National Insurance on pension pay outs

[Stevemr]

Hi,

Hopefully someone will know the answer to this?

If I get a monthly pension payment from a final salary pension scheme, am I right in thinking i will only pay tax but no national insurance on it?

Similarly if I transfer out to a draw down pension, again after tax free lump sum is taken out, do I only pay tax but no national insurance on the monthly payments, as i draw them out?

[bobmedley]

No NI on pension payments

https://www.pensionsadvisoryservice.org.uk/about-p...

[The Leaper]

Liability for NICs arises on earned income. Pensions and earnings on any savings income eg dividend income, cash deposits etc do count for NICs.

R.

[Eric Mc]

The Leaper said:

Liability for NICs arises on earned income. Pensions and earnings on any savings income eg dividend income, cash deposits etc do count for NICs.

R.

Is there an importnat "not" missing from the above sentence?

[The Leaper]

Oops, correct Eric!

R.

[JulianPH]

The Leaper said:

Oops, correct Eric!

R.

[joyless lobotomised parrot]

There's no NI on earned income either (employed or self employed) after state pension age. Although employers still have to pay NI (I think) regardless of the employee's age.

[bobmedley]

You do pay NI after state pension age if you are self employed paying class 4 contributions

[joyless lobotomised parrot]

bobmedley said:

You do pay NI after state pension age if you are self employed paying class 4 contributions

What happens at State Pension age

At State Pension age:

you stop paying Class 1 and Class 2 contributions, even if you’re still working
you still have to pay Class 4 contributions if you have taxable profits from the year you reach State Pension age - the next year, you’ll be exempt

.....according to the government anyway.

(you had me worried for a second)

[anonymous-user]

joyless lobotomised parrot said:

bobmedley said:

You do pay NI after state pension age if you are self employed paying class 4 contributions

What happens at State Pension age

At State Pension age:

you stop paying Class 1 and Class 2 contributions, even if you’re still working
you still have to pay Class 4 contributions if you have taxable profits from the year you reach State Pension age - the next year, you’ll be exempt

.....according to the government anyway.

(you had me worried for a second)

I wouldn't be counting on that for too long. Requiring over 65's to continue paying NI contributions looks likely the easiest thing (from a long list of deeply unpopular changes) to raise a chunk of new tax.

https://www.express.co.uk/news/uk/940685/social-ca...

[Eric Mc]

bobmedley said:

You do pay NI after state pension age if you are self employed paying class 4 contributions

That's because it is not REALLY NI. Class 4 is a con. It's called an NI contribution but entitles the payer to nothing. It is really an additional tax on the self employed.

The government has plans to abolish the GENUINE self employed Class 2 NI contribution and replace it with a "new improved" version of Class 4. However, they have postponed the implementation of these changes at least twice already because they keep realising that turning "rubbish" old style Class 4 into a genuine useful Class 4 is proving immensely complicated.