year £6,200) and want to know how much more i need to earn to qualify for the state pension please

many thanks

p00hsticks

It depends on how frequently you get paid and if that pay is spread evenly over each payment period.
  
To get an NI credit for the relevant week(s) you need to earn £123 a week if paid weekly, £533 a month if monthly, and £6,396 if paid annually. 

RogerPensionGuy

p00hsticks said:

It depends on how frequently you get paid and if that pay is spread evenly over each payment period.
  
To get an NI credit for the relevant week(s) you need to earn £123 a week if paid weekly, £533 a month if monthly, and £6,396 if paid annually. 

Nice info here, very helpful thanks.

Question that maybe helpful for people that don't work complete years, using the above £6,396 PA, if a person is earning say 20K PA and only works 4 months in say this year, will they get an NI credit trying to achieve the maximum 35 years now required.

I know a few people who have left paid employment and then find out they are a few years short of NI inputs, some are thinking they may just work for just 4 or 5 months PA for a few odd years to top up NI inputs and shore up their cash inflows as they a bit worried about inflation and pension performance.

Any info much appreciated.

xylophone

https://forums.moneysavingexpert.com/discussion/6426694/nat-ins-will-i-get-a-state-pension-qualifying-year-based-on-my-employed-earnings-in-t-yr-2022-23

Linton

RogerPensionGuy said:

p00hsticks said:

It depends on how frequently you get paid and if that pay is spread evenly over each payment period.
  
To get an NI credit for the relevant week(s) you need to earn £123 a week if paid weekly, £533 a month if monthly, and £6,396 if paid annually. 

Nice info here, very helpful thanks.

Question that maybe helpful for people that don't work complete years, using the above £6,396 PA, if a person is earning say 20K PA and only works 4 months in say this year, will they get an NI credit trying to achieve the maximum 35 years now required.

I know a few people who have left paid employment and then find out they are a few years short of NI inputs, some are thinking they may just work for just 4 or 5 months PA for a few odd years to top up NI inputs and shore up their cash inflows as they a bit worried about inflation and pension performance.

Any info much appreciated.

First point - 35 NI years is only the number required should your entire working life be post 2016.  Clearly that is not the case for anyone retiring at the moment.  If you have pre 2016 NI your are under the transition rules where the number of years could be more than 35 or less depending on your particular circumstances.

You need to get a State pension forecast - https://www.gov.uk/check-state-pension.  If you do not understand what it means post the details here.

On your question of definition of an NI year - yes if you have worked sufficient qualifying weeks/months (your wages payment period) to earn a total of  £6396 over the year then you get it classed as an NI year. If you dont want to work you can buy a voluntary NI year for currently £824.

Marcon

p00hsticks said:

It depends on how frequently you get paid and if that pay is spread evenly over each payment period.
  
To get an NI credit for the relevant week(s) you need to earn £123 a week if paid weekly, £533 a month if monthly, and £6,396 if paid annually. 

Unless you're a director of a company, in which case your NI is based on earnings for the whole year, not pay periods. See https://www.gov.uk/employee-directors

RogerPensionGuy

Thanks for all the great posts above, but I'm still confused a bit, I've googled a lot and think I now understand maybe, someone could maybe just reconfirm my understanding please.

A person wants to stop paid employment in March, but does 3 more months, April, May & June and then stops paid employment. 

Person earned 3K per month so gross income was 9K total.

His employer paided employers NI as normal. 

Person paid his employees NI and income tax as per normal. 

After person stops paid employment he requests an income tax refund and he will receive back any income tax he paid for that year assuming his overall Income was only 9K.

Person won't get any NI refund. 

I'm guessing the combined NI contributions tick the box required. 

Finally after all my comments above, this person will receive a 1 years NI credit to help him achieve more years for state pension?

PS, I know a good few people who just decide to stop paid employment at the end of March and if all the above is correct, staying employed a few more months saves £824 payment later on..

RogerPensionGuy

I was unable to edit with this information link, but I found it easier to understand. 
☆☆☆
https://www.litrg.org.uk/tax-guides/pensioners/approaching-retirement

NedS

RogerPensionGuy said:

Thanks for all the great posts above, but I'm still confused a bit, I've googled a lot and think I now understand maybe, someone could maybe just reconfirm my understanding please.

A person wants to stop paid employment in March, but does 3 more months, April, May & June and then stops paid employment. 

Person earned 3K per month so gross income was 9K total.

His employer paided employers NI as normal. 

Person paid his employees NI and income tax as per normal. 

After person stops paid employment he requests an income tax refund and he will receive back any income tax he paid for that year assuming his overall Income was only 9K.

Person won't get any NI refund. 

I'm guessing the combined NI contributions tick the box required. 

Finally after all my comments above, this person will receive a 1 years NI credit to help him achieve more years for state pension?

PS, I know a good few people who just decide to stop paid employment at the end of March and if all the above is correct, staying employed a few more months saves £824 payment later on..

Yes, the key figures to take into account are the Lower Earnings Limit (LEL) and Upper Earnings Limit (UEL):

https://www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

For the year to count, the employee must have earnings over the Lower Earnings Limit, which for someone who is paid monthly would be 12 x £533 = £6396

However, monthly earnings above the UEL do not count, so earning £6400 in 1 month would not give a full year.

In your example, having earnings of £9,000 split evenly over 3 months (3 x £3000) would qualify for the full year as they would have earnings over the LEL and those qualifying earnings have not have exceeded the UEL in any once month.

Two months of earnings (2 x £3000 = £6000) would not in itself be enough and would leave them just short of the LEL (£6396) - the year would not count without some other contributions, either from additional earnings or from NI credits awarded, for example, through claiming benefits.

RogerPensionGuy

Ned said.

"In your example, having earnings of £9,000 split evenly over 3 months (3 x £3000) would qualify for the full year as they would have earnings over the LEL and those qualifying earnings have not have exceeded the UEL in any once month:

I obviously still cannot understand the most easy economical and time efficient way of achieving a 1 years NI credit. 

In the example above, I'm confused as to why not going above the UEL is relevant?

If in the example the person gets gross pay of 4K, 5K or 6K any or all of those three months, why is it a problem?

I understand NI is 12% between the LEL and the UEL and income below the LEL is no benefit and income over the UEL also no benefit trying to achieve a quick easy one years NI credit in a financial year.

I understand gross pay of £2,150 for 3 months is £6,450 and is about the LEL so happy days.

I just cannot understand why earning above the UEL in any or all months would cause an issue. 

Say a person is on a zero hours contract and can adjust hours to achieve any gross pay per month, what's the most efficient way to get that one years NI?

Is it that 12% collection rate needs to collect an X amount of pounds over a period. 

I've spent hours and hours reading a lot on line and still unfortunately cannot exactly understand the mechanics of how to achieve an easy NI years credit. 

Thanks in advance to anyone that can explain simply what I just cannot understand. 

Cheers Roger.

Dazed_and_C0nfused

Why do you think it "causes an issue" 🤔

AIUI it's just that the amount above UEL isn't a factor for NI purposes.

Could you clarify what issue you think there is?

@Neds explanation seemed pretty good to me 😀