Autumn statement

rosie1959

Germanshepherdsmum

growstuff

Abolition of Class 2 NI payments for the self-employed is a trick!

For people with very small business (like I had), it might seem like a saving. However, it also means that they won't be eligible for those years to count towards the state pension. I'm not sure of the actual figures now, but a few years ago, each extra year was worth something just over £4 a week in pension, so well over £200 a year.

So, if you don't have the minimum number of years for a full state pension, it might be worth paying voluntary Class 4 contributions, which are more expensive (and I'm not entirely sure it's possible).

The government tried doing the same thing a few years ago when Sunak was Chancellor, but abandoned the idea when it caused a backlash from very small business owners

I think he said that this would not affect the entitlements that NI contributions give.

Will only affect entitlements of those on very small profits of £6275 and under. They can opt to carry on paying class2 at a rate of £3.75 a week.

Are you sure? The report I read said that Class 2 is to be abolished. That's what Sunak tried to do a few years ago. I know because I was somebody whose profits meant that I paid Class 2 but not Class 4 contributions.

How can people continue to pay Class 2 contributions, if they've been abolished?

Not paying NI certainly would have affected my entitlement to state pension.

Smoke and mirrors, I think - but I confess I'm busy at the moment and have only glanced through the headlines.

As always, wait for the details.

At the time Sunak tried to abolish Class 2, a lobbying group was set up. Most of the people who would have been affected were people who had retired at 60 with occupational pensions. However, their pensions weren't enough until they reached state pension age, so they were working as self-employed to boost their income.

They were happy enough when Class 2 was abolished, including those with profits less than the threshold, who were paying voluntary Class 2 contributions. Then they discovered that not paying NI would in many cases affect their state pensions. Instead of paying £3(?) a week for Class 2, they were having to pay Class 4 (too lazy to look up how much they are, but they're much higher), so they would lose out in the long run. I guess it's a bit like the women who lost out from paying the "married woman stamp".

Germanshepherdsmum

As always, wait for the details.

It doesn't affect me any more, but anybody caught in the trap should look into it.

I did look at the details when it was tried a few years ago and I can't see how this is different from then.

growstuff

Germanshepherdsmum

As always, wait for the details.

It doesn't affect me any more, but anybody caught in the trap should look into it.

I did look at the details when it was tried a few years ago and I can't see how this is different from then.

I read it on Gov.uk Autumn Statement 2023/National Insurance fact sheet

growstuff

At the time Sunak tried to abolish Class 2, a lobbying group was set up. Most of the people who would have been affected were people who had retired at 60 with occupational pensions. However, their pensions weren't enough until they reached state pension age, so they were working as self-employed to boost their income.

They were happy enough when Class 2 was abolished, including those with profits less than the threshold, who were paying voluntary Class 2 contributions. Then they discovered that not paying NI would in many cases affect their state pensions. Instead of paying £3(?) a week for Class 2, they were having to pay Class 4 (too lazy to look up how much they are, but they're much higher), so they would lose out in the long run. I guess it's a bit like the women who lost out from paying the "married woman stamp".

Surely if they had retired at 60 with occupational pensions they would have accrued enough years of NI payments to get a full pension anyway

rosie1959

growstuff

Germanshepherdsmum

As always, wait for the details.

It doesn't affect me any more, but anybody caught in the trap should look into it.

I did look at the details when it was tried a few years ago and I can't see how this is different from then.

I read it on Gov.uk Autumn Statement 2023/National Insurance fact sheet

Do you have a link? It's not what I read, which was that Class 2 contributions were to be abolished.

Agreed Growstuff. I would advise people who may be affected to look into this very closely. My state pension has suffered by being ‘contracted out’ as a public sector employee. I never understood the implications of this; neither was it ever explained, and I was given no choice. Now as a pensioner, with 41 years NI contributions, I still don’t qualify for the full state pension. Beware!

rosie1959

growstuff

At the time Sunak tried to abolish Class 2, a lobbying group was set up. Most of the people who would have been affected were people who had retired at 60 with occupational pensions. However, their pensions weren't enough until they reached state pension age, so they were working as self-employed to boost their income.

They were happy enough when Class 2 was abolished, including those with profits less than the threshold, who were paying voluntary Class 2 contributions. Then they discovered that not paying NI would in many cases affect their state pensions. Instead of paying £3(?) a week for Class 2, they were having to pay Class 4 (too lazy to look up how much they are, but they're much higher), so they would lose out in the long run. I guess it's a bit like the women who lost out from paying the "married woman stamp".

Surely if they had retired at 60 with occupational pensions they would have accrued enough years of NI payments to get a full pension anyway

No, not necessarily. Public service pensions usually had a retirement age of 60, but there were not requirements for a minimum length of service. Many women, in particular, had taken time out to raise families and didn't have the full 40 years needed for a full public service (or other occupational) pension. Home Responsibilities Protection/Pension Credits didn't (doesn't) apply to pensions other than the state pension.

LizzieDrip

Agreed Growstuff. I would advise people who may be affected to look into this very closely. My state pension has suffered by being ‘contracted out’ as a public sector employee. I never understood the implications of this; neither was it ever explained, and I was given no choice. Now as a pensioner, with 41 years NI contributions, I still don’t qualify for the full state pension. Beware!

Neither do I qualify for the full amount - for the same reason - and I have 48 years of full contributions. It was important for me to build up some extra eligible years from self-employment even after I had retired from my main job.

From government website re NI:
www.gov.uk/government/publications/autumn-statement-2023-national-insurance-factsheet/autumn-statement-2023-national-insurance-factsheet
Obviously the exact details will be set out in the Finance Bill.

www.gov.uk/government/publications/autumn-statement-2023-national-insurance-factsheet/autumn-statement-2023-national-insurance-factsheet

No good at links growstuff but read it on here

I think it's probably fair to claim that very few people understand pensions, unless they have an advisor and/or until it's too late to do anything about it.

I'm afraid you only have to look at the WASPI women who claim that their pensions have been put back by six years. They had 25 years to find out that pension ages had been equalised. If they knew so little about their pension ages, I think it's unlikely they'll understand the "small print" in the Autumn Statement and the implication for their futures.

LizzieDrip

Agreed Growstuff. I would advise people who may be affected to look into this very closely. My state pension has suffered by being ‘contracted out’ as a public sector employee. I never understood the implications of this; neither was it ever explained, and I was given no choice. Now as a pensioner, with 41 years NI contributions, I still don’t qualify for the full state pension. Beware!

Same here.
I agree about breadcrumbs before GE, and of course if will work.

Thanks for the link, which I've read.

So it confirms that Class 2 will be abolished.

It claims that people with profit under £6725 will be able to pay the equivalent of Class 2 contributions - BUT it only commits to one year. What happens after that?

I'm just on my way out, so am pushed for time. However, I don't think this factsheet is being totally honest, unless rules for Pension Credits changed last year after I had started claiming state pension.

I paid voluntary Class 2 contributions from the age of 60 to 67 (apart from the two years when I had profits over the £6725 threshold, when I paid them anyway). Every year I sent in my tax self-assessment and every year (apart from those two years) I was told by HMRC that I didn't have to pay, but my state pension would be affected if I didn't pay. Paying a £3.25 a week to receive over £4 a week seemed like a no-brainer to me, but not if HMRC was misleading me all along. Hmmm...

I agree about breadcrumbs before GE, and of course if will work.

Yes nadateturbe, sadly, it probably will work. Already people are applauding🙈🙈🙈 It beggars belief!

Maybe these are the same people who tell us that they don’t watch or listen to the news (or presumably news-related programmes).

I only receive a little above the basic SP despite having worked and paid full NI contributions for 43 years. For many years I was contracted out of SERPS on the advice of my pension provider, Equitable Life, the idea behind contracting out being that the government contributes to your pension fund in return for your giving up SERPS entitlement and you end up better off with a private or occupational pension into which the government has made payments, plus your basic SP, rather than with a private/occupational pension into which only you have paid plus a full SP. So the majority who were contracted out are, overall, better off. Unfortunately those who invested with the badly managed EL well and truly lost out all round.

LizzieDrip

*I agree about breadcrumbs before GE, and of course if will work.*

Yes nadateturbe, sadly, it probably will work. Already people are applauding🙈🙈🙈 It beggars belief!

It does. Depressing.

Germanshepherdsmum

Maybe these are the same people who tell us that they don’t watch or listen to the news (or presumably news-related programmes).

I only receive a little above the basic SP despite having worked and paid full NI contributions for 43 years. For many years I was contracted out of SERPS on the advice of my pension provider, Equitable Life, the idea behind contracting out being that the government contributes to your pension fund in return for your giving up SERPS entitlement and you end up better off with a private or occupational pension into which the government has made payments, plus your basic SP, rather than with a private/occupational pension into which only you have paid plus a full SP. So the majority who were contracted out are, overall, better off. Unfortunately those who invested with the badly managed EL well and truly lost out all round.

That's not at all relevant to the situation very low earners find themselves in. I assume you receive pension from the time you were working for local government.

In any case, I suspect your idea of "a liitle above" is sowhat different from my idea of "little".

This is an article from 2017, which explains the "trap" for very low paid self-employed from that 2016 announcement.

www.litrg.org.uk/latest-news/news/170320-self-employed-nic-reform-%E2%80%93-trap-lowest-paid

There was an outcry at the time and the changes didn't happen in the end.

The figures have increased in 7 years with inflation, but the principle is the same. As far as I can tell, today's announcement is the the same as it was in 2016.

Apologies: Philip Hammond was Chancellor of the Exchequer in 2016.

Mum is very happy about the state pension increase from next April but is worried that if Labour get in they mightn’t keep the triple lock.I understand her worries and would like Keir to come out and say they will def keep it.

The Autumn Statement seems reasonable to me.

I disagree growstuff. I receive a very small pension from the 13 years I worked in local government because for most of that time I was working as a secretary, having been unable to obtain articles until I had passed all my exams because I didn’t have a degree. My salary only increased significantly after being employed as a solicitor in private practice and within a couple of years being made a partner, responsible for my own pension arrangements - with the company chosen by many professionals including all my partners. So my occupational and private pension income is very low.

My SP is considerably lower than my husband’s, with a similar number of years’ contributions, who was never contracted out. It may well be less than your SP. And certainly less than that of a very low paid worker in receipt of the full old SP, let alone the new one.

By not raising the threshold that you start paying tax he has, because of inflation, effectively raised the tax for the poor and given the benefits to the rich in true Tory fashion.

If you consider the SP, you will (on basic rate tax) be left with 80% of it.
Benefits will be increased.
NI is being decreased for those who pay it.
The living wage is being increased.

What exactly do you want?