No National Insurance due to low income

[Singinginshower]

I have just realised my DD doesn't pay NI contributions, presumably due to not earning enough (she isn't able to work full time and is on minimum wage)
This means she misses out on employers contributions as well, and importantly, not build up towards a State pension.
There must be so many people in this situation.

Yes there are. In many lives there are gaps, what matters is paying enough years by the end.

Those claiming child benefit for children under 12 I think get their NI credited so those years are not missing.

Is your DD likely to be able to work more in the future?

National Insurance credits?

OP how old is DD?

Why can’t she work full time? Of course if you don’t pay enough in to the system you don’t get the full amount out of it. She can buy NI years if she wants.

I believe she'll still get a pension but it will be the smaller one?

Why can't she work full time?

If she is over 25 she only has to work 14 hours a week at minimum wage to meet the Lower Earning Limit for NI.

That's useful to know OddBoots.
She is 19. The job is 20 hours a week, and all recent advertised posts have been part time anyway. Presumably there is no incentive for employers to increase hours as it will add costs for them.

There are a number of different thresholds for National Insurance.

The first is the Lower Earnings Level, above this (but below the Primary & Secondary Thresholds) while no NI is actually paid the employee still accrues the benefits of paying.

You don't have to read it all, but the weekly and monthly tables show these levels and there is a link within the Lower Earnings Level bit to "benefits of paying" which shows what these are.
www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions#contents

You can make payments into your NI account to cover missing years. Might be worth saving to do that. The ability to do so is time limited though.

www.gov.uk/voluntary-national-insurance-contributions

@Singinginshower

That's useful to know OddBoots. She is 19. The job is 20 hours a week, and all recent advertised posts have been part time anyway. Presumably there is no incentive for employers to increase hours as it will add costs for them.

At 19 her minimum wage would be £6.45ph so at 20h a week I make that £129 a week. The LEL is £120 a week so she should be getting her NI credited even if she doesn't actually pay any NI.

www.gov.uk/government/publications/rates-and-allowances-national-insurance-contributions/rates-and-allowances-national-insurance-contributions

Why can't she work full time?

Oh of course - full-time jobs are so easy to come by in the middle of a global pandemic.

@PurBal Are you not UK based? If so are you saying you don’t know what they are?

I have missing years of NI and I chose not to pay and buy those years

Really glad I didn’t as Now I’ve paid my full 35 years anyway, so any extra now will not benefit me in any way

If your daughter is 19 then likelihood of her receiving her state pension before 67 is minimal

That’s 48 years away

She’d be better looking at a stakeholder pension and sticking £10 per week in now & doing so for 48 years

She's got close to 50 years before she will be entitled to a state pension and she only needs 35 years of contributions to get a full state pension according to current rules, so no need to panic yet, or pay in extra.

Stakeholder pension is a good idea. She can also check her NI credits on gov.uk, as it sounds like she might have some anyway.

If she has children, she will get credits at any time she is receiving child benefit for a child under 12, so that's a good chunk of credits there. Obviously it's also quite likely that she is going to work more/earn more during her lifetime.

I think the idea of starting a stakeholder pension is fab. I have one and my DC (14 and 10) have their own too.

However I'm a bit wary about relying on all those "working years" and the amount of qualifying years. I'm sure the qualifying years used to be 30 and then it changed to 35.

So if possible and if affordable I'd keep up with qualifying years as early as possible before the 6 year time limit runs out.

I missed 4 when I was at Uni and I wish I'd found the money to pay for those years (although I was working 3 jobs so you'd think I'd have qualified somehow?)

What if something were to happen (I don't know what) when a bit older and your DD was unable to work and didn't qualify for NI credits? (Disclaimer I don't know if this is possible)

Thanks everyone. Yes stakeholder pension is the way to go I think.

What if something were to happen (I don't know what) when a bit older and your DD was unable to work and didn't qualify for NI credits? (Disclaimer I don't know if this is possible)

That’s why you should always claim state benefit if unemployed, as this at the very least gets your stamp paid

If you have children you claim child benefit for the same reason, your stamp gets paid

Thanks for that @ivykaty44 I suspected that was the case.

The cynic in me doesn't trust the security of the welfare state under the present administration.

I foresee a possible future where many cost cutting exercises could happen to pay for the cost of the pandemic.

Does your entitlement to JSA currently depend on NI payments?

My gut feeling is, IF she can then paying some sort of voluntary contribution is a good idea.

Though if it's a choice between vol NI contributions and a pension I'd choose the latter every time.

I just read up on JSA - looks like it doesn't matter anymore though there are a few NI dependent benefits still. None perhaps relevant to your DD for now.

Yes you still need to have paid in enough class one NI contributions to qualify for JSA

Its not the point of claiming benefits due to NI paid

Its the point that if you don't claim the benefits your stamp will not be paid whilst you are not claiming unemployment benefit - claiming benefit means your stamp is being paid by the government just like child benefit gets your stamp paid if you are claiming CB

You need enough contributions to qualify for contribution based 'New Style' JSA. You don't need contributions to qualify for Universal credit. So its really useful if you have a partner with a good income so as a couple you wouldn't qualify for UC, or you or your partner have too much in savings to qualify for UC.

If your daughter is only 19, there is a fair chance there won't be a state pension that isn't means tested by the time she is 70 or 75 or whenever the state pension kicks in for her. So I really wouldn't worry about it.