National Insurance bombshell! Pensioner NI levy will not count towards State Pension

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The NATIONAL INSURANCE health and social care levy of 1.25 percent that working pensioners must pay from April 2023 will not count towards their State Pension entitlement. This will be a blow to those over 66 who have not made enough NI contributions to qualify for the maximum basic new State Pension.

From April 2023, people who continue to work beyond State Pension age will pay Boris Johnson’s new health and social care levy. However, unlike National Insurance contributions paid on income earned before age 66, this will not count towards their basic new State Pension.

Pensioners who make less than 35 years of NI contributions during their working lifetime do not qualify for the full basic State Pension of £179.60 a week, and will get a reduced sum instead. Those who contribute for less than 10 years get nothing at all.

Many who do not get the full amount may resent paying the new 1.25 percent levy, as it will not go towards plugging any shortfall they have in their State Pension, said pensions expert Sandra Wrench.

Sandra, 69, worked for the Department for Work & Pensions for more than 40 years, including two decades on the State Pension, and helps friends and family members get a fair deal from the DWP.

Many who continue working after 66 are forced to do so because they do not qualify for the full basic State Pension.

Now they will pay the new National Insurance levy but unlike standard NI contributions, this will not help them build up extra State Pension, Sandra said. “NI contributions have always been associated with benefits and contributing to your State Pension, but the new working pensioner levy breaks this link.”

Currently, once you reach State Pension age, you no longer have to make any National Insurance contributions.

That rule will continue to apply to income from the State Pension, and any income from a workplace pension, personal pension or savings.

However, from April 2023 those over 66 who continue working will have to pay the new NI health and social care levy on any income they earn from a job, to help fix the social care crisis.

This is part of a package designed to raise £36 billion over three years for the NHS and care system.

Source: Theexpress.co.uk

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