Posted 11 December 2023

Voluntarily Unemployed

Hello people.
Someone I know (no, it isn't me) has decided to stop working before retirement age.
They have no intention of becoming gainfully employed again.

Does anyone know what this person needs to do in order to maintain an appropriate amount of state pension once that time eventually comes?
Some kind of voluntary contributions or something?

And I appreciate this next one is probably best for a financial adviser, but is there a way to keep contributing to a public-sector work pension scheme after you've quit your job?

Cheers.
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  1. crevitz215's avatar
    I'd suggest you get the person to obtain a Government Gateway account, to be able to review their tax and pension affairs.
    gov.uk/che…ord

    This can clearly show you the years of contribution required, and obtained. Then decisions can be made. There has been other discussions on this forum around 'truing' up a pension, but personally I'd scour 'Money Saving Expert' forums for any potentially more tailored advice/case studies.

    MSE also has a guide on buying 'years' - moneysavingexpert.com/sav…ns/
    crevitz215's avatar
    regarding the workplace pension contributions - its best to review the last statement, and give the provider a call - they may offer if the monies are moved into another product wrapper. (so it would morph into a personal pension plan, and you could continue contributions).
  2. Haz_19's avatar
    Isn't it just 35 complete years of national insurance payments thats gives full state pension
    Feargal's avatar
    Correct..35 years for full state pension.
  3. mutley1's avatar
    you can get a forecast from HMRC via the gateway, so you need to register for the gateway. then you can call them and pay any missing NI contributions to get the full state pension.
  4. Uranus's avatar
    Author
    Apparently, this is the way.
    Thanks for confirming.
  5. deleted2862047's avatar
    So, in the next six months the government are simplifying all this and are launching a new website just for state pensions. You’ll be able to log in and see what you’ve got, see what years you can ‘buy’ and then simply input card details and pay what you want/is needed for missed years.

    And they’ve also extended the period that you can pay missed years for. If you have missed years between 2006 and 2018 you now have until 2025 to ‘buy’ them.

    This is all due to the shambolic way HMRC & DWP manage (or don’t) the system, which considering the affects Covid had on them and then the civil service attitude to sorting anything out quickly, means you can wait anything up to a year for a reply at the moment. (edited)
    mutley1's avatar
    hmrc isn't so bad, but DWP really need sorting out. they are a shambles of an outfit for the public sector.
  6. HonourableGentleman's avatar
    Re the pension, call the provider - they will give you unbiased advice I hope!
  7. Uranus's avatar
    Author
    Thanks for the advice people.
    Looks like the work pension queries are resolved.

    However, regarding the state pension, it isn't clear how you proactively contribute.
    All the advice and the info online is in reference to retrospective making-up for previous years shortfalls.
    The situation in-scope is about tackling shortfalls to come. Is there a way to pay up front, or else make regular payments at specific intervals to ensure the state pension contributions are kept up to date in order to ensure maximum pay-out at retirement age?

    The circumstances here seem quite rare: someone quitting work many years ahead of typical retirement age, and who currently has no intention of returning to paid employment again, but who is keen to maximise the pay-outs from both their private and their state pensions when they reach the appropriate age.

    Thanks again. (edited)
    mutley1's avatar
    you pay for missed years so there is no need to pay for future missed years as you can't predict the future. he may start working again in future even though he doesn't intend to. there is a phone number on the gateway site that you can call to ask questions about paying the missing contributions.
  8. snapper's avatar
    Look on the government website it will tell you
    Uranus's avatar
    Author
    What an amazing reply. (edited)
  9. Mark_Hickman's avatar
    How many years has the person paid national insurance ? If its 35 then no need to do anything, also if they had to quit work due to illness and were to claim disability payments then im pretty sure you still get it if that was a situation (edited)
  10. cheekyweegit's avatar
    If they care for someone they might be able to get extra credits towards their State Pension too, same if they are looking after a child when the childs parents work, the credits can be transferred over eg granny / grandad looking after little Johnny whilst parents are working.

    They can also claim Jobseekers Allowance for up to 6 months and current income / savings will not effect amount paid and they will get a stamp towards their State Pension this way too. They will need to be seen to be "actively seeking work for this" but given their age and the bias of a lot of employers, there should be no problems claiming for the 6 months.

    After the 6 months it will be a Universal Credit Claim where everything income wise is taken into account, so savings, investments, 2nd properties, partners income and any private / work pensions.

    Oh and get them to check if they are entitled to discount on their council tax with no longer working, minimum discount should be 25% if they are living alone.
  11. Uranus's avatar
    Author
    Thanks for the latest replies.
    To be clear, the person has no interest in working again.
    They are not entitled to benefits (and don't wish to claim anyway) due to household income etc

    I think the person has got all the info needed thanks to many of the helpful replies in this thread.
    Thanks again all.
  12. Timbonagasaki's avatar
    Moneyhelper (Formarly The Pensions Advisory Service) should be able to help. He'll be able to contribute into a pension and get tax relief back from the government even if he is not paying tax, however there will be limits to how much he can pay in.
    It's essentially free money, and a bit of a no brainer in my opinion. (edited)
    Uranus's avatar
    Author
    Thanks.
    The advice received was to check this page: gov.uk/pay…nce


    Still trying to figure out how you proactively pay, rather than retrorpective.
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