Rishi Sunak grilled by Andrew Marr over National Insurance rise
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Many people make the mistake that they are guaranteed the right to receive the full amount paid through the state pension. However, a person’s entitlement to the state pension is dependent on their history of National Insurance contributions. Currently, the full new state pension comes to currently worth £179.60 a week for claimants.
In order to receive the full amount, recipients must have made NI contributions for at least 35 complete years by the time they have retired.
While employees are likely to have their National Insurance taken out automatically from their pay cheques, self-employed people have to pay via a self-assessment form if they earn above a certain amount.
To calculate how much they have accumulated in contributions, taxpayers opt to use the Government’s online service to see how far away they are from getting the full state pension.
In order to use this service, claimants must have a Government Gateway account. It is possible to get an account by signing up using details from a passport, payslips or a P60.
Through the Government Gateway account, taxpayers will be able to see their National Insurance history.
Notably, it will highlight any gaps within National Insurance contributions which could affect someone’s eligibility for the full state pension.
There are many reasons why someone may have gaps in their National Insurance record, which could include being self-employed but not earning above the threshold or working overseas.
Furthermore, stay-at-home parents and carers are often affected by this issue as they end up leaving the professional world for long periods of time.
If someone decides to “buy” missing years of National Insurance contributions this tax year, the cost of purchasing ‘Class 3’ contributions is £15.40 each week. This comes to £880.40 annually.
To get the state pension, claimants will need to pay extra contributions worth £5.13 a week or £266.83 a year.
Ed Monk, the Associate Director of Fidelity International, reminded Britons of what they need to take into consideration when weighing up the pros and cons of voluntary NI contributions.
Mr Monk said: “It’s possible to make extra National Insurance payments to make up for missing years.
“For employed people that means paying voluntary ‘Class 3’ NI contributions. Self-employed people usually pay ‘Class 2’ contributions.
“But there are several things to consider before you take that action. You can usually only pay to make up for contributions missed in the past six years.
“If years are missing prior to that it may not be possible to make them up.
“Bear in mind, however, that if you still have some years to go until you retire you may be able to get to your 35 years of contributions even if you have gaps in your record.
“The closer you are to retirement the more easily you’ll be able to work this out.
“If you missed contributions because you were raising children or caring for family members, it may be possible to apply for NI credits which also help build your state pension entitlement.”
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