Protect your State Pension!

Your entitlement to a State Pension depends on two things:

  1. The amounts you’ve paid in National Insurance over the years.
  2. The accuracy of HMRC’s records of those payments.

The amounts you pay are easy to monitor, but the second is more tricky!

In this video we share some of the horror stories we’ve heard recently where HMRC’s records have been seriously lacking.

We’re also explaining how to check the accuracy of your HMRC record and what to do if it’s wrong…

(Transcript below.)

Transcript:

Hi, and welcome to another episode of BaranovTV, designed to demystify the world of accounts and tax, and to help your business grow.

A key focus for us is to make sure that clients hold onto as much of what they earn as possible. One of the ways that we do that is to ensure that you pay as little tax as you need to, but also that you take advantage of the many types of tax relief that are available too.

One area where we can’t help directly though, is by making sure that your National Insurance record is up to date and that it reflects the payments that you’ve made over your working life so that you can qualify for the right amount of State Pension when you get to that point.

The amount of State Pension that you’re entitled to depends very much on these records, held by HMRC, and making sure that they’re right.

We’ve recently heard some real horror stories that we really don’t want to be repeated amongst our client base!

To qualify for a State Pension, you need to have at least 10 years fully paid up at the point you start to draw, but 35 years to qualify for the full amount, which at the moment is £168 per week.

So, what can go wrong?

Well, the horror stories that we’ve heard include:

  1. An 80-year-old who hasn’t been able to get any State Pension, as the Revenue have no records of any contributions paid back in the 1950s and who was asked to provide those records as proof that the payments had been made.
  2. Twin girls with the same first initial now are at retirement age, and one has no National Insurance record at all. It turns out hers was deleted many years ago, having been incorrectly identified as a duplicate record because the address and the initials were the same. She’s had to reconstruct her entire employment record, aged 60 plus.
  3. Earlier this month, a Financial Times article reported that one of their writers has challenged HMRC’s claim not to have any records for 1988 / 89. She was asked to resubmit 30 year old records, and it was only after she put in an official complaint that the Revenue found the ‘missing’ information.
  4. And finally, Chris had a missing year, 2015 / 16, which is when we sold the last business. My record’s absolutely fine, but the Revenue said they had no record of his payments.

So, what can you do to avoid the problems?

Well first off, you need to check your State Pension online.

  1. Google ‘Check State Pension’ and follow the gov.uk link.
  2. You’ll need the same logins to access it as you use to access your personal Self Assessment account, but it’s not the same page that you normally go into.
  3. You’ll then see a forecast for the State Pension you’d get now and the amount that you’d get if you continued to pay in.
  4. If you follow the link to view your forecast, it will show you if you have any missing years and it will show that that year is not full.
  5. You can ‘view the details’ and then you can investigate from there.

So, why can’t we do this for you because it sounds as if it be much easier?

Well sadly, we’re not appointed to act as National Insurance agents for our clients, and bizarrely, there’s no way for us to be appointed!

If you do have problems when you Google ‘check your State Pension’, do get in touch, and we can chat you through and help where we can, but you actually need to be the ones that do it.

So, what do you do if there are years missing?

Well actually, the gov.uk website will talk you through it, and they will show you what they’re doing. For example, when Chris found that he had a year missing, it said that they were looking into it, although after six months of waiting and watching, it was still showing the same so he ended up having to call them, and actually, it’s now sorted.

Our recommendation is obviously to make sure that you’ve got enough tucked away that the State Pension actually is just an extra, because by the time we all get there, it probably won’t be a very significant amount. But, what you do want to be able to do is get out what you’re entitled to, whatever that figure may be at the point that you are actually eligible to claim.

Make this an annual task, do it towards the end of every summer because the Revenue can take time to process P60s.

You can pay extra to make up any missing years, but you can only go back up to six years to do that, and after that, the ability is gone. And also, it’s much easier to find documents or prove payments within a reasonable timescale than going back a number of years.

Those poor people looking back to the ’50s is just mad!

That’s it for this week’s episode; do make a note to go online and check the Revenue’s records, and I will see you very soon.

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