State Pension Credit For Low Paid Employment

I have recently left full time employment and taken a part time job as I am nearing state pension age. I have worked out that I will actually earn slightly less than the National Insurance threshold 105 per week and consequently I will not pay any National Insurance contributions through may wages. Will this affect my entitlement to a state pension?

1st December 2008

If you earn more than the Lower Earnings Limit (For 2007/08 tax year this is 5,435), then you will get a notional credit towards your secondary state pension even though you have not made any National Insurance contributions.

For this to be effective your employer must report your earnings at the end of the tax year on the employers end of year return form P35 and form P14.

You should ensure that you get a P60 from your employer showing your earnings at the end of the year, as this will prove that your earnings have been declared to the HMRC, and mean that you receive a notional credit for state pension purposes.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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