As if the prospect of a poor retirement isn’t enough to contend with, the government has recently come out with a rather disturbing announcement over National Insurance records that could leave millions of individuals at a loss when it comes to the state pension.
The government estimate that around 9 million individuals national insurance contributions over the last 5 years have not been credited to their official records with Revenue and Customs. The total amount of money currently floating in limbo is around £1.3 billion in contributions.
How does this really matter? Well, this mistake could have significant ramifications on the people who are affected and could leave some of them with a lower state pension when the time comes. This is because in order to qualify for the State Pension, currently £97.65 per week, one should have paid National Insurance Contributions for at least 30 years to receive the maximum pension. For individuals it is as long as 44 years for men and 39 years for women if you reached the State Pension age before the 6th of April 2010. It is estimated that for each year that an individual fails to meet the targeted number of years of contribution it will cost them around £3 a week in pension contributions.
How did this occur? Each year employers send a P14 to the Revenue and Customs detailing an individuals salary, income tax and NI deductions. However, on many occasions the information on the P14 does not tally with the information held by Revenue and Customs, which should trigger a further investigation which in many instances did not occur.
How do you know if you’ve been impacted? Revenue and Customs has stated that they as a matter of course write to individuals with significant NI contributions gaps around 18 months after the end of a tax year. Therefore, if you are notified of this and feel that it has been done in error, do get in contact with them.