National Insurance contributions and low pay
If you work for low pay it is worth checking that you are earning enough to get National Insurance contributions.
If not, it may be worth paying some voluntarily at the end of the year, to make 2014/15 count towards your state pension.
National Insurance contributions and state pension age
People reaching state pension age from April 6, 2016 will need 35 years of contributions to get a full state pension and ten years to get any. The way you work out if a year counts is complicated.
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National Insurance contributions and your earnings
You will not actually pay National Insurance contributions until you earn more than £153 in a week. But if you earn at least £111 in a week you will be credited with a NI contribution.
That weekly credit counts towards the amount you need in a year for the year to count towards your state pension. If you get a credit every week for a whole tax year – April 6 to April 5 – then you will have enough contributions for that year to count towards your pension.
If you are paid adult minimum wage of £6.50 then you will need 18 hours to earn enough to get a credit as 17 hours is just 50p short of £111.
So it may be worth adjusting your hours or your pay to hit that magic number. Remember: the pay is not averaged over the year or across jobs. You have to earn that much with one employer in a week to get a credit.
If you are only on credits then you need a credit every week of the tax year to get a qualifying year for a pension.
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If you earn more than £153 then you start paying National Insurance contributions. They cost 12p of every pound you earn above £153 up to £805 a week. So if you earn £253 you will pay £12 in National Insurance contributions.
Above £805 a week National Insurance contributions drop to 2% of the amount above that.
If you pay National Insurance contributions then you can earn a qualifying year for your state pension more quickly than just with a credit. To qualify you have to earn at least £5772 in the year, but earnings above £805 do not count.
If you earn £300 a week it will take you 20 weeks to get a qualifying year and if you earn £154 a week then it will take 38 weeks. Someone earning £805 or more will only take eight weeks.
So if you earn enough to pay National Insurance contributions, you do not have to work a whole year to make it count towards the pension.
Once you reach state pension age, you do not have to pay National Insurance contributions at all.
If you have fewer contributions than you need for the year to count, you can pay extra contributions called Class 3 to fill the gap.
They are £13.55 a week, so only consider paying them if you know there is a gap AND you may end up short of the 35 years you will need at state pension age.
Check your record by filling in the form at https://online.hmrc.gov.uk/shortforms/form/NIStatement and sending it to HMRC.
Credits for National Insurance contributions
You can get credits for National Insurance contributions in many circumstances even if you are not working.
Credits can be given if you get child benefit for a child under 12, are a carer, are looking for work, or you cannot work. In some circumstances you have to apply for these credits, in others they are given automatically.
There is a comprehensive list here: https://www.gov.uk/national-insurance-credits/eligibility
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National Insurance rates and amounts
The rates and amounts quoted related to the tax year 2014/15. They will change from April 2015. The details apply to qualifying years for the basic state pension.
Qualifying years for state second pension, jobseeker’s allowance, or other benefits may be different.