Author Topic: gaming the state pension system? (UK)  (Read 1535 times)

mohawkbrah

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gaming the state pension system? (UK)
« on: November 30, 2017, 11:24:05 PM »
so to qualify for the full state pension you have to have 30 qualifying years of paying national insurance

The minimum amount to earn weekly in order to qualify but not pay any actual national insurance is between 113-157 where as after 157 a week you pay 12% on earnings up to 883 then 3% after

 So could you technically just work low paying or low hour jobs while semi-retired till you're satisfied with how many years you qualify for and then get full state pension as well for later on? This way you avoided paying anything into the system at all

That can't be right surely?

2Cent

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Re: gaming the state pension system? (UK)
« Reply #1 on: December 01, 2017, 08:21:39 AM »
Is there no factor of savings/investment income that gets added to your income?

Playing with Fire UK

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Re: gaming the state pension system? (UK)
« Reply #2 on: December 01, 2017, 09:16:48 AM »
Hey mohawkbrah, that's how the system works, but is that really what you want to optimise? Not a lot of employers are going to be jumping to employ you for a handful of hours, so that you can game the state pension system.

You could also buy NI contributions if you were self-employed. They are getting more expensive but the test for being self-employed is fairly lax.

dreams_and_discoveries

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Re: gaming the state pension system? (UK)
« Reply #3 on: December 02, 2017, 09:43:32 AM »
Yes, we've got a progressive system of national insurance (and therefore benefits/state pension) as well as for income tax.  Why are you so determined to contribute as little as possible and get the most out? You also get NI credits for signing on if you want to go full on gamicifation.

Call me old fashioned, but what's wrong with a bit of hard work and contributing to society?

Would you not be happier overall finding a job that challenges you and enjoy? Or perhaps studying for a while? Or experiencing life in a different part of the country?

shelivesthedream

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Re: gaming the state pension system? (UK)
« Reply #4 on: December 03, 2017, 12:42:15 AM »
If you really want to "optimise"/screw over the system, just get fired and sign on for Jobseeker's Allowance. Your new full time job will be filling in job applications but never getting hired, but you won't pay a penny for your NI credits.

life_travel

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Re: gaming the state pension system? (UK)
« Reply #5 on: December 03, 2017, 06:40:10 AM »
Not from UK but I know that you are very young and with MANY years before pension age, I'll be very careful about not saving much in case the system gets changed /abolished in the next 30-40 years. Just my 2 cents :)

MrsPete

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Re: gaming the state pension system? (UK)
« Reply #6 on: December 04, 2017, 06:23:38 PM »
I'm not from the UK, but my pension is based upon two separate factors:  My salary AND my years of service. 

Example:  Say you have two people who start with the school system on the same day and retire on the same day (both with 30 full years) ... but one of them is a cafeteria lady and earns $10-12 her entire career, while the other begins as a teacher and works her way up to principal, earning close to 100K by the end.  They'd both get a pension ... but the cafeteria lady's pension would be significantly lower (just as her salary was significantly lower for her whole career). 

Having said that, it IS possible to make a few choices that optimize the pension:

- Never use a sick day.  I can use my sick days to bring me up to 30 years service (at any age).  I'm not sure how early you could retire if you literally never used a sick day, but at the moment I have almost two years' worth of sick days.
- Depending upon your marital status and your own health, you might choose maximum benefits for yourself or survivor's benefits. 
- If you have a spouse or other family member who works for the state and has a large number of sick days, it might be possible for that person to transfer some /all to you. 
- If you've taken time off for military service, maternity leave, or a few other specifics, you might have the option of "buying back" that time towards your years of service. 

And, of course, I'm talking about benefits in my American state.  I could be completely off topic. 

cerat0n1a

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Re: gaming the state pension system? (UK)
« Reply #7 on: December 04, 2017, 11:53:53 PM »
And, of course, I'm talking about benefits in my American state.  I could be completely off topic.

You would be in this particular case. National Insurance is effectively an extra tax that is paid only on income from working rather than from "unearned" sources, which is nominally paid into a pot of money that funds unemployment benefit and state pension (state here means national government, not local government as it does in the US.) In practice, the cost of those benefits is far more than the amount raised by national insurance. The amount you get out is unrelated to the amount you put in, except that in order to get a pension from the government at age 65, there is a calculation based on how many years you have been paying into the scheme, that determines your weekly amount. For some people who have not paid in for enough years, it may be worthwhile making some voluntary payments, or being "self employed" for a few years while actually RE, in order to qualify for a bigger amount later. What mohawkbrah is talking about is taking a part-time, minimum wage job and thereby not earning enough to be required to pay at all, which seems to me an odd way to try to optimize things.

Sick days and maternity also work very differently here. There is no concept of a person having a specific number of sick days. People are not expected to work if they're ill (except where employers are operating at the edge of the law) and you wouldn't lose any entitlements through taking a year's (paid) maternity leave.

shelivesthedream

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Re: gaming the state pension system? (UK)
« Reply #8 on: December 05, 2017, 03:14:48 AM »
Mohawkbrah, if you want to post a UK-specific question I recommend posting it in the UK Tax Discussion subforum - it's turned into a general UK-specific subforum. We do get the odd American wandering in by accident, but it seems to me like most of the UK users I am aware of hang out there, so you're likely to get enough knowledgeable eyes on whatever it is you're asking - in the general subfora a UK-specific question can get a bit lost in all the other chat.

https://forum.mrmoneymustache.com/uk-tax-discussion/