Pension query?

helpimcrap

helpimcrap

helpimcrap

Soldato
Joined
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Leicestershire
Hi all,
Question on pensions so i know.

If i have completed my required amount of NI years to earn a full state pension upon retirement, can i halve it or cancel it without any repercussions i.e. reduced pension?

My thinking is once i achieve maximum and i'm guaranteed it,it cannot be taken away, so i cancel or go onto half pension contribution and then put the rest into a private pension?

I've tried looking for answers but found nothing. I don't mind paying into a pension obviously as i want to pay my way, but it got me thinking when looking at additional pensions of which i am in.
 
State pension entitlement and NI years has no relationship to your personal pension and employer contributions. Assuming you’re talking about DC pensions, private/employer distinction doesn’t really exist - the only difference is your employer has agreed to contribute if you do and normally they’ve negotiated a reduction on the fees. Most of the providers and investments are the same.
 
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Hi, you are misunderstanding me. NI is a given - like death and taxes.

I'm talking about pension contributions only. Once i reach max NI/pension can i opt out and put the money to better use?
 
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I'm confused to what you mean. State pension is part of your NI. You can't change that. Unless I'm very mistaken.

Are you talking about your state pension, or a private/work pension?
 
helpimcrap said:
Hi, you are misunderstanding me. NI is a given - like death and taxes.

I'm talking about pension contributions only. Once i reach max NI/pension can i opt out and put the money to better use?
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No.

NI deductions have nothing to do with your private employer pension. Your state pension entitlement has nothing to do with your private employer pension. NI isn’t just for your state pension entitlement either.

I think you’re confused about what NI is - although that’s not your fault as it should arguably just be wrapped up into income tax.
 
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Begbie said:
I'm confused to what you mean. State pension is part of your NI. You can't change that. Unless I'm very mistaken.

Are you talking about your state pension, or a private/work pension?
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You have to have a workplace pension now since the government realised no one had one and was retiring for free. This is the one i've on about.

I pay NI, that isn't what i'm asking. As long as i work i will pay NI. I'm talking about the pension contributions on top of that.

In a few years i reach the maximum i can have when i retire - £180 curtrently with max of £203 a week (currently before yearly inflation). The pension i pay for currently will not increase that past it's maximum. Do i have to continue paying or is it a waste for me personally as i won't see any of it? I'll be paying into a pot that covers others who haven't paid in?

I have additional contributions and private pension on top of that but i was just wondering if i could cancel my work place pension and put it all into my additional pension which i would see some return on.

Paid into a private pension because the car insurance offered a discount on additional product so bought a pension and saved 25% on my car insurance.

I've not au fae with the pension side of things and don't really understand it.
 
MichaelAwkward said:
No.

NI deductions have nothing to do with your private employer pension. Your state pension entitlement has nothing to do with your private employer pension. NI isn’t just for your state pension entitlement either.

I think you’re confused about what NI is - although that’s not your fault as it should arguably just be wrapped up into income tax.
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Ah so the workplace pension i'm paying into is on top of my NI contributions. NI = state pension, and workplace pension is extra i get when i retire?
 
helpimcrap said:
You have to have a workplace pension now since the government realised no one had one and was retiring for free. This is the one i've on about.

I pay NI, that isn't what i'm asking. As long as i work i will pay NI. I'm talking about the pension contributions on top of that.

In a few years i reach the maximum i can have when i retire - £180 curtrently with max of £203 a week (currently before yearly inflation). The pension i pay for currently will not increase that past it's maximum. Do i have to continue paying or is it a waste for me personally as i won't see any of it? I'll be paying into a pot that covers others who haven't paid in?

I have additional contributions and private pension on top of that but i was just wondering if i could cancel my work place pension and put it all into my additional pension which i would see some return on.

Paid into a private pension because the car insurance offered a discount on additional product so bought a pension and saved 25% on my car insurance.

I've not au fae with the pension side of things and don't really understand it.
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Your workplace pension isn’t the state pension entitlement - it’s effectively a private pension on top.
 
Hi all,
Question on pensions so i know.

If i have completed my required amount of NI years to earn a full state pension upon retirement, can i halve it or cancel it without any repercussions i.e. reduced pension?
No. As far as I'm aware the only way to stop paying NI contributions is to stop earning above the minimum threshold.
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My thinking is once i achieve maximum and i'm guaranteed it,it cannot be taken away, so i cancel or go onto half pension contribution and then put the rest into a private pension?
See above. You "earn" your state pension entitlement by paying NI, but you do not have a defined state pension contribution that can be amended.
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I've tried looking for answers but found nothing. I don't mind paying into a pension obviously as i want to pay my way, but it got me thinking when looking at additional pensions of which i am in.
 
helpimcrap said:
Ah so the workplace pension i'm paying into is on top of my NI contributions. NI = state pension, and workplace pension is extra i get when i retire?
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Yes.

You pay NI for a certain number of years and this builds your state pension entitlement.

You then pay pension contributions either privately or through your workplace with an employer contribution into a private pension. This will give you income on top of whatever state pension you get.

If you’re paying additional contributions and a separate other private pension as well, you may want to consider whether you’re contributing in the most effective way or indeed, too much.
 
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Company pension is on top of state pension.

If the company matches up to 4% for example, if you don't pay the 4% then you're throwing away the 4% from the company.

State pension plus the minimum company pension contribution isn't a lot, most people want to be contributing more than that to maintain the lifestyle they're used to.

As you've maxed the state pension you can't be that far off retirement - so I strongly suggest you get some pensions advice to make sure you set yourself up for the type of retirement you want. At the very least do some reading and use calculators to forecast your situation.
 
throwaway4372 said:
Company pension is on top of state pension.

If the company matches up to 4% for example, if you don't pay the 4% then you're throwing away the 4% from the company.

State pension plus the minimum company pension contribution isn't a lot, most people want to be contributing more than that to maintain the lifestyle they're used to.

As you've maxed the state pension you can't be that far off retirement - so I strongly suggest you get some pensions advice to make sure you set yourself up for the type of retirement you want. At the very least do some reading and use calculators to forecast your situation.
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over 20yrs until retirement lol.

But yeah, i get the idea and it is something i am starting to look at. Get mortgage out of way first.
 
helpimcrap said:
Hi, you are misunderstanding me. NI is a given - like death and taxes.

I'm talking about pension contributions only. Once i reach max NI/pension can i opt out and put the money to better use?
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The two are separate, you need 35 years of Ni contributions for a full state pension, this is absolutely nothing to with any pension contributions you make, which are unlikely to 'max out' unless you're over lifetime allowance which may or may not have just been done away with.
While you work under the retirement age you make Ni contributions it doesn't matter if you've already made full Ni contributions thye continue to take it.
Pension contributions are employer based or worplace pension based and are nothing to do with the state pension.
 
helpimcrap said:
over 20yrs until retirement lol.

But yeah, i get the idea and it is something i am starting to look at. Get mortgage out of way first.
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Don't opt out - it's effectively free money your getting from your employer and you will also be benefitting from tax relief on your personal contributions either via tax relief added to your fund, or more likely salary sacrifice arrangement. Both of which are a very good benefit.

Keep paying in - It's a private pension that is in addition to your State Pension..... You would struggle to survive on just the state pension alone.
 
Opting out paying into a pension is a bit like opting out saving money. Pension is just a vehicle to save money, work pension you get free money on top of the money you save because work is adding more.
 
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Just for clarity the amount of NI you pay has no bearing on how much state pension you get.

If you earn more than the 'lower earnings limit' (£553 per month for 23/24) your national insurance record for the purposes of calculating state pension and your eligibility to some out of work benefits is credited for that week/month.

There are other ways of having your national insurance record credited, they include being in receipt of child benefit (which it is still important to claim it, even if you are in the scope of HICBIC if one of you earns below the 'lower earnings limit') or you are in receipt of out of work benefits.

You can have a part time job your entire life, pay zero national insurance for your entire life and qualify for a full state pension.

You can not opt out of paying national insurance, it is a tax on employment in addition to income tax. Now the 0% bands are the same your tax rate is not 20%, that is a massive con. Your marginal rates are actually 0% then 32%, 42% and finally 47% depending on what thresholds you hit.

Of course if you hit the 47% you also lost your personal allowance along the way and while that happens your marginal rate is actually 60%. You also loose 'tax free' childcare (another lie as its only grossed up by 20% and the people who use it actually pay 32-42% but that is a rant for another day) and child benefit if you have kids.
 
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