Business

National Insurance explained: Are your contributions counting towards state pension?

Today News ||

There are four main types of National Insurance.

Those who reach state pension age stop paying Class 1 NI when they turn 66.

Only employees who are under state pension age and earning more than £184 a week pay Class 1 NI.

People don’t need to pay National Insurance contributions on any payments they get from a pension scheme.

Ads

They also don’t need to pay NI contributions on guaranteed income from an annuity.

People who are self-employed are not required to pay Class 2 NI when they reach state pension age.

Anyone who is self-employed and makes profits of £6516 or more a year pays
Class 2 NI.

Also, people who are self-employed are not required to pay Class 4 NI upon reaching state pension age

Self-employed people earning profits of £9,569 or more a year pay Class 4 NI.

This amounts to nine percent for those on profits between £9,569 and £50,270 and two percent for individuals making profits over £50,270.

To receive the full new state pension, people need to have at least 35 qualifying years of National Insurance contributions.

This only applies to those who have reached their state pension age on or after April 6, 2016.

DON’T MISS: 

Anyone with less than 35 qualifying years will receive a reduced state pension.

RELATED:  Finland, Estonia eye floating LNG terminal to ensure supply

Overall, National Insurance contributions count towards the basic state pension of Class 1 employees, Class 2 self-employed individuals and those who pay Class 3 voluntary contributions.

Class 3 voluntary National Insurance contributions are designed to fill in any gaps on a person’s NI record.

People can normally go back a maximum of six years to fill NI contribution gaps, though some people may be able to top up over a longer period.

National Insurance contributions do not count towards the additional state pension of those paying Class 2 NI or Class 3 NI.

But it does count for Class 1 employees.

NI contributions count towards the new state pension of all those paying the above three NI classes.

National Insurance contributions are a tax on earnings and self-employed profits.

It is paid by employees, employers and the self-employed.

State pension is proportionate to NI contributions.

More Economy Business News Updates of Today Check Below

Today News || Business Today || World News || Headlines Today || Health || Technology News || Education News

Source

Tags
Show More

Related Articles

Back to top button
Close