Interactive Investor

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

31st August 2017 17:13

Michelle Cracknell from interactive investor


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“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


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.

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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 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.

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This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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