04 March 2010
The Pensions Advisory Service (TPAS) has now made available a
new voluntary National Insurance Contributions (NICs) Planner on
its website www.pensionsadvisoryservice.org.uk.
The new self help planner is designed to help individuals better
understand and make decisions about qualifying for or improving
their entitlement to the state pension. It is directed primarily at
people who are not receiving or do not expect to receive the full
pension (currently £95.25 a week). The planner provides
general information and guidance about rights and options in
respect of the payment of voluntary (Class 3) NICs, when and how
they can be paid and whether it might be worthwhile to pay
them.
There are time-limits on the payment of voluntary NICs.
Ordinarily you can only pay voluntary NICs in respect of any of the
preceding six tax years - although since April 2009 it has been
possible in certain circumstances to pay up to a further six years
back to April 1975 if your state pension age (SPA) falls between 6
April 2008 and 5 April 2015. The special concession which
allowed certain other contributors to make voluntary NICs in the
tax years 1996/97 to 2001/02 expired on 5 April 2009 for those
reaching their SPA after 24 October 2004 and will expire on 5 April
2010 for those who reached their SPA between 6 April 1998 and 23
October 2004.
"This is unfortunately a rather complex area", says Malcolm
McLean, TPAS Chief Executive, "but one which can be so important to
many people who could possibly stand to gain and improve their
financial well-being in their retirement years. I would
encourage everyone who might be affected to go on to our website
and check out their position, particularly those people with gaps
in their NI record who reached their state pension age
between 6 April 1998 and 23 October 2004. The special
concession deadline which allows many people in this age range to
opt to make good missing contributions (without necessarily having
to pay any money up-front) in the tax years 1996/97 to 2001/02 is
fast approaching and from 6 April 2010 will no longer be available
to them".
Notes for Editors
1 Entitlement to the basic state pension depends on your record
of NICs over most of your working life. To get the full
pension (currently £95.25 per week) you need 44 NI qualifying
years if you are a man and 39 if you are a woman, although this is
reducing to 30 qualifying years in both instances from 6 April
2010. If you have less than a full NICs record a proportion
of the pension is normally payable providing you have at least 25%
of the years required (although this minimum requirement will no
longer apply from 6 April 2010). In some circumstances
you can make good any gaps in your record by paying voluntary NICs
to help you qualify for or improve your entitlement, and this is
often worth considering if you are able to do so
2. The ability to pay missing contributions is not
available to those women who had elected and retained the right to
pay the reduced rate married womans NI contribution (the "married
woman's stamp"). It would also normally not be sensible to look to
secure an increase in the state pension if it simply led to a
corresponding reduction in other pensions or benefits in payment,
e.g. pension credit or a married women's state pension claimed on
her husband's contribution record. For those who do secure a
meaningful increase in their state pension, however, the right to
have the payment backdated to the start of their pension at their
state pension age means that it might be possible to have the costs
of the voluntary NI payments due offset against the arrears of
pension payable, thus avoiding the need to pay any "up-front
costs".
3. TPAS is an independent Non-Departmental Public Body supported
by the Department for Work and Pensions
4. TPAS provides free information and guidance to the public on
all aspects of pensions and a dispute resolution service in respect
of Occupational, Personal and Stakeholder Pensions
5.TPAS operates a general pensions helpline 0845 601 2923 which
is open Monday to Friday 9.00am to 5.00pm.
6. The voluntary NICs planner is the latest in a series. Others
already in use are an annuity planner and a contracting-out
planner. All three are accessible on the TPAS website www.pensionsadvisoryservice.org.uk
