Ask the Experts: “If I retire early, can I stop paying National Insurance Contributions?”

Published by Michelle Cracknell on 31 August 2017.
Last updated on 31 August 2017

Q

Do I have to pay National Insurance Contributions (NICs) up to age 66 in order to receive a full state pension? I am considering retiring in May 2018, when I am 62, and living off my company pension.

From:
S/Cookstown

A

There is no law that says you have to work until you hit state pension age. If you do work, then you have to pay NICs until you reach state pension age. If you continue to work after you have hit state pension age, then you still pay income tax, but you don’t have to make NICs any more.

In order to receive the full state pension, you need to have made NICs for at least 35 years. If you weren’t working for certain reasons, such as you were raising a family or caring for someone, you can claim NIC credits for those years. If you haven’t accrued 35 years on your national insurance record, you could receive a lower state pension.

The new state pension was introduced in 2016 and during the current transition period your pension will be the higher of the state pension calculated under the old system (which was partially earnings related) and the new state pension.

I would suggest that you get a pension statement to see how many years of NICs you have and a forecast of what your state pension will be. You can apply for a forecast at Gov.uk/checkstate- pension.

Michelle Cracknell is chief executive of the Pensions Advisory Service

What is a state pension forecast?

A state pension forecast will tell you how much state pension you are expected to receive, as well as when you will be eligible to receive the state pension, and if there is anything you can do to increase your entitlement.

This article was written in response to a reader’s question. If you have a financial or work/career question that has left you scratching your head ask our panel of experts who will aim to shine some light on the matter.

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