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If you retire on 31 August have you paid enough NI to qualify for the year?

Discussion in 'Retirement' started by asnac, Aug 9, 2020.

  1. asnac

    asnac Lead commenter

    I am well short of qualifying years for the state pension, and I don't want to miss out on 2021-22 given that I will only be paying NI contributions from 6th April - 31st August 2021 (I plan to retire then).

    I'm not clear how many contributions, or how much in total, need to be made for a year to qualify for state pension purposes. Would appreciate any advice.
     
  2. Lara mfl 05

    Lara mfl 05 Star commenter

    By no means an expert, but because I had years of supply I was told I needed 26 weeks to qualify, so that's 6 months. By my reckoning therefore you'd need till the end of September?
     
  3. frodo_magic

    frodo_magic Occasional commenter

    @asnac

    Have you created a Government Gateway account:

    https://www.gov.uk/check-national-insurance-record

    It's a bit convoluted and can take about a week, but gives you all the info you need. It's not quite as simple as the number of weeks unfortunately. Since 1978 a qualifying year was where you paid contributions on earnings of at least 52 times the Lower Earnings Limit. For the year 2019-20 the lower earnings limit is £118/week so you would need to have been paying NICs on a salary of £6,136 at least.
     
    asnac likes this.
  4. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Have a look at this, particularly the explanation of what a qualifying year means by Steve Webb at the end of the article.

    https://www.thisismoney.co.uk/money...ualifying-years-state-pension-worked-out.html

    It seems that it doesn't have to be 26 weeks of contributions but that you have to earned (and therefore have paid or been credited with NI contributions) over the year an amount equivalent to 52 times the Lower Earning Limit. That was £6,136 last year when the article was written but in 2020-21 is £6,240.

    So in principle if you earned £6,241 in month 1 and nothing for the rest of 2020-21 you would still have a qualifying year. But if you earned in total £6,239 in even amounts every week for 52 weeks in 2020-21 it wouldn't be a qualifying year.

    That's my reading of it, but I may have misunderstood so don't take my word for it!
     
    Lara mfl 05 and asnac like this.
  5. asnac

    asnac Lead commenter

    That is a really helpful link, thank you @Rott Weiler . It tells me what I need to know.

    I don't think what you said is quite right. From your summary it sounded like someone needs to to earn 52 times £6136 (2020-21 figure) - I'd need to be promoted to a superhead and fat chance of that. But the 52 times just means 52 times the weekly £118 equivalent, i.e. you need to have paid contributions on £6240 in total for the year.

    The article goes on to say
    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.

    In the example given in the question, we can ignore the periods when the individual earned a token amount, and focus on the five months where pay was £2,000.

    In each of those months, the pay was above the monthly LEL and therefore the full amount counts towards the annual target.

    As five lots of £2,000 totals £10,000 for the year, and this is in excess of 52 times the weekly LEL (£6,136) this would count as a qualifying year.

    From a National Insurance point of view there is therefore no need to sign on as unemployed for the ‘missing’ months and no need to pay voluntary NICs.


    So since I will earn well over the lower earnings limit for the year between April and August, that year will count for me. I hope that's right as it does seem a bit of a dodge - you only have to earn 6k and you've got pension credit for that year. But (as I understand it) if in any given week you earn less than £118 then that week's earnings don't go towards the annual total.
     
  6. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Yes, poor explanation by me. I meant, as you correctly deduced, you need to earn during the year 52 times the weekly LEL, which equated to an annual £6,136 in 2019-20 and £6,240 in 2020-21.

    So my understanding is that as any full time teacher will earn more than £6,240 between April and August 2020 they will have earned enough and paid enough NI to make 2020-21 a 'qualifying year'. You don't need to earn more or make voluntary contributions to make this year a qualifying year. (There may be other reasons to consider voluntary contributions but that's an entirely different question.)

    Same disclaimer though, I'm not an expert on this so please don't take my word for it.
     
    Last edited: Aug 9, 2020
  7. catmother

    catmother Star commenter

    I stopped working last August and I'm pretty sure that 2019/2020 were credited as a full year,having only worked April to mid August.
     
    asnac likes this.
  8. 60sunnysmile

    60sunnysmile New commenter

    I’ve just checked my NI credits online and I’m confused. At the top it states that I have 38 years and no gaps. It lists every tax year from 1885 onwards which is correct as I only started working in 1985. There cannot possibly be 38 years since 1985. I’m seriously confused about how they got to 38. I’m sure my maths is not that bad! And I counted them just to be sure. Has this happened to anyone else?
     
  9. Rott Weiler

    Rott Weiler Star commenter Forum guide


    I make it 37 if your first tax year when you earned was 1984 -1985 (the "1985 tax year") and if they are also including the current, 2010-21, tax year.
     
  10. 60sunnysmile

    60sunnysmile New commenter

    Checked again (so easy with online account) and the first year is 1985-86. This year, 2020-21 is not counted yet. So 35?
     
  11. jonnymarr

    jonnymarr Occasional commenter

    Credits for being in education used to count. I have three years added for this reason.
     
  12. Rott Weiler

    Rott Weiler Star commenter Forum guide

    Yes, 35, I agree.

    So that's two things we have in common. Both of us reckon it as 35 years and neither of us know why DWP say 38! :)
     
  13. diddydave

    diddydave Lead commenter

    My record includes those years I was in the 6th form as 'credits' rather than from employment.
    Some of my university years have a mix of employment/credits where I did not get a 'full' year and others where I paid some voluntary weeks and are 'full' years...but they are all shown on the record so I don't know why yours only shows your employment years.
     
  14. 60sunnysmile

    60sunnysmile New commenter

    I think I’ll have to contact them to find out what’s going on.
     
  15. lizziescat

    lizziescat Star commenter

    Do you know the criteria for having ‘education years’ credited (or a link?)
     
  16. frustum

    frustum Star commenter

    I have credits from when I was 16/17 and at school (but not whilst at university). It surprised me.
     
  17. diddydave

    diddydave Lead commenter

    lizziescat likes this.
  18. lizziescat

    lizziescat Star commenter

    Thank you @diddydave. That could be useful for a friend of mine
     
    Lara mfl 05 likes this.
  19. frangipani123

    frangipani123 Lead commenter

    I left my job in mid-July and didn't have paid employment for the rest of that tax year. That year has been included in my NI statement as a full year of contributions, but I couldn't see it on my record until the following tax year. So if you finish at the end of August your contributions should be enough for a full year.
     
    asnac likes this.
  20. nomad

    nomad Star commenter

    From 1975 16, 17 and 18 year olds were given credits if they stayed in full time education, approved training or apprenticeship to protect their state pension position.
     

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