PART-TIME WORK AND NI
If you are one of the eight million people working part-time you may be missing
out on valuable rights to a pension and other benefits.
If your part-time job pays less than £109 a week then you will not
be building up a National Insurance record and that could mean a lower state
pension or none at all when you reach pension age.
Even if you do more than one part-time job but they all pay you
less than £109 your National Insurance record will still remain blank. For
example, if you work 16 hours in one job on minimum wage you will earn £99 a
week. That is below the £109 limit so NI is recorded by your name. If you take
on another part-time job – perhaps also 16 hours with another employer also on
£6.19 an hour – you earn another £99 a week. But you will not get NI for that
job either. Add a third 16 hours a week job with another firm and still no NI
will be recorded for you.
Altogether you will be working 48 hours – which is certainly
full-time! – and earning £297 a week, around £15,500 a year, but you will still
not be building up any National Insurance record. If you earned that in one job
you would be paying NI and building up rights to a state pension. If you had one
job on £297 a week you would pay £3.55 NI and build up rights to a pension and
to benefits such as Jobseeker’s Allowance for the first six months if you lose
your job. But as a multiple part-timer you do not.
The odd thing is that the Revenue will add together earnings form
several jobs and tax you on the full £297. But it keeps them separate for NI and
if all of them are below the £109 limit no NI is recorded for you.
There are three things you can do. If you have multiple part-time
jobs, try to
make sure at least one of them pays you £109 a week or more. At that level you
do not pay NI contributions but they are credited to you so you build up rights
to a pension and other benefits.
Second, if you cannot get at least one job at that level of pay
then you could consider paying voluntary contributions. They are called Class 3
contributions and are £13.55 a week. That may seem very expensive – you would
have to earn £715 a week to pay regular NI at that rate. But it can be worth it
to buy you a year of state pension if otherwise you would be short.
Third, things are cheaper for a self-employed person. Your NI
contributions – called Class 2 – cost just £2.70 a week but earn the same rights
to a state pension (but not to benefits if you cannot work). You do not have to
pay these if you earn less than £5725 a year. But you can if you want and it may
be worth doing so.
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