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NI contributions and state pension

Discussion in 'Retirement' started by pauljoecoe, Dec 8, 2019.

  1. pauljoecoe

    pauljoecoe New commenter

    Well this has been an education. When I moved abroad to work I checked my NI contributions and they were over 35 years so I thought all was OK. However, checked on the Government website at my state pension forecast and it says I will get around £140 rather than the full rate of £168 when I reach state retirement age in 2029 (age 67)

    So from what I can tell it is due to being contracted out (SERPs) while paying into the TPS ???

    It also stated if I contribute for another 6 years before 2029 then I will get the full amount.

    However, I believe you don't pay NI on your teachers pension?

    So the question is, if I return to the UK in September 2020 and retire and claim my Teachers will pension my state pension always be under the maximum? Unless maybe I make pay some extra into the NI - not sure if thats possible or worth it for £28 a week in 10 years time?

    Appreciate some thoughts/knowledge on this.
  2. diddydave

    diddydave Established commenter

    You are correct, you do not pay NI on your teacher's pension.

    You can pay voluntary NI and, at the moment, there are two alternatives. One costs £3 a week, the other £15 a week.

    Only certain groups of workers can pay the lower amount but the good news is that you can quite easily be in one of those groups - in particular "examiners" or "invigilators" qualify for it, so taking up such a role with one of the exam boards or with a local school or university on your return would do. Also if you can become "self-employed", so doing some 'tutoring' may do it.

    As to whether it's worth it, clearly the lower rate makes it more worth it!

    6 years @ £3 a week - £18 a week and in return you get a promise to pay you £28 a week for life after your NPA so I'd say that was a sound investment.

  3. coolhands

    coolhands New commenter

    how does it work if you're only employed (eg examiner) for part of the year. ie he won't be working all 52 weeks so although he can pay £3 for the employed weeks, what about the unemployed weeks?
  4. diddydave

    diddydave Established commenter

    From what I have seen, I'm self-employed anyway so have no first-hand knowledge though I do pay the class 2 voluntary NI, you have to complete a self-assessment tax return and simply tell HMRC that you have worked in the year as an examiner/invigilator. You then get a bill for the NI.
    Others have reported that they phone the tax people and have them note on their file their work as an examiner.

    I work as an examiner and have ad-hoc contracts throughout the year - the role is specifically mentioned in the regulations and I've not seen, or heard, anything about it having to be every week of the year to be able to pay the Class 2 NI
    Treacle3 likes this.
  5. coolhands

    coolhands New commenter

    Oh that's quite nifty. Definitely worth doing then for the OP
  6. diddydave

    diddydave Established commenter

    Oh yes, and as he's going to be 'retired' when he returns it would be quite simple to do a little tutoring or some other side-line that would allow him to be 'self-employed' for all 52 weeks - he has 9 years to get in the extra 6 so he can try it the first year and see if it works.

    Each year of NI adds about £4 a week to the State Pension so doing just one year will gain something.
    Treacle3 likes this.
  7. catmother

    catmother Star commenter

    Yes it will be less than the maximum. However,it's more than the old state pension was meant to be. Assuming that you will also get a teaching pension,the extra state pension as it stands is still a good deal,IMO. As for buying in extra years,only you can decide if it's worth it or not.
  8. meister

    meister New commenter

    What is the process for this? My wife is due to start invigilating soon - will NI be deducted automatically?
  9. diddydave

    diddydave Established commenter

    I believe you simply ring HMRC and tell them that your wife will be working as an invigilator and will need to complete a self-assessment form. This post has more details: https://community.tes.com/threads/voluntary-nics.793360/#post-12889034

    So, the school shouldn't deduct NI and no it won't happen automatically. I have to pay mine when I've finished filling in the tax return.
    Treacle3 likes this.
  10. phatsals

    phatsals Established commenter

    An individual doesn't have to fill in the self-assessment form, they can just phone them up. Although the jobs are subject to tax, they are classed as self-employed for NI purposes but not tax purposes. As such, no need to fill in the form though you can if you want to. There is a box you can tick for examiners etc.

    I'm sure the person who is working as an invigilator is more than capable of making the call themselves, I do hope in the 21st century women don't need men to make 'important' calls for them.
    eljefeb90 likes this.
  11. diddydave

    diddydave Established commenter

    ...it might be more a case of "Why have a dog if you're going to bark yourself" ;)
    Piranha likes this.
  12. Treacle3

    Treacle3 New commenter

    I am starting exam invigilating in January but only retired from teaching in August this year so don't think I will need to contribute the £3 a week for Class 2 voluntary contributions until after April 6th for the 20-21 year...
    Should I ring HMRC before the end of this tax year or is it fine to do so sometime in April to inform them I wish to start paying the extra NI contributions? Thanks.
  13. diddydave

    diddydave Established commenter

    You can catch up with past years, I think you have 6 years in which to do that so there should be no rush.
    Treacle3 likes this.
  14. phatsals

    phatsals Established commenter

    There is nothing to stop you registering in January, they will only send you a bill for the balance, ie, if you have enough contributions from April to August to cover the entire year, that will be fine. However, if not, you will be credited with the weeks you paid for via PAYE and would get the option to pay Class 2 from January for the remaining weeks, Jan to April. If there is a gap in the middle that means you don't have a full year, you will have the option to pay Class 3 NI for that time, ie August to Jan. If you don't need to pay for them then you don't, you won't be billed twice for the same weeks.

    Once you're registered, next year you will just be sent a bill for Class 2 NI, around September time.
    Treacle3 likes this.
  15. pauljoecoe

    pauljoecoe New commenter

    Well, my idea was to retire not to go back to work! I'm not sure I would want to invigilate. Hated that many years ago when as teachers we had to. Ah well, something to think about anyhow. Not sure I am really bothered about an extra 28 quid a week when I'm 67 anyway.

    Thanks for all the info anyway. Things to think about.
  16. diddydave

    diddydave Established commenter

    Sounds like you are approaching with a good mind-set, considering what you WANT to do and not what you HAVE to :)

    A rich man is one who knows he has enough
  17. Luvsskiing

    Luvsskiing Occasional commenter

    "considering what you WANT to do and not what you HAVE to :) A rich man is one who knows he has enough"

    Sage advice!
  18. Luvsskiing

    Luvsskiing Occasional commenter

    It's interesting with discussions about pensions how people discuss how much they will get without working how much they really need. My parents got fixated with saving for rainy days well into their 80s, even though they couldn't spend it, and I swore I'd never do that.

    The start of any pension review and planning as you get to your mid 50s and start thinking of escape surely should be, what do you need to live well, without going into a crazy save mode? If you only ever spend £12k a year, why work like a mine donkey for another ten years to ensure you have £18k a year? Saving for a mobility car, a better Zimmer frame, more absorbent incontinence pants?
    Brianthedog, eljefeb90 and mjfp509 like this.
  19. eljefeb90

    eljefeb90 Senior commenter

    @Luvsskiing . I wish I could give your post more upticks! I have found that your outgoings decrease massively as you get into your late fifties. Obviously, everyone's circumstances are different and you may want to help out adult children and grandchildren, or splash out on your bucket list, but compared to forking out on a mortgage and raising a family, the outgoings are tiny.
    In addition, your lump sum gives you a tidy wodge of rainy day money.
    I know that, with lifespans increasing, financing thirty years of retirement can seem daunting, but remember that your TP is index linked as is the SP. With the previous generation living longer, many of us will be in our late fifties and sixties when we inherit . Plus we can always downsize. We are a very fortunate generation in very many ways and should count our blessings.
    My in-laws kept saving and accruing money , scrimping and paying the minimum. They are now too infirm to do much with the several hundred thousand pounds they have salted away. The good news is that we shall get a nice inheritance but it is a shame they didn't alter their mindset in their late fifties when they retired.
    Brianthedog likes this.
  20. diddydave

    diddydave Established commenter

    Both of my parents sound very similar though more recently as they saw that I was 'safe' they've taken to doing SKI breaks...(Spending the Kids Inheritance - not the snow based kind) :)
    eljefeb90 likes this.

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