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Original poster

SAHM - pension question

29 replies

SamoyedFan123 · 13/01/2021 12:29

Hi all
I'm sorry if this is a stupid question but I'm a bit clueless when it comes to tax and pensions and I don't really understand what the gov.uk website is telling me in this. So I've worked and paid tax/NI since I was 19. Never been unemployed or missed payments in this time. Last year I gave up work aged 41 to be a SAHM to my twins. Was claiming child benefit allowance as my husband was just before the £50k threshold for this. Late last year his salary increased to £70k which means that we either have to stop claiming the child benefit, or continue and then pay it back in full via his tax return every year. I understand that the benefit to doing this is that I will continue to accrue NI stamps towards my state pension. My question is have I worked enough years to claim a full pension? The gov.uk website says at least 10 years for some pension (which I have obviously done), and 35 years if your NI record started after 2016 (obviously given my age my record started before this). Has anyone been in this situation and can explain how this works please?
Thank you.

OP posts:
Sophiesdog2020 · 13/01/2021 12:39

I thought there was a third option for CB - claim it so you still get NI credits, but then request it not to be paid.

I have seen that mentioned on a number of other threads, I think it is a tick box on the form.

My understanding is that you need to have 35 years for a full state pension if you claim the pension after 2016 - when the new state pension was introduced. It has nothing to do with when your record starts. Mine started in 1979, I still need 35 yrs.

But bear in mind that 35 years could rise again to 40 or more years by the time you reach state pension age. I would ensure that you continue to get NI credits whilst you are a SAHM.

You can also pay into a private pension, even if not working, so something to consider if you can afford it.

Hwory · 13/01/2021 13:00

Claim for the credits but don't take the payment.

I also highly suggest you invest in a private pension for yourself if you aren't already.

RedHelenB · 13/01/2021 13:01

It's 35 years from when you started paying NI. Claim.the credits because you will have 12 years to add to your total due to having the twins. If you go into gov.uk it allows you to look at your record. I was pleasantly surprised because I got credits for sixth form which I didn't know I hsd.

BobbingPuffins · 13/01/2021 14:25

The reason it doesn’t say everyone has to pay in 35 years for a full pension is that the system changed in 2016 and everyone’s contributions had to be recalculated.

There used to be two levels of NI contributions and two levels of pension you could get, so if you paid less into the system you got less out. It was simplified in 2016 and a full pension is now the same for everyone.

The state pension forecast will tell you how many more years you have to contribute to get the full pension. If you were paying the lower contributions prior to 2016 you might end up having to pay for more than 35 years to get the full pension, but the good news is that the new full pension is considerably more than you would have got from the old lower level of contributions.

Cocomarine · 13/01/2021 20:47

Don’t ever rely on having enough qualifying years when that requirement could easily change! Especially when you’re around 25 years away from SRA! 😳
Just tick the box as described above for non payment - you’d be off your head not to!

Distractingmyself · 13/01/2021 20:51

35 working years is it??

Don’t rely on hubby’s and the state pension. Top up your own pension each month. There is a low ceiling (£2880? Might be different on mat leave) but it would keep your pension accruing value til you go back to work.

ruddynorah · 13/01/2021 20:58

You can see exactly what you've accrued on the gov gateway website so no need to guess.

ivfbeenbusy · 13/01/2021 21:12

Do you intend never to go back to work then?

I wouldn't put myself at risk of financial hardship later in life by relying solely on husbands presumably private pension and your state one if I were you? No guarantees you'll even still be married by the time you reach SRA so you should have a long term plan in place which includes employment

Mia85 · 14/01/2021 12:50

Yes as ruddynorah says, you can easily get your own NI record, see exactly how many years you are recorded as having completed and get a pension forecast:
www.gov.uk/check-state-pension

BernadetteRostankowskiWolowitz · 14/01/2021 12:58

Is it worth paying the shortfall on a random year even if that year isn't needed to get you to the 35 qualifying years?

Original poster
SamoyedFan123 · 14/01/2021 12:59

Thanks all, you've beef really helpful. Basically I just didn't know if I should stop claiming the child benefits as it seemed like a lot of hassle to have to pay it all back again, but I didn't know there was an option to claim the NI stamp without getting paid the money so I will definitely look onto this.

OP posts:
Howshouldibehave · 14/01/2021 13:00

Make sure you start paying into a private pension. I doubt the state one will be worth anything by the time many of us get to retire.

Travellor · 14/01/2021 13:09

@BernadetteRostankowskiWolowitz

Is it worth paying the shortfall on a random year even if that year isn't needed to get you to the 35 qualifying years?
It depends on your circumstances and how your pension contributions stacked up in 2016 when the system changed. I've got missing years prior to 2016 and it isn't worth paying these due to being in a "contracted out private scheme". I have paid voluntary contributions for 2016/7 onwards after I retired. I won't get the full new pension despite having over 40 years contributions when I reach SP age You need to look at your forecast on the gov.uk website and read past the headline figure to see what is possible
GypsyLee · 14/01/2021 13:14

I've always paid voluntary contributions for the state pension.
We invested in property as don't trust private pensions and neither of us have worked for an employer, ever.

BernadetteRostankowskiWolowitz · 14/01/2021 13:21

It was the first year I started earning, in 2006. I won't retire til 2053 [sob]

DianaT1969 · 14/01/2021 13:31

I wish people on here would stop saying "the state pension won't be worth anything" or it won't be there. Why the bloody hell are you settling for that? We're a first world country. Our state pension is already less generous than others. I always assume it's a Government bot planting sht like that. We pay into a system.
The Government can choose how to allocate tax/NI income. They have no problem spending an average £3k per month to over 800 mates in the House of Lords. Their mates also did well out of all the recent government contracts. Seriously, anyone trying to sign away our expectations of a state pension across social media needs to pss off and look at how they vote.

ivfbeenbusy · 14/01/2021 15:49

@DianaT1969

I don't think the state pension will exist in the very long term - that's why all employers have to pay into a pension scheme now for employees. I imagine there will be a gradual pulling back of state pensions and it will only exist for those that can't work

But I think it will be a couple of generations down the line - think the OP will be ok for her state pension albeit may not receive it till she's in her 70s now with the ever increasing retirement age 🤣

Nohomeschoolingtoday · 14/01/2021 15:55

I don’t receive the CB money but clicked the other button so I receive the credits? I got a letter asking me when my daughter turned 16 would she being going into FT education and I would still receive £0 the must wasted costs of letters!
Also if you move make sure you update your address as it’s where your children’s NI number get sent to when they are nearly 16.

AlwaysLatte · 14/01/2021 15:58

I have no clue about this. I stopped claiming child benefit when the new rules came in and we were over the threshold but I didn't know until recently that it affected NI and pension.

AlwaysLatte · 14/01/2021 16:12

Does anyone know if loan repayments count as income? These days a big chunk of our income is loans we made to
My stepsons for them to buy properties. Without that I think we would be just under the threshold of £50k at the moment.

ivfbeenbusy · 14/01/2021 16:13

@AlwaysLatte

It's only a problem if the parent doesn't work AND also doesn't claim the child benefit or do a tax return stating they over the threshold

If you work and are paying NI through your payslip it doesn't matter

ivfbeenbusy · 14/01/2021 16:15

@AlwaysLatte

Difficult one in respect of the loans......were they loaned formerly as part of an investment agreement/contract/via a business you run or were they done "off book"

AlwaysLatte · 14/01/2021 16:19

Thanks @ivfbeenbusy I don't work (although I do submit a tax return as I have rental income). My joint earnings with husband at the moment come to just under 50k if we don't include the loan repayments, but it may be that they are classed as income even though it was money that was ours to start with iyswim. I'm not so much worried about getting the CB but the NI contributions are bugging me...

AlwaysLatte · 14/01/2021 16:20

@ivfbeenbusy they were done formally - they have charges on their properties to keep things official.

bluebluezoo · 14/01/2021 16:25

I wouldn’t be counting on govt pensions.

Do you have a pension from your previous employment?

If you are a sahm you should set up a private pension. Very few people consider pensions when they decide being a sahm “isn’t worth it financially”- they should also factor in a private pension from their husband’s wage.

If yours is on 70k you should be able to afford private contributions. There may be tax relief on them too.