National Insurance con

24

Comments

  • AnotherJoe
    AnotherJoe Posts: 19,622 Forumite
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    misuel1955 wrote: »
    Many NHS staff attended pre retirement workshops and at no time was the fact that our NIC would not entitle us to the full State Pension. Surely this should have been a valid topic for discussion so staff could be given the opportunity to pay a shortfall if they wanted to


    I dont know when those took place but i recall when i was advised to contract out (not NHS but no difference in outcome AFAIK) , there was no possibility to "pay a shortfall if they wanted to" to get both, its only recently that has applied.


    And, you were and are better off overall because the pension you spent the money on the NHS pension instead was better than the SP.


    So, your ire is misplaced.
  • BobQ
    BobQ Posts: 11,181 Forumite
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    At one time there was just the Basic State Pension. Then they introduced an earnings related penson that was additional to the basic one.

    Contracting out (reduced NI contributions) was appropriate for those on good (typially defined benefit) occupational pension schemes. Those contracted in needed this additional pension.

    There was no con. You spent years paying less NI than those without an occupational pension. When contracting out ended you made the same contributions and got the same benefits as everyone else.
    Few people are capable of expressing with equanimity opinions which differ from the prejudices of their social environment. Most people are incapable of forming such opinions.
  • michaels
    michaels Posts: 27,991 Forumite
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    The con was that those who didn't contract out and had in theory built up some s2p were left in their mid 40s still paying NI but not accruing any more pension for the next 20 years whereas those who had contracted out get to keep the contracted out pot and will still get the same state pension at 67 based on their current contributions.
    I think....
  • Nick_C
    Nick_C Posts: 7,456 Forumite
    Name Dropper First Anniversary First Post Home Insurance Hacker!
    I'm in a similar position to OP and consider myself very lucky. I can buy additional years by paying voluntary NICs and get a much higher SRP than I ever expected to get.
  • jem16
    jem16 Posts: 19,397 Forumite
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    I’m in the same position as the OP and far from thinking it’s a con, I am certain I’m a winner.

    My COPE is £75pw. Instead of having to wait until I’m 66 to get this, ive been receiving it via my Teachers’ Pension since I was 60. That extra 6 years will gain me £23,400 plus index linking.

    I will also be able to get around £27pw extra on my state pension that I would never have been able to get under the old system simply by paying NI from April 2016 onwards.

    Basically a win win situation for me.
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    What I think is unfair is that some people can top up the SP to £164.35pw but others cannot.
    Fair enough contracted out = c £125pw but if say you reach SP age soon after 2016 your ability to top up is limited.
  • hyubh
    hyubh Posts: 3,531 Forumite
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    Tom99 wrote: »
    What I think is unfair is that some people can top up the SP to £164.35pw but others cannot.
    Fair enough contracted out = c £125pw but if say you reach SP age soon after 2016 your ability to top up is limited.

    Hey, why stop there? Why not allow anyone with a final salary pension in payment to retrospectively buy additional state pension cheaply? Most people under 30 are cynical about ever getting a state pension themselves anyway...
  • zagfles
    zagfles Posts: 20,317 Forumite
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    Tom99 wrote: »
    What I think is unfair is that some people can top up the SP to £164.35pw but others cannot.
    Fair enough contracted out = c £125pw but if say you reach SP age soon after 2016 your ability to top up is limited.
    What's really unfair is people who were contracted in can't get any more than £164 a week, while those contracted out who get eg £125 a week state pension plus £50 in COPE, can accrue more state pension!
  • molerat
    molerat Posts: 31,816 Forumite
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    Those that were contracted in could have a pension of £293, why can't I top up to that amount, very unfair.
  • Tom99
    Tom99 Posts: 5,371 Forumite
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    hyubh wrote: »
    Hey, why stop there? Why not allow anyone with a final salary pension in payment to retrospectively buy additional state pension cheaply? Most people under 30 are cynical about ever getting a state pension themselves anyway...
    Why stop there, allow everyone entitled to less than £164.35pw to top up to that level at c£760 per £4.69pw.
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