State pension may be impacted due to key July change – National Insurance | Personal Finance | Finance
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The major change set to occur in just one month relates to National Insurance contributions, which tie in to the state pension. From July onwards, the National Insurance contribution threshold is set to rise.
It will increase by £3,000 to a total of £12,570.
The rise has been welcomed, as it means employees will keep more of their earnings before tax kicks in.
However, it could have long term impacts on the state pension, according to one expert.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, has issued a warning to those earning less than £12,570.
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She said: “Ordinarily a worker should receive an NI credit even if they earn below the threshold as long as they have earnings of more than £120 per week or £6,240 per year.
“However, it is worth checking to make sure this is the case.
“It is vital people worried they may no longer be getting National Insurance credits check to see what benefits they are entitled to, so these credits can be made.”
The Government website suggests people may be able to pay voluntary contributions to avoid gaps in their record.
However, this can only be achieved if a person is eligible to do so.
Individuals can usually only pay for gaps in their National Insurance record from the past six years, but there are some exceptions.
Men born after April 5, 1951 and women born after April 5, 1953 have temporary reprieve.
The Government states: “You have until April 5, 2023 to pay voluntary contributions to make up for gaps between tax years April 2006 and April 2016 if you are eligible.
“After April 5, 2023 you’ll only be able to pay for voluntary contributions for the past six years.”
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