Rising numbers of self-employed workers in the UK could mean thousands of people miss out on a full state pension when they retire, warns the Association of Chartered Certified Accountants.
Chas Roy-Chowdhury, ACCA head of taxation, said: “Most workers do not have to worry that their National Insurance contributions are up to date, the group that are most at risk from not having the full qualifying years are those that are self-employed. Figures from the Office of National Statistics (ONS) show that there were 4.25 million people in the UK who are self-employed as of 31 October 2013. While some will meet the criteria to be entitled to the full state pension, many won’t.”
ACCA points out that if you reached state pension age on or after 6 April 2010 you will need to have 30 years of National Insurance contributions to be entitled to the full basic state pension.
Chas Roy-Chowdhury continued: “It is not only the self-employed that may not qualify for a full pension, other groups include those employed but who earn below the ‘lower earnings limit’ (£109p/w at the 2013/2014 tax year rates), people who are unemployed and not claiming benefit, as well as the self-employed who don’t have to pay Class 2 National Insurance contributions because you applied for and were issued with a CA6812 Small Earning Exception certificate or living abroad.
“If you fall in to any of these categories I would advise you to contact HMRC (Her Majesty’s Revenue and Customs) and obtain a statement of your National Insurance account. If you do not have the full number of qualifying years it may be beneficial to seek qualified financial advice before deciding whether to top up your contributions, as it is not always beneficial to do so, depending on your individual circumstances. A qualified chartered certified accountant will be able to help.
“Plans are in the pipeline to reform the eligibility criteria for the full state pension, so it is worth keeping an eye out in future for changes that could affect whether you are entitled to it.”
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