The state pension is clearly a worthwhile thing to have, particularly for the self-employed who will receive a pension through the new ‘flat rate’ pension. However, there have been numerous changes to the qualification criteria over recent years and now may be a good time to check your entitlement.
One thing which is worth bearing in mind is that it is the individual’s obligation to keep track of their own entitlement and ensure that it is correct, although most people do not appreciate that. Keeping track of this over a working life is difficult but rectifying problems with the state pension at the point of retirement can be even more difficult, so a quick check of your position once every four or five years is time well spent.
Are you or have you been self-employed?
A recent case lays out some of the historic problems with the state pension. The taxpayer was both employed and self-employed between 1965 and 2013 when he retired. He was dissatisfied with his state pension on retirement and queried his NIC record. As a result, he was sent a full breakdown of the NIC paid during his career. He queried a number of matters on that breakdown, including the periods of nil payment in 1993/94 to 1996/97. The taxpayer appealed his NIC record from 1965 to 2013, on various grounds including:
- it was the obligation of HMRC to send him statements showing NIC due
- he was submitting income tax returns for the same period and the Inland Revenue and National Insurance Contributions Agency must have shared the information.
The Tribunal, in summary, held that the onus was on the taxpayer to have sorted things out during his working life and that he had limited ability to do anything at the point of retirement.
Potential Child Benefit trap
Child Benefit can pay a parent £20.70 a week for the first child and £13.70 a week for each additional child. However, if a person’s (or partner’s) income exceeds £60,000, then all of the Child Benefit will need to be repaid through an increase in tax liabilities of the higher earner. To avoid this, affected persons can elect not to receive the Child Benefit in the first place. However, this may mean for some ‘stay at home’ parents that they miss out on accruing entitlement to state pension. The best advice therefore is to fill in the Child Benefit form (it is available as an online form – search ‘child benefit form’ on the internet). The government also recommends completing the form but the detail is rather hidden in the eight pages of notes which are available with the online form!
The ability to check your position has improved markedly with the advent of the internet and your state pension can initially be checked at www.gov.uk/check-state-pension
So, don’t delay – get a pension forecast and if you believe it is incorrect please get in touch with us and we can consider your options.