The true story of NI autocredits
There’s yet another bizarre claim doing the rounds in Waspiland. Or, more correctly, among the hardline Back to 60 fringe of the broader women’s state pension movement. I try to ignore most of the ridiculous claims made by Back to 60 campaigners, because they aren’t going to listen to me and I will simply end up with a sore head and a very frayed temper. But this one is more complex – and confusing – than most, and it doesn’t only affect women. So it is worth explaining.
I can now announce a new scheme for part-time job release. It will apply to the same categories of older people who are willing to give up at least half their standard working week, so that someone else who is without a job can be taken on for the remaining half. The allowances will be paid at half the full-time rate. The scheme will take effect from 1 October and should provide part-time job opportunities for up to 40,000 more people who are at present unemployed.
Some 90,000 men between the ages of 60 and 65 now have to register at an unemployment benefit office if they wish to secure contribution credits to protect their pension rights when they reach 65. From April, they will no longer have to do this. Even if those concerned subsequently take up part-time or low-paid work on earnings which fall below the lower earnings limit for contributions, their pension entitlement will be fully safeguarded.
At the moment, we award National Insurance credits to men between the ages of 60 and 65 who don’t work and don’t pay National Insurance contributions. We do this to protect their basic State Pension entitlement. We will make similar arrangements for women from 2010, when their State Pension age begins to rise.
7.33. Since 1983, National Insurance credits have been automatically available to men to make up any deficiencies in their record in the five tax years before the year in which they reach state pension age. “Autocredits” were introduced alongside changes that meant that men were no longer required to be available for work as a condition for receiving benefit once they reached age 60 (ie. the age at which women become eligible for the state pension). Autocredits protect a man’s basic state pension position during these five years if he is not working and paying National Insurance or entitled to credits for other reasons such as registered unemployed, sick, or a carer.
7.34. When the Government published its plans for state pension age equalisation in 1993, the intention then was that as women’s pension age increased gradually to 65, autocredits would become available to them on the same basis as for men. This was in part to compensate for the increase in the number of years women would otherwise have to pay National Insurance contributions for in order to qualify for a full basic pension.
7.35. This approach has since been reviewed, for two reasons. Firstly, the qualifying age for Pension Credit (the income-related benefit currently payable to men and women at 60 without jobseeking conditions attached) is set to increase to 65 by 2020 in line with female state pension age. Men claiming Jobseeker’s Allowance or Employment and Support Allowance will no longer have the option of switching to Pension Credit in the run-up to state pension age and will continue to receive a credit through receipt of those benefits instead. Without the proposed change, autocredits would increasingly apply mainly to people who could afford not to work or claim benefit. Secondly, the reduction in the number of qualifying years needed for a full basic pension to 30 and the improvements in the crediting arrangements for carers under the measures introduced by the Pensions Act 2007 will mean that the need for autocredits to protect state pension entitlement will be significantly reduced. (Those who would have benefited from autocredits had they been available will still have the option of paying voluntary National Insurance contributions to make up “missing years”.)
7.36. This instrument amends the Credits Regulations to provide that autocredits will be available to men only for the tax years in which they have reached what would be pension age for a woman of the same age, up to and including the last tax year before the one in which they reach age 65. Men born on 6 October 1954 or later, who will reach both female pension age and their own state pension age in the same tax year, will not qualify for the credits.
Source: https://www.coppolacomment.com/2020/06/the-true-story-of-ni-autocredits.html
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