Are we storing up problems for the future?

[PensionProblems]

The Chancellor has announced quite a big rise to the NI threshold today meaning that no one needs to pay NI contributions on a salary of less than c.£12k (previously was c.£9k). This is great that it means a few more £££ in people's pockets in the short term.

But AIBU to say that it is just storing up problems for the future in that it's making a full state pension more unattainable for those in low-paid, part time work (yes, many are working mums). If they're not paying NI contributions, surely they're not gaining qualifying years towards their final state pension entitlement?

Does more money now mean less in later life?

No - You are making a wrong assumption.

Lower Earnings Limit (LEL): Employees do not pay National Insurance but get the benefits of paying. This is £120/week and is not changing.

Primary Threshold (PT): Employees start paying National Insurance. It is this that is Changing from £9568/year (£184/week) to £12570/year in July.

So even someone like me, who only earns £150/week and therefore doesn't get NI deducted, would be able to accrue credits towards a full state pension?

@PensionProblems

So even someone like me, who only earns £150/week and therefore doesn't get NI deducted, would be able to accrue credits towards a full state pension?

Yes - exactly this. I am living proof - I have some years where I haven't earned enough but did earn over the Lower Earnings Limit (which is not the same as the threshold) but still have credits. You can check online too www.gov.uk/check-state-pension

so YABU

I would assume you would still get a state pension even if you are below the threshold to contribute but I don’t actually know so wait for a more knowledgeable poster.

Bear in mind that if you do still get state pension now, the goal posts can move in 15 years time and it could mean it suddenly doesn’t count…there’s always a possibility of that happening, but that’s not something you can control, but best to plan for the worst and hope for the best.

I think you've misunderstood. People below the threshold still accrue the benefits.

It’s not a hypothecated tax. So it’s not really ringfenced to pay your own pension in the future. In that sense, the goalposts can change regardless of this announcement about who gets what in the future. Long story short, no one can trust the system to have a meaningful state pension in the future. The much bigger problem is the lack of provision employees make for themselves. And the primary reason for that is the culture of low pay in the country subsidized by welfare. Stagnating wages in the last 20 years have done untold damage to a number of things in our country.

One thing that I didn't realise until recently was that you can retrospectively pay NI contributions where there might have been gaps. I wondered if mine were covered fully due to stopping work to have children and then retiring, so I looked into it and there was a small shortfall which I paid to bring it up to full stamps. So if in the future you are able to, you can cover these gaps.

@AlwaysLatte

One thing that I didn't realise until recently was that you can retrospectively pay NI contributions where there might have been gaps. I wondered if mine were covered fully due to stopping work to have children and then retiring, so I looked into it and there was a small shortfall which I paid to bring it up to full stamps. So if in the future you are able to, you can cover these gaps.

I have also done this. Paid 2 missing years in full retrospectively and paying 3 more years by DD to get full pension at 67. Check your pension statement Op. You will see what your pension forecast is fir 67 and you can top up accordingly in the future

With regard filling in gaps, I have seven more years to pay in to qualify for a full state pension. If I stop working now, can I just pay the next seven years NI ?

And how much is one years NI? Surely it depends how much you earn?

I’ve just checked my NI record and there are 5 years when I ‘didn’t pay enough’. I was at uni- should I still have been paying or should that be protected?

The biggest disadvantage will be having low contributions to an employer pension, who knows what state pensions will be like in a fee decades time.

You have to pay 35 years, I think, over your whole working life, so work out when you want to retire, and see if that gives you enough years.
And always claim child benefit if you don’t work as a mum, as that will pay in for you.
That is for sock fluff…..

Phew - I've just logged in and checked mine - and it looks as if I've mostly got full contributions despite a long time as a SAHM and since then only working part time on minimum wage for many years. That is a big relief to know - so thanks everyone.
There are a couple of recent years where I haven't got the full contributions – I can't understand why this would be, as I was working then exactly the same as I'm working now. Should I query that with my employer or with the pensions office?

@SockFluffInTheBath that’s right I’m afraid. You are given credits for years in full time education at 6th form level but beyond that, eduction isn’t credited so if you weren’t earning or earning enough) at Uni then you’d need to pay for those years if you want them to count.

[quote SunshineSasha]@SockFluffInTheBath that’s right I’m afraid. You are given credits for years in full time education at 6th form level but beyond that, eduction isn’t credited so if you weren’t earning or earning enough) at Uni then you’d need to pay for those years if you want them to count.[/quote]
Thank you. It’s too long ago now (I’m that old) but it’s good to know.