State Pension - Sorry if this has already been asked, but I don't understand SP

Merlot

I am currently a SAHM with a husband with a company pension. I am trying to understand if I will be entitled to the basic state pension when I retire or get older, I have no plans at this moment returning to work, with childcare costs etc, and have been there and done, it really isn't worth it, anyway my question is:

As I have been in receipt of Child Benefit for the past ten years, (have worked some of the time) and have previously work full-time for 10 years before the children arrived, am I entitled to recieve the basic state pension as I assume my NI contributions have been credited to the fact of HRP, and how do I contribute after 2010 if my children are older than 12, I am terribly sorry if this doesn't make sense, but I am trying to plan for retirement and at the moment I am unable to afford a personal pension, my husband has been in full employment for 15 years since leaving university, would I be entitled to a basic state pension because of his NI contributions, I have copied and pasted the following, can anyone advise me on the above. Many thanks in anticipation.



Parents and carers

Working and caring will be recognised equally in the reformed State Pension scheme, with more women and carers being eligible for a full basic State Pension and for State Second Pension.
From 6 April 2010, more people who are not paying National Insurance contributions will be able to build up entitlement to basic State Pension and State Second Pension through a new weekly National Insurance credit. The people who will be eligible for these new credits are:

• people who are getting Child Benefit for children up to the age of 12
• approved foster carers
• caring for at least 20 hours a week for people who are getting Attendence Allowance, Disability Living Allowance (the middle or highest rate care component) or Constant Attendence Allowance
• having caring responsibilities for at least 20 hours a week for other people who need care. The details are still being developed.

People who pay National Insurance contributions for part of a tax year and qualify for the new credits for the rest of the tax year will be able to combine them to gain a qualifying year for basic State Pension and State Second Pension.
Home Responsibilities Protection (HRP), which is only given for full tax years, will be abolished. Past years of HRP (up to a maximum of 22) will be converted into qualifying years of credits which will count towards basic State Pension.

seven-day-weekend

Right, this is how I understand it, although it may all have changed in the new rules. Someone will correct me if I am wrong.

You have ten years worth of paid contributions. AFAIK that entitles you to some State Pension in your own right (obviously not the full amount).

You have ten years of HRP. Now this will bring down the time that you have to pay NI for. If your State Retirement Date is after April 6, 2010, which I assume it is, then you only have to pay/be credited with NI contributiions for thirty years anyway. So your 10 years of HRP will bring this down. I'm not sure by how much, under the new rules.

You can pay Voluntary Contributions if you are not working and not in receipt of Child Benefit, at the moment these are around £7 a week and will qualify towards your Pension.

You will be entitled to a 60% pension based your husband's contributions, but it looks to me as though you will have time to build up a full pension in your own right, through a mixture of paid contributions, HRP and voluntary contributions.

It would be much better to have 100% of your own than 60% of your husbands, IMHO.

Hope this helps, and also if any of it is wrong that someone will correct me.

TREVORCOLMAN

seven-day-weekend wrote: »

Right, this is how I understand it, although it may all have changed in the new rules. Someone will correct me if I am wrong.

You have ten years worth of paid contributions. AFAIK that entitles you to some State Pension in your own right (obviously not the full amount).

You have ten years of HRP. Now this will bring down the time that you have to pay NI for. If your State Retirement Date is after April 6, 2010, which I assume it is, then you only have to pay/be credited with NI contributiions for thirty years anyway. So your 10 years of HRP will bring this down. I'm not sure by how much, under the new rules.

You can pay Voluntary Contributions if you are not working and not in receipt of Child Benefit, at the moment these are around £7 a week and will qualify towards your Pension.

You will be entitled to a 60% pension based your husband's contributions, but it looks to me as though you will have time to build up a full pension in your own right, through a mixture of paid contributions, HRP and voluntary contributions.

It would be much better to have 100% of your own than 60% of your husbands, IMHO.

Hope this helps, and also if any of it is wrong that someone will correct me.

So working wives are wasting their time then?

seven-day-weekend

TREVORCOLMAN wrote: »

So working wives are wasting their time then?

I don't understand what you mean?

Merlot

TREVORCOLMAN wrote: »

So working wives are wasting their time then?

Sorry, but you are saying that I am not working because I am not in paid employment, I will have to say that being a SAHM/D is one of the hardest thankless jobs anyone can do, I have worked full-time for ten years, full time for several years after the children were born and then part-time, it is not my fault I cannot afford the high rates of childcare for my two children, and as we only have child minders in this rural area, none of which take children over 12 , I have very little option but not to return to work as I will not leave my twelve year to be a latch door key child, or is it the fact that you weren't aware of the HRP? To be honest, I wasn't until I watched working lunch on TV, and then the DWP website, but it is not very clear about the new rules, and this is why I posted the original question.

SDW, Do you know how I can make additional contributions to my NI, via direct debit etc. I know I could phone them but the last time I checked,it wasn't a freephone number and they keep you on hold for sometime. Thanks for your comments.

seven-day-weekend

I don't think you need to do it yet whilst you are in receipt of child benefit as you will be getting the HRP.

You may find this link useful - it tells you about voluntary contributions halfway down the page. You can pay them by Direct Debit.

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/PensionsAndRetirement/FinancialPlanningForRetirement/DG_10021384


It would be preferable to talk to them if you could, as they will be able to tell you more about your individual circumstances. You could try writing or maybe e-mailing if you don't want to hang on the phone.

A State Pension Forecast is useful, but they are not doing them at the moment for people who retire after 2010.

Hope this helps, but please take professional advice as I have no training in pensions and have just a reasonable layperson's knowledge.

EdInvestor

TREVORCOLMAN wrote: »

So working wives are wasting their time then?

Nah.There are actually 2 state pensions - the basic and the topup Serps/S2P.Working wives get credits for both automatically via their NI conts, whereas SAHMs have to pay voluntary conts to get just the basic.

Merlot

EdInvestor wrote: »

Nah.There are actually 2 state pensions - the basic and the topup Serps/S2P.Working wives get credits for both automatically via their NI conts, whereas SAHMs have to pay voluntary conts to get just the basic.

That's not quite correct - you don't have to pay voluntary conts to get the basic - as long as you have 30 years NI contributions then you qualify for the basic pension - example 10 years working before child arrives, 12 years HRP for each child (from 2010), so if you carefully plan your children, once your eldest child is 8 then have another one you will have made up the 30 years contributions needed.:D (10 & 8 & 12) (If only I thought of that at the time), I will be 6 years short..damn.

isasmurf

Here's how I understand it.

The answer to your basic question as to whether you will be entitled to a basic state pension should be yes based on the information you have provided. You may not be entitled to a full BSP though.

Under the current rules you are entitled to receive some BSP if you have 25% of the maximum number of qualifying years of contributions - this is 44 for women reaching state pension age after 5th April 2020. HRP reduces the number of qualifying years you need for a full basic state pension.

So an example. A parent works for 10 years and receives HRP for 12 years and reaches state pension age in 2021. The 12 years of HRP reduces the maximum number of qualifying years down to 32 years. Having 10 years of NI contributions gives the parent enough to receive 31% of the maximum BSP.

Now, under the new rules post 2010 the maximum number of qualifying years is reduced to 30. HRP will be abolished with, as I understand it, each year of HRP being converted to a qualifying year of contributions. Therefore the same person will then have 22 years of contributions and be eligible for 73% of the BSP.

EdInvestor

Just to add to 7DWE's post:

Merlot wrote: »

As I have been in receipt of Child Benefit for the past ten years, (have worked some of the time) and have previously work full-time for 10 years before the children arrived, am I entitled to recieve the basic state pension

Not a full one (yet). Under the new rules, this would give you 20 years of contributions, out of 30 needed for the full BSP, so you would get 66% of the BSP. However, one thing does need checking: under the old rules it was possible IIRC to invalidate an HRP credit by working part time or part of a year but not paying full NI conts ( a pernicious rule IMHO), thus ending up with neither a paid year or an HRP year. So you would need to check how many years you have been credited with.There are also a couple of years credited at the beginning while still at school.

how do I contribute after 2010 if my children are older than 12,

If you don't return to work then you can pay class 3 voluntary contributions to make up the remaining years to 30.

would I be entitled to a basic state pension because of his NI contributions

You could claim a 60% pension based on his contributions, but it would appear you are already close to or up to that level in your own right with 20 out of 30 years. So better to pay the Class 3 conts for the remaining years and get the full amount.

margaretclare

EdInvestor wrote: »

If you don't return to work then you can pay class 3 voluntary contributions to make up the remaining years to 30.

You could claim a 60% pension based on his contributions, but it would appear you are already close to or up to that level in your own right with 20 out of 30 years. So better to pay the Class 3 conts for the remaining years and get the full amount.

And it's not just a question of 100% being better than 60%, which it obviously is.

At present a woman retiring with her own state pension provision can do so at 60, a woman retiring on the 60% via her husband's contributions has to do so when he retires aged 65. I believe the retirement age will change for both sexes in the future and both will retire at the same age.

But additionally, the feeling of independence, of receiving your own pension which you earned in your own right, is just indescribable, and is of incalculable value.

If you never plan to return to work at any stage, not even when the children have grown and flown, then it would be a good idea to investigate the possibility of paying the missing contributions, as others have already said.

HTH

Margaret