A State Pension warning has been issued over the National Insurance rise.
Chancellor Rishi Sunak announced in this week's Spring Statement the threshold for National Insurance contributions would rise by £3,750 to £12,570 from July. The increase is one of the measures introduced in the wake of the UK's cost-of-living crisis and means employees will keep more of what they earn before they have to start paying personal tax - as The Daily Record reports.
The Health and Social care levy also comes into effect next month, which is a 1.25 percentage point increase on National Insurance Contributions designed to support the NHS across the UK. Mr Sunak had been under pressure to scrap the increase in the face of the rising cost of living crisis, but instead opted to soften the blow by raising the threshold at which people start paying National Insurance.
READ MORE: HMRC warns 7,000 benefit claimants could have payments frozen in two weeks time
However, a senior pensions and retirement analyst at Hargreaves Lansdown has issued a warning in the wake of the increase care must be taken that workers earning less than £12,570 per year do not lose access to vital National Insurance credits for their State Pension. Helen Morrissey said: "The State Pension forms the backbone of most people’s retirement and therefore, they should ensure they do not incur gaps unnecessarily, which means they end up with less in retirement.
“Many benefits come with automatic National Insurance credits. For instance, Child Benefit, Universal Credit and Jobseekers Allowance will credit you automatically. Other benefits such as Statutory Sick Pay will give you credits if you apply for them. It is therefore vital people worried they may no longer be getting National Insurance credits check to see what benefits they are entitled to, so these credits can be made.”
“A further option for people looking to plug gaps in their State Pension record is to buy voluntary National Insurance credits. Each missing year costs around £800 and will give you 1/35th of your entitlement. Over the course of retirement they can be a very good value way of boosting your state pension entitlement.”
Automatic National Insurance Credits
You should get automatic National Insurance credits if you receive the following benefits
- Universal Credit
- Jobseekers Allowance
- Employment and Support Allowance
- Maternity Allowance
- Child Benefit
- Carers Allowance
- Income Support
You may be able to claim National Insurance credits in these instances
- If you are unemployed and looking for work but not claiming Jobseekers Allowance, you can contact your Jobcentre to claim credits.
- If you are on Statutory Sick pay and you do not earn enough to make a qualifying year NIC, you can still claim. The same goes for statutory maternity, paternity or adoption pay.
- If you are caring for one or more sick or disabled person for at least 20 hours a week and you don’t claim Carers Allowance or Income Support.
- You are under state pension age and you look after a child under the age of 12 you may qualify for Specified Adult Childcare Credit.
For more information and how to claim go to National Insurance credits: Eligibility on the GOV.UK website here.
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