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National Insurance

Practical Issues
smokey01
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National Insurance

#340605

Postby smokey01 » September 16th, 2020, 12:01 pm

Hi,

I have just checked my national insurance record and I have 37 qualifying years however it also says I need one more year to get the full pension.

I may be made redundant shortly, I presume I won’t lose the weeks of this tax year I have already paid but would need to pay class 3 NI for the remainder of this tax year? Note I have no intention of getting another job so will be effectively early retired at age 55.

swill453
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Re: National Insurance

#340607

Postby swill453 » September 16th, 2020, 12:09 pm

I'm sure someone will come along with the actual figures, but if you've paid NI this year already on salary of X (where my memory tells me X is fairly low, £8K or £12K or something) then this year will count as a full year and you won't need to pay any more.

Scott.

NeilW
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Re: National Insurance

#340618

Postby NeilW » September 16th, 2020, 12:44 pm

NI Pension Credits is an utter nightmare when you're trying to find out what is and isn't eligible.

Pension Credits are awarded per week, and you get one if you earn over £120 in the week, or are treated as such.

Which means what matters is the time period over which your salary is treated as covering. If you are paid monthly and earn over £520 for the month then you get a credit for all the complete weeks in that month.

You have to have the full 52 weeks for the year to be a qualifying year for the state pension, which can be topped up with class 3 voluntary contributions.

swill453
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Re: National Insurance

#340621

Postby swill453 » September 16th, 2020, 12:49 pm

NeilW wrote:You have to have the full 52 weeks for the year to be a qualifying year for the state pension

So my recollection, from the dim past when I needed to care about it, is that that's not the case. That if you earned over a certain amount and paid NI on it then it counted as a qualifying year even if you didn't work 52 weeks.

But obviously my memory may be faulty, do you have a reference?

Scott.

swill453
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Re: National Insurance

#340625

Postby swill453 » September 16th, 2020, 12:53 pm

Ah good, I seem to be remembering correctly.

For a year of your working life to be a ‘qualifying year’ towards your state pension, you have to have paid (or been credited) with NI contributions on earnings equal to 52 times the weekly lower earnings limit*.
...
To give a simple example, suppose that you have a year in which you do no paid work for 26 weeks and then you do 26 weeks at an earnings level of £236 – double the lower earnings limit.

For the year as a whole, you have qualifying earnings of 52 times the LEL and this is therefore a qualifying year.

https://www.thisismoney.co.uk/money/pen ... d-out.html

* This is £118 x 52 = £6136.

Scott.

NeilW
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Re: National Insurance

#340630

Postby NeilW » September 16th, 2020, 1:07 pm

swill453 wrote:
NeilW wrote:You have to have the full 52 weeks for the year to be a qualifying year for the state pension

So my recollection, from the dim past when I needed to care about it, is that that's not the case. That if you earned over a certain amount and paid NI on it then it counted as a qualifying year even if you didn't work 52 weeks.

But obviously my memory may be faulty, do you have a reference?


"From 6th April 2010 a qualifying year is any year in which your earnings factor is equal to or more than the Lower Earnings Level for that year"

Earnings factor is defined in sections 22 and 23 of the legislation https://www.legislation.gov.uk/ukpga/1992/4/pdfs/ukpga_19920004_310320_en.pdf

Once you get through that Byzantine mess you are treated as having a credit for the week

NeilW
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Re: National Insurance

#340635

Postby NeilW » September 16th, 2020, 1:14 pm

swill453 wrote:* This is £118 x 52 = £6136.

Scott.


It's £120 for 2020/21. So the LEL is £6240.

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Re: National Insurance

#340639

Postby swill453 » September 16th, 2020, 1:25 pm

NeilW wrote:
swill453 wrote:* This is £118 x 52 = £6136.


It's £120 for 2020/21. So the LEL is £6240.

Ok, so if the OP has paid NI on more than this amount this tax year so far, then it counts as a qualifying year. No need to worry about the rest of the 52 weeks.

Scott.

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Re: National Insurance

#340640

Postby mc2fool » September 16th, 2020, 1:32 pm

smokey01 wrote:I may be made redundant shortly, I presume I won’t lose the weeks of this tax year I have already paid but would need to pay class 3 NI for the remainder of this tax year? Note I have no intention of getting another job so will be effectively early retired at age 55.

swill453 wrote:* This is £118 x 52 = £6136.

swill453 is correct in that the 52 weeks worth is a lower earnings limit £ amount not a calendar period, but the figure he gives is last years.
For 2020/21 it's £120 * 52 = £6,240. https://www.gov.uk/guidance/rates-and-t ... thresholds

So, as long as you've already earned more than £6,240 this tax year (and paid class 1 NICs on it) then this year will already be a qualifying year.

Either way, as class 3 NICs are frozen in price for 2 years after the end of the tax year, I suggest you simply do nothing for now and just check your NI record again in a years time (well after April 2021), and if then it shows a shortfall you can make it up then.

NeilW
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Re: National Insurance

#340643

Postby NeilW » September 16th, 2020, 1:41 pm

mc2fool wrote:So, as long as you've already earned more than £6,240 this tax year (and paid class 1 NICs on it) then this year will already be a qualifying year.


Do you know how it works with multiple jobs where you're up and down below the LEL in payment periods interspersed with fortnightly National Insurance Credits from the Job Centre?

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Re: National Insurance

#340651

Postby mc2fool » September 16th, 2020, 1:53 pm

NeilW wrote:
mc2fool wrote:So, as long as you've already earned more than £6,240 this tax year (and paid class 1 NICs on it) then this year will already be a qualifying year.

Do you know how it works with multiple jobs where you're up and down below the LEL in payment periods interspersed with fortnightly National Insurance Credits from the Job Centre?

"If an individual has earnings in any particular job less than the Lower Earnings Limit (LEL) (£109 per week in 2013/14) they do not pay any National Insurance, and will not accrue a qualifying year towards the basic State Pension. Those who earn less than the LEL in two or more jobs are not liable to pay NI contributions and similarly do not accrue a qualifying year towards the State Pension even if, when combined, their earnings are above the LEL. In other words, earnings from separate jobs cannot be aggregated for pension purposes."

https://www.gov.uk/government/statistics/state-pension-coverage-lower-earnings-limit-and-multiple-jobs

smokey01
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Re: National Insurance

#340663

Postby smokey01 » September 16th, 2020, 2:52 pm

Thanks, I’ve earned more than £6,240 this tax year so it looks like I will be ok but I will double check after April 2021.

Thanks everyone


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