BENEFITS EXPERT: The puzzle of pension contributions

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My wife works 18 hours a week but does not pay National Insurance.

 Does this mean she is not earning a State Pension? If not can she qualify because of what I have paid?

Puzzled husband

(by Email)

Certain low earners do not have to pay a National Insurance contribution, but will be treated as though they have. People who earn between £112 and £155 a week do not pay National Insurance, but will still be building up an entitlement to State Pension.

 With the National Minimum Wage being £6.50 an hour currently, your wife’s 18 hours a week should mean she earns just enough to be treated as paying National Insurance.

 If she reaches State Pension age on or after April 6 next year her State Pension will be based upon her National Insurance record alone. From that date, the rules that enable someone’s National Insurance to count towards their spouse’s State Pension will be scrapped.

Are there different rates of State Pension? My wife is 46 and has always worked since leaving school. What sort of pension can she expect?

Mr C (Sunderland)

A person’s basic State Pension varies according to their number of ‘qualifying years’ of National Insurance. A qualifying year is a tax year during which they have paid, or been credited with, a certain level of National Insurance. The more qualifying years they have, the bigger their pension. Currently a person needs 30 qualifying years for a maximum basic pension. If they have fewer they will get a modified pension, and will be eligible for something even if they have just one qualifying year.

 Under the forthcoming rules, however, people reaching pension age on or after April 6 next year might need at least 35 qualifying years to be eligible for the full pension. Also they will need ten qualifying years to qualify for the minimum pension.

 The new pension is called the ‘Single Tier’ pension, which the Government originally put at £144 a week maximum, but it will no doubt be more than this when the time comes.

 Your wife will be due her pension when she is 67 and appears to have a full National Insurance record from the age of 16.

 She will have her 30 years by next April, so the pension she will have earned by then will be at least as much as the maximum current State Pension of £115.95 a week.

 But with 20 years to go before pension age, she will have ample time to make up any extra years needed to bring her up to the maximum Single Tier pension.