Term time only workers and NI contributions/credits

[StevieNicksfan]

My dh worked as a supply teacher for many years, getting paid weekly and paying tax and national insurance contributions for the weeks he worked. However, he didn't work during the holidays so didn't get paid during the holidays and didn't pay ni contributions for those weeks he wasn't paid. After watching Martin Lewis last week we had the terrible thought that because he hadn't paid ni contributions for 52 individual weeks of each year, he might not have enough qualifying years for the full state pension. He rang HMRC last week and was told he actually has the full 35 years and cannot improve his forecast. We couldn't quite believe this so requested a paper copy of his national insurance record (he can't access it online). He has today received a copy of his national insurance record and it states "payment not needed" for enough years to qualify for full state pension. We can't get our heads around this and wondered is there perhaps a minimum amount you only need to pay of class 1 Nics to qualify for that full year, even if you haven't actually worked 52 weeks? We doubt HMRC have made a mistake but it's very confusing.

In the current scheme NI for the New State Pension doesn't need to paid every week of the year. What is required is that you pay NI in each year on a sum equivalent to 52 times the Lower Earnings Limit - currently around £123/week.

I guess people working term time only as (say) "Dinner Ladies" so only a couple of hours a day might struggle with that.

@Bromptotoo sorry if I sound stupid, so are you saying if he earned more than £6396 in that particular year (52 x 123) he would have paid enough in ni contributions to qualify for that full year? On his ni contributions record it shows some years as NICs paid at class 1 and the figure is only about £2,000 yet it then says "payment not needed", meaning he's got the full year?

@StevieNicksfan you are confusing two things.

Earning 52 x the lowers earning limit is the key figure. In you example £6396. As he earned more than this he has a qualifying year.

The £2k he paid in NI is not relevant, it just means he eared more that £6396 and paid the correct amount of NI for his earnings.

I don't know if this would hold true for all teachers, but it certainly used to be the case that full year supply teachers got paid the same as a permanent teacher if you looked at annual earnings.

Full-time teachers don't get paid for part of their holidays but their pay is split into 12 for convenience.

Supply teachers would take home more in the months they were working but would have to save some of that to tide them over the holidays.

So he probably paid the same NI as he would have in a permanent post on the same salary point.

@Tippingadvice thanks for the reply. So, as long as he earned the equivalent of 52 x £123 per week, even if that amount was spread over 39 weeks rather than 52 (he averaged about 25k per year) then that's why he has enough qualifying years, even though he wasn't paid for 52 individual weeks of the year?

@ditalini thanks for the reply and I understand what you are saying but, unfortunately, as he worked for an Agency, some days there was no actual teaching work and he had to work as a TA. Hence, he averaged around 25k per year, whereas teachers with permanent jobs on his same spine point earned about 35k.

That's still easily plenty for minimum NI contributions to be met. I think you can definitely believe the HMRC letter.

He is fine. He has paid the minimum amount needed for each year to qualify. End of.

Enjoy the full pension.

Thanks to everyone who has replied, you have all put our minds at rest.

Yes

Exactly that.

The Lower Earnings Limit is, in terms of what's actually paid, only part of the equation. In practice earnings above that and below the another figure, the Primary Threshold currently around £240, are not actually subject to NI. You're deemed to have paid the contributions but no actual money comes of net pay.

If HMRC's records say that a year is a qualifying year then unless there's a very obvious mess up, like an NINO error, then it'll be right.

@Bromptotoo thank you for the reply. We have checked and it is definitely his NI number. He has some mental health problems relating to severe anxiety and I think this is why he's so worried about this but thanks to everyone's reassuring replies, he's accepted that HMRC is correct and that, thankfully, he will be entitled to full state pension.

The 'take away' for all of us from this post is the need, particularly as pension age looms on the horizon, to check what you'll get at 66/67 and whether there are any gaps in your NI history.

In my own case I was a Civil Servant for 35 years until 2013. With an occupational pension as part of my terms I was contracted out of the second state pension and therefore paid reduced NI for all those years. What that means is that part of what I'm guaranteed as pension in relation to them is delivered as part of my Occupational Pension rather than the State Pension.

The State Pension was reformed c2016 with the Second State Pension closing to new entrants/contributions and the option of lower NI for those with Occupational Schemes going.

The headline stuff for the post 2016 New Retirement Pension scheme is that 35 qualifying years will give you the full pension of around £200/week. However, if some of those years were contracted out you won't.

Because I've been in a second career since 2014 I'm still paying NI and, provided I work until I'm 66 in 30 months time, I'll have 35 qualifying years. Otherwise I'd have needed to decide whether to buy in extra years to make up C£170 to £200.

My other half, like the OP's, was a teacher. Initially she was paying into the Teacher's Pension but stopped when she went part time when our kids were young and never got her act together to rejoin. She also spent a lot of time on supply with no Employer's scheme. Because she was NOT paying reduced NI she has got pretty much the full £200 on her prediction and that's in spite of 3+ years not in employment while working on a PhD.

We only picked up on this because somebody on another discussion group I'm in asked about their pension and the qualifying years thing.

@Bromptotoo I have just looked at my own state pension forecast online. I'm 55 and it states I currently have 30 qualifying years. However, as you mentioned, it says I was contracted out for some of those years and obviously paid less NI. I know this relates to a job I had for four years from 1988 to 1992. It states that my COPE estimate is £6.72 per week but that "this will not affect your state pension forecast". My query is, that these years from 1988 to 1992 have "full year" next to them and are included in the 30 year figure (and it shows I made NI contributions of at least £300 next to each of them, even though I was supposedly "contracted out"?), do you know if that means that even if I was contracted out for those years that I will still receive state pension for them and I will also receive the £6.72 per week from the private pension provider on top of that?

@StevieNicksfan there was a change to state pension in 2016. Based on your number of years “full NI” as at 31 March 2016 they calculated how much state pension you would have got. This figure then became your starting amount for the new state pension. So yes, your contracted out years have been included.

From 2016 onwards everyone was contracted in and each full year of NI equates to a cash amount which is added to the starting amount calculated in 2016. You can keep adding years (and cash) until you reach the maximum state pension.

I know that sounds a bit vague, it’s because each year the £ amount for a full year changes. So in 2023/24 the full state pension is £156.20 / 35 years = £4.46 per week for a qualifying year.

So say in 2016 they worked out you would get £100 under the old scheme, from 2016/17 you have 7 years of full NI so you add on 7 x £4.46 = £31.22 = £131.22. To get a full pension you need £156.20 - £131.22 = £24.98/ £4.46 = 5.6 years rounded up to 6 years. This is just an example your pension forecast should show how many years you need for a full pension.