How do I keep my pensions and benefits if I work part-time?
If you are one of the eight million people working part-time, you may be missing out on valuable rights to a pension and other benefits.
If you have part-time jobs, make sure at least one of them pays you £109 a week or more
If your part-time job pays less than £109 a week then you will not be building up a National Insurance record and that could mean a lower state pension or none at all when you reach pension age.
Even if you do more than one part-time job but they all pay you less than £109, your National Insurance record will still remain blank.
Read more about the changes to the state pension rules.
What if I have more than one part-time job?
For example, if you work 16 hours in one job on minimum wage you will earn £99 a week. That is below the £109 limit so no NI is recorded by your name.
If you take on another part-time job – perhaps also 16 hours with another employer also on £6.19 an hour – you earn another £99 a week. But you will not get NI for that job either.
Add a third 16 hours a week job at minimum wage with another firm and still no NI will be recorded for you.
Altogether you will be working 48 hours – which is certainly full-time! – and earning £297 a week, around £15,500 a year, but you will still not be building up any National Insurance record.
If you had one job on £297 a week you would pay £17.76 a week NI and build up rights to a pension and to benefits such as Jobseeker’s Allowance for the first six months if you lose your job. But as a multiple part-timer you do not.
The odd thing is that the Revenue will add together earnings from several jobs and charge you income tax on the full £297. But it keeps them separate for NI and if each employer pays below the £109 limit no NI is recorded for you.
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How can I make sure I don't miss on pensions and benefits?
There are three things you can do.
- If you have part-time jobs, try to make sure at least one of them pays you £109 a week or more. At that level you do not pay NI contributions (you don’t start paying until you earn £149 a week) but between £109 and £148 earnings NI contributions are credited to you so you build up rights to a pension and other benefits.
- If you cannot get at least one job at that level of pay then you could consider paying voluntarily. They are called Class 3 contributions and are £13.55 a week. That may seem very expensive – you would have to earn £262 a week to pay regular NI at that rate. But it can be worth paying it to buy you a year of state pension if otherwise you would be short.
- Things are cheaper for a self-employed person. Your NI contributions – called Class 2 – cost just £2.70 a week but earn the same rights to a state pension (but not to benefits if you cannot work). You do not have to pay these if you earn less than £5725 a year. But you will pay them if you do NOT ask for what is called ‘small earnings exception’. It may be worth your while not to ask for that and pay the £2.70 a week.
Read our guide to the benefits you might be entitled to after you retire.
* Read Paul Lewis' money articles every month in Saga Magazine.
The opinions expressed are those of the author and are not held by Saga unless specifically stated. The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.