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Making up shortfall on NI contributions

Discussion in 'Personal' started by roseangel, Mar 28, 2012.

  1. What "obvious reasons"?
    You only need 30 years contributions to get a full pension now. Will the next 5 years not fully count?
    I have done less than 30 years full time but plenty of part time and supply. I'm sure I'll have enough to get a pension.
     
  2. margie2

    margie2 New commenter

    No, they may not. They used to but don't anymore (since April 2011) if you earn less than £ 8,000 a year or thereabouts.
     
  3. phatsals

    phatsals Occasional commenter

    If there is a shortfall in contributions they will write to you. You will have 6 years to pay up (from the year they became due). When they write they tell you how much is needed to cover the missing year.
    Currently 30 years contributions are sufficient for full state pension. If you need to you can make up the difference. You can contact NI for a statement of how many years you have already paid, it was available online up until the last few weeks but due the the changes taking place a phonecall will be required.
     
  4. margie2

    margie2 New commenter

    Thanks Phatsals. I've contacted them and it is round about £600/year per year due (to make up shortfall). I suppose some part-timers on here are in that situation (not earning enough to pay N.I). I can't find a sub-forum for part-timers, is there one?
     
  5. phatsals

    phatsals Occasional commenter

    If you earn around £146pw you will pay NI contributions, that's around £7.5k per year. If you are going P/T you may be earning above this threshold, it's about a 0.2.
    The main thing is that you find out how close you are to the 30 years qualifying as it takes some pressure off.
    If you are working less than 16 hrs pw you are entitled to sign on. Even though there would be no entitlement to benefits, this would then allow NI to be credited to you.
     
  6. margie2

    margie2 New commenter

    Thanks Phatsals, I've got 25 years of NI. And ta for the info re Benefits, I didn't know. So, presumably, if I decide to do supply next year and do not work enough to pay NI, I can register somewhere to be allowed NI? Is it the Job Agency that deals with that?
     
  7. phatsals

    phatsals Occasional commenter

    Yes, at the Job Centre, register as unemployed and those weeks will be credited,
    The malarkey at the JC is another thread altogether but lets keep this simple an just look at NI for now.
    Is it 25 years up to last April? I can't imagine this years has been updated yet and by next year it's at least 26 years, possibly 27.
     
  8. jubilee

    jubilee Star commenter

    That option would not be open to the OP as they will be voluntarily giving up a f/t job to go p/t and thus won't be able to claim that they are looking for f/t work.
    Anyway, the OP is likely to be earning enough even on 0.2 to still be paying NI.
    You no longer get an automatic statement telling you that a year is deficient in NI contributions. That stopped some time ago. You now have to contact them and ask for a statement.
    Care should be taken before paying up nay deficient years and best advice would be to get the statement and do nothing until nearer the last date for paying because:
    1. You may already have enough NI years to qualify for the full state pension
    2. You may have HRP years (Home responsibility Protection) which reduce the number of years that you need to be paying NI. HRP years relate to entire tax years when you were at home caring for children, for instance
    3. There is strong talk of everyone getting a flat-rate pension, irrespective of whether they have paid any NI at all. Making up deficient years would thus be pointless. The intention is to do away with allt eh means-testing of pensioners and the allocation of Minimum Income Guarantee to those who have only the current state pension or lower than a full pension. Everyone will get the amount currently received by a pensioner with no other income (state pension + MIG top-up only) and those who have other significant sources of income in retirement will have any excess from an increased state pension clawed back via the tax system.
     
  9. jubilee

    jubilee Star commenter

    If you do supply, rather than cut your current job to p/t, you could claim JSA at some point if you can say that you are (at that time) looking for f/t work and are available for f/t work.
    You would initially have an issue with claiming as you will have voluntarily given up a f/t job. They can disallow benefits for up to 26 weeks in such cases.
    Further down the line, if you decide that you want as much work as possible for a term per year, say, you could sign on when you are not getting enough work and are available for and seeking f/t work.
    You can make claims on-line at directgov.co.uk or you can phone up. You then get an interview at a jobcentre and eventually sign on every 2 weeks with details of your jobsearch over the fortnight. If your p/t earnings (under 16 hrs per week to keep claim open) don't trigger NI from pay, you get free NI credits whilst claiming.
     
  10. phatsals

    phatsals Occasional commenter

    This is not quite correct, the following is.:-
    <h4>'Gap in your National Insurance record' letter
    </h4>You might receive a letter from HM Revenue & Customs (HMRC) telling you there is a gap in your record. These letters are generally sent out between September and January each year. The letter isn't a bill - but it will tell you how much you can pay if you want to fill the gaps and how you can pay if you opt to do so.
    This is up-to-date information. You can always ring for information, and up until the last few weeks it was possible to look on-line at your records.
    The comment about a non-contributory full basic pension is purely speculative. It would be very foolish to make any decision regarding NI contributions on the basis of such speculation.
     
  11. jubilee

    jubilee Star commenter

    Which is why I suggested waiting until the last possible moment for making payments for deficient years (they give you several years to make the payment) in case the proposed flat-rate pension is brought in in the next few years.
    It would be galling to have paid several hundreds of pounds when a deficient statement arrives, only to find that had you waited, you could have saved the expense and still be in line for the new, higher, flat-rate pension.
    Waiting also allows you to put the money in a savings account, getting interest for 5 years or so, before paying out the original sum at that later date if the tax year in question is still needed for pension purposes.
     
  12. phatsals

    phatsals Occasional commenter

    I had already said it was 6 years to make the payment, just as I had said a letter would be forthcoming regarding NI underpayments. As I suggested, the OP has already contacted NI to check on the number of years they have already accrued.
    As of this year, 30 years contributions are required. Any further changes in the short term towards non-contributary flat rate State pension are purely speculative. The situation has still not been resolved for those who have paid full NI contributions towards SERPS or State Second Pension.
     
  13. margie2

    margie2 New commenter

    Thanks for the info and the rest Jubilee, as usual you've been most helpful and have helped me understand how the system works. Thanks to Phatsals as well.
     

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