No longer scope for voluntary NI contributions?

[brrapp]

I currently have no income but have been paying class 2 contributions on a voluntary basis to preserve my future pension rights. Just wondering what will happen now that the chancer has announced an end to class 2 and new means testing to class 4 contributions. Any way for me to carry on making contributions on a voluntary basis?

[Eric Mc]

Class 2 was never meant to be a "voluntary" system. You either need to pay Class 2 or you don't.

The voluntary system for NI is contained within Class 3 - which has not been abolished.

[brrapp]

Eric Mc said:

Class 2 was never meant to be a "voluntary" system. You either need to pay Class 2 or you don't.

The voluntary system for NI is contained within Class 3 - which has not been abolished.

Thanks Eric, I got that a little bit mixed up as I used to be self employed and paid class 2 .
I'll carry on as before then.

[Jockman]

Register for your Govt Gateway Account and it will show you shortfalls on any years for State Pension purposes.

Where possible it also tells you how much you can pay to make that year eligible.

[condor]

That's confusing Eric - I pay voluntary Class 2 contributions as I'm registered self employed but don't earn enough to pay NI.

[brrapp]

Jockman said:

Register for your Govt Gateway Account and it will show you shortfalls on any years for State Pension purposes.

Where possible it also tells you how much you can pay to make that year eligible.

Thanks, I did that, it told me I need another 6 years contributions to reach the max . I'll probably return to paid employment later this year for around 10 more years so it shouldn't be a problem but as the voluntary contributions are so low, it's worth paying them just to be on the safe side.

[Jockman]

brrapp said:

Jockman said:

Register for your Govt Gateway Account and it will show you shortfalls on any years for State Pension purposes.

Where possible it also tells you how much you can pay to make that year eligible.

Thanks, I did that, it told me I need another 6 years contributions to reach the max . I'll probably return to paid employment later this year for around 10 more years so it shouldn't be a problem but as the voluntary contributions are so low, it's worth paying them just to be on the safe side.

Remember you only need 35 years.

[Eric Mc]

brrapp said:

Thanks Eric, I got that a little bit mixed up as I used to be self employed and paid class 2 .
I'll carry on as before then.

It's all explained here -

https://www.gov.uk/voluntary-national-insurance-co...

[condor]

Eric Mc said:

It's all explained here -

https://www.gov.uk/voluntary-national-insurance-co...

That says if you are self employed and pay class 4 NIC then that doesn't count towards your state pension! that can't be right.
Class 3 looks a lot more expensive than class 2 which both count towards the state pension.

[condor]

This might be a better link to read - it's the consultation on removing class 2 contribution.

https://www.gov.uk/government/consultations/consul...

[Eric Mc]

condor said:

Eric Mc said:

It's all explained here -

https://www.gov.uk/voluntary-national-insurance-co...

That says if you are self employed and pay class 4 NIC then that doesn't count towards your state pension! that can't be right.
Class 3 looks a lot more expensive than class 2 which both count towards the state pension.

Class 4 has NEVER counted towards the state pension. It was purely a form of "tax".

For the self employed, the important NI was always Class 2 - even though it was a relatively small amount.

With abolition of Class 2, Class 4 has now become THE NI for the self employed and it WILL count for the state pension and other benefits.

The legislation to change and upgrade Class 4 NI to genuine contributory status has been quite complicated and has taken almost four years to put into place.