Forces Pension Society

Fighting for the forces and their families

National Insurance Contributions

March 31, 2017
National Insurance Blog

The attached petition is currently doing the rounds and we keep being asked if it is accurate and if we will  support it

The answer is no on both counts.

The petition suggests that the National Insurance rules (which affect the size of your state pension) were changed by sleight of hand in April last year and that “opting out” or more properly  “contracting out” was something that happened retrospectively at the same time.  This is not true. As anyone who has served and is already drawing their state pension will know, contracting out has affected the level of state pension for those contracted out for at least 40 years and has applied to millions of pensioners across the whole public service and beyond. The petition also states that  the level of NI that Armed Forces personnel or other contracted out personnel paid was “allegedly” smaller. There is no allegedly about it. It was demonstrably smaller.  Given the length of time the rule has been in place and the breadth of its application we do not think this is a credible Armed Forces Campaign issue.  The Royal British Legion takes a similar view. It is however important that everyone understands what their entitlement to a pension will be, so  go online and apply for a State Pension Statement. You can then decide whether to top up your pension if you are eligible to do so and if you are a spouse who is missing NI payments because you were serving abroad apply to have the missing years reinstated.

The post below, extracted from the Forces Pension Society Newsletter from October 2015 explains the changes to the state pension which were about to occur when it was written:

“The new state pension goes live on 6 April 2016, so with some six months to go, time to find out how it will affect you. The changes offer opportunities for both those staying on the old state pension and those who will be on the new, so read on. Basic rule is that those MEN born ON or AFTER 6 April 1951 and those WOMEN born ON or AFTER 6 April 1953 will be eligible for the new state pension. The basic state pension is currently £115.95 a week or just over £6,000 a year. It is currently topped up by additional state pension entitlements – either the State Earnings Related Pension Scheme (SERPS) in place from 1978 to 2002 or the State Second Pension, which replaced it. This two-tier system will change from April 2016 and be entirely replaced for those retiring after April 2021 by a ‘flat rate’ pension. The official guidance says that it will be no less than £151.25 a week, which would amount to more than £7,800 a year. However, not everybody eligible for the new scheme will receive the full amount, a fact that has been the cause of some confusion. Currently, workers need to have 30 years of qualifying National Insurance contributions to get the current full state pension, but will need 35 years of contributions to get the full flat rate state pension in future. However, people who have contracted out of S2P and Serps over the years may get less than this. It comes as a surprise to some of our members to be told that they were “contracted out” when members of the Armed Forces and that their state pension entitlement is therefore less than they had anticipated. There is also a perception amongst some that this “special treatment” has been reserved for former members of the Armed Forces alone. This is not so. Contracting out was normal practice across the whole public sector and indeed amongst many independent Final Salary schemes. If you remain unsure about what your pension entitlement is likely to be you can apply for a State Pension Statement to give you an estimate of how much you are likely to get when you reach state pension age. The statement will be based on your National Insurance contribution record as it stands on the date the statement was produced. Worth applying so that you know where you stand. “



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