NI Class 1, 2 & 3 Clarification... PLEASE!

seven-day-weekend

Thankyou Brum Man, I stand corrected.

(I'm from Wolverhampton, although I now live in Spain).

EdInvestor

Brum_Man wrote: »

Class 2 aren't voluntary, they are just a flat rate for the self employed and non profit related.

In addition, British expats working overseas can pay class 2 conts on a voluntary basis.

How significant might this S2P be if I'm only paying into it for, say, only 15 years? Is this what many people opt out of to invest in other schemes?

An above average earner with a 30 year NI record retiring now would double his basic state pension with S2P.The pension will flatten out in future, so will benefit the less well paid at the expense of the higher earners..

EdInvestor

seven-day-weekend wrote: »

If you are in an Occupational or Private Pension scheme, you will be opted out of S2P

It's only when a company scheme is itself contracted out that you are automatically opted out. Otherwise you have to choose.

I thought you could only pay the six previous years so you could only pay 2001 and 2003. Has there been a chnge in the rules?

Yes, you can currently catch up on missing years back to 1996. The number of years was extended due to a computer malfunction which meant many people didn't receive notices in the 90s alerting them to the need to pay in.

efunc

EdInvestor wrote: »

An above average earner with a 30 year NI record retiring now would double his basic state pension with S2P.The pension will flatten out in future, so will benefit the less well paid at the expense of the higher earners..

I see, thanks for that. Could I enquire further if this calculation is based on the number of years contributed or the total amount paid in? ie if I'm earning £40k and make 15 years of contributions will that be equivalent of someone on £20k making 30 years of contributions? Or is it a more complex caulculation?

EdInvestor

More complex: there is a top earnings limit above which you don't get any extra, which is around 32k IIRC (but don;t quoite me on that).It's based on how much you earn and how long you've paid in.

Towards the end of this year you should be able to get a forecast from the pension service of how much you are likely to get, once their computer is back in action.