What happens once you have paid up your NI years?

[KingSatsuma]

I will have paid up all my NI contributions (35 years) by age 62. I am planning on working past this.

What happens then? The info seems vague. There are lots of "may" affect your entitlements if you don't carry on paying it.

If I have paid up, I then want to take that money and put it in a private fund. Also, what about your employer? Once you reach 35 years, do they still have to pay it?

You can't take the 35 years NI payments and put it in a private fund, that isn't how it works.

You can opt out of your employer's scheme any time you want, but this is separate to your state pension entitlement.

Nothing happens.
If you are still in a position to be liable for NI contributions (age & earnings) then you still have to pay them.

You carry on paying. It's not like a personal pension fund, and NI contributions pay towards lots of things; for example NI covers 20% (£24b in 2018) of the NHS's budget. Best to think of it just like an additional tax really.

This is the myth. I retired at 62 and I've just had to buy the extra 4 years in order to get the maximum amount after paying in for 45 years!

You still have to pay NI. NI funds the NHS as well as state pension.

I think you still have to wait until the national retirement age to start claiming it, although you can retire when you like (I'm 52 and have two more years left to get to my 35 years. I'm now retired so need to pay in those two years' privately but I still won't qualify to receive the state pension till I'm 66). I think this is correct, but I'm following these threads with interest as the information isn't freely given, is it?!

Unfortunately, it will be 67 when you reach state pension age.

Make sure you check your pension forecast via the Government Gateway. I had a few partial years that I had to top up and only full years count.

Of course the information is given freely, it is all published and easily findable online.
You can also look at your own state pension forecast on your tax account.

You aren’t able to opt out of NI payments, other than opting out of earning the taxable income.

You can’t opt out of paying NI. It funds other things as well as pensions.

Some people over their lifetime will pay more in to a system, some people less.

@Parky04 Oh is it 67? I thought it said 66 but another year doesn't really make much difference. Could well be abolished altogether by then, anyway!

I don’t see why you should have to contribute to your state pension via NI once you’ve hit your 35 years. Maybe for the NHS, but it should at least be reduced.

Yes I know I’ll get it when I’m 67. I have other private pensions I can draw on if I retire earlier than this, which TBH I’m hoping to do.

I don’t mean that I’m taking the 35 years out to put in a private fund. I meant I want to take what I am paying in NI and privately invest it once the 35 years are up.

So contributing 35 is not it then. You pay it till the day you retire. Do people still have to pay NI over a certain amount of pension, like they do tax?

In my Self Assessment account, HMRC provides the breakdown of exactly how my tax and NI is spent.

As you can see, pensions is just 11%, and it may not necessarily be just your pension you are paying for, but also funding todays pensioners.

As PP said - just because you have paid for 35 years doesn't mean that is enough or that you will have a full State Pension. If you have a pension scheme through your employer as well you need to see if, as part of that scheme, you were "contracted out" which means you paid a lower rate of NI for some years. These years will not count towards your 35 necessarily. Get a State Pension Forecast via Government Gateway.

The current state pension is £203.85 per week, or £10,600.20 per year.

You do not pay NI once you have reached pension age, and are drawing the state pension.

You do pay tax on pension income, but only if your income exceeds the personal allowance.

The current personal allowance is £12,570, meaning you need to earn more than this before tax is due.

If the state pension is a person's only income, they won't have any tax to pay, but that isn't the same as saying pension income is not taxable. The reason this person doesn't pay any tax is because £10,600.20 is less than £12,570.

If a pensioner was receiving state pension of £10,600.20 and private pension which of £25,200 per year, meaning total pension income of £35,800.20, tax would need to be paid.

NI pays for all sorts of stuff things - attendance allowance, unemployment benefit, disability benefits. You may be lucky and not need them but the point is it is a national insurance system with pooled risk.

I am up to date with my NI contributions and am on top of it every year to make sure the previous tax year had 12 months of NI contributions. If I have fully paid up for 35 years, why wouldn't I get a full state pension? My pension forecast says if I pay another 8 years out of my 15 years remaining till I am 67, I will get the full amount.,

As for paying tax over £12,570 from your pension. Why do people bother paying into a private pension if they are just going to get it taxed? Why not just invest it ourselves and draw down on it or just save it as cash?

Contributing into a private pension is tax efficient, as you don't pay tax or NI on the contributions, if you do it via a salary sacrifice scheme.

Let's say your monthly salary is £3,000, and you put 5% in to your pension.

The 5%, or £150, will be deducted from your salary and put into your pension before tax and NI are calculated and taken off your salary.

In addition if you have an employer who matches your pension contributions, a total of £300 will be saved into your pension fund every month.

I always encourage everyone to join a workplace pension as early as possible in their working life. Due to compound interest it will make a substantial difference to their income as a pensioner, and half of it is given as an extra benefit by employers.

I am currently paying £800 a month out of my wages into my company's private pension, and they are paying 12% of my salary, and I am paying £250 into another private one I have had on the go for years.

Or you could be dead. Not being rude but you can pay in all your life and die before you retire. My dad died the year before he retired and that was it, no one gets it!

Some people are just not clued up about this stuff are they. You can go all of your life living on benefits but you still get a pension when you ‘retire’, takes the piss really doesn’t it.

I paid some missing years on my recently but received no acknowledgment. I don’t even know if it was received. Is this normal?

I didn’t get any acknowledgment either. I only knew they’d been credited when I logged back onto government gateway and checked the pension forecast. It showed that I’d made the voluntary class 3 NI contributions to top up the years I was short. Also, one of the years was more than six years ago and hadn’t been credited so I had to call HMRC and have them do it manually. They said when you pay the total bill online, the computer can only go back six years. So if some of what you pay is older, it has to be manually done afterwards.