self employed N I C no benefit to payee at retirement

[gasmick2]

Hi after being in business since 1972 and paying all the demands in tax etc I reached retirement age and decided to claim my pension and work part time as an when i wanted to. That was 3 years ago.

My brother was due for retirement and had his forecast and I was amazed how much more he will get per month than me even though he has spent half his life out of work and dossing about on incapacity benefits for years. It amounts to £160 per month more the me
I have been in touch with the D W P and they tell me as I was self employed I will only get bog standard state pension with no extras.

I asked where all the money I paid at the end of the year in N I C goes and she told me it is not linked to any benefits like extra pension etc so i ask where does it go then ????? she did not know

Then why is it called NATIONAL INSURANCE CONTRIBUTIONS ????? another blank
No one seems to know what it was intoduced for, i certainly dont we just by law had to pay it.
By the way as my brother was on incapacity benefits for a few years
i entitles him to extra state pension about £30 per month for life
What sort of message does that send to people who do not want to work
they will be amongs the well off pensioners at this rate
I am goin to write to my M P tp see if he can explain to me why not 1 %
of all the money i paid in has benefitted me ??? the system just seems unfair
So chaps invest your profits in property or something that will build up a pension for you
mick

 

[maltaron]

Your correct in saying that it aint fair. I was self employed for 30 years and paid my normal stamp plus the extra NI percentage on profits but now retired on basic pension only, and due to the useless politicians and greedy banks a good chunk of the private pension went awal and the pension pot left was less than I paid in, so all the interest and some capital vanished. You are so right, we are all mugs for bothering to work.

 

[JohnD]

Fair? Fair?

remember though that if you work for an employer, there are personal NICs plus Employer's NICs (uncapped, and 12% of the gross last time I looked)

How does self-employed NICs compare to the total of Employee's + Employer's NICs?

Sadly it may be too late for you now, but when I was in business on my own, I had some of my revenue paid into a Personal Pension instead of to me as earnings. Since it is not earnings it is free of income tax and NI, so quite a good deal.

 

[RedHerring]

And for anyone considering a SIPP the government contribute an additional 25% to your SIPP.

 

[JohnD]

This is if you pay it yourself out of taxable income. Contributions by the firm do not get a tax rebate (because they haven't been taxed)

In round terms, contributions into a pension are tax-free, but income withdrawn from a pension is taxable.

Most people get a benefit from this, though, because they are paying tax at a higher rate when working than when they become pensioners, or a greater proportion of their pension is within their allowance than when they were working.

If you are on very low earings, your contributions to a pension get the tax rebate, even if you do not actually pay much tax. this is very good for those on low incomes who are able to put a bit aside.

 

[jondecs]

Steer clear of with profits. When I went S/E in 1984 I was conned into setting up a £50 p/m ppp. its gone up and down but the last three yrs have sent my pot down and worse when the 22p tax was reduced to 20 p this meant i was paying extra £12 p/m to stay static..(it all went in a black hole anyhow )
Soo last yr I said cobblers I got 5 yrs to go .. the annuity rates are useless. and worse for me because I gave up smoking three yrs ago, and as I live down sarf, I get less anyway... All that 20% tax relief is going in charges ie bonuses to fat cats.. So what Im left with is a 51k pot which might give me a single life annuity of £2,300

Luckily I saved more in isa's etc than this pensions ****e In less time too and without wasting tax payers relief... Wish to hell I'd put all that pension payments into property Ahh well hindsight..

 

[big-all]

heeelllooo gasmick hows it going
i am sorry to hear about your plight not nice at all
i could be wrong i often am but as far as i remember the basic principal off self employment hasnt realy changed over the years
as in you get the tax benefits because you have to look after your own holidays sickness and pensions !!
if i am wrong please forgive me for misunderstanding

its part off normal good houskeeping to to check your responcibilitys and make provisions accordingly

the national insurance stamp goes towards healthcare unemployment and basic pension provisions eg povery level pension

 

[gasmick2]

Thanks for all the replies
Big All ///
Self employment did have a lot of rewards i suppose over the years and in 1975 i deciced to take out a pension for my retirement that was £22 per month index linked
over the years with the projections at the time and with increase in payments it should have given me a £15.000 a year pension
but owing to 2 recessions like others my pot was more than halved
during that time i moved house and linked my mortgage to my pension
so the cash lump sum should have paid it off at that time it was £16.000 whowever .i had to alter my retirement age to 68 and double the payments but luck was not on my side and i was struck down with lung cancer that was in 1985 after having a major op to have 2 parts of my lung removed, i returned to work the cancer returned in 1995 and had to have the rest of my lung out
With this going on my pension had to be frozen i was off work for almost 3 years on £42 per week because i was self employed
when i started back i could not afford the monthly payments
so it was left in a frozen state so as it came to retirerment time my fund only managed after a small cash lump sum to pay me £102 per month. So i did try to make my retirement better financially
but it was not to be but i am still here and have had further treatment for tumors on my wind pipe i have learnt how to live withing your means and we do ok.
I was not moaning about things
i was just curious as to where all my payments went to

mick

 

[big-all]

life has rather conspired against you i hope you are keeping well ands enjoy your life to the full as best you can on the sumnptuous pension

you seem to have taken all reasonable precations and measures towards your pension so i appologise for assuming to much

can you not claim the means tested part to bring you up to minimum pension

gov uk or direct gov are great sources off information
http://www.direct.gov.uk/en/AdvancedSearch/Searchresults/index.htm?fullText=self+employed+pensions

 

[n-hatton]

Mick.

Only just seen your post, and therefore late to the thread.

You have all my sympathies. It makes me shudder to think about any retirement and what finances I'll end up with!

I'm currently a single person operating as a Ltd company - a hangover from old days of being an IT contractor. But with my average turnover now as a multi-trade I feel I pay more to an accountant in fees than I would in NICs and PAYE as self-employed. Considering changing, but always wonder what paying the NICs would give me - as you seem to say (and what I feel) - NOTHING!

I still do have my own personal pension on the go, but like everyone else, seeing it drop in value and failing to deliver - funny, just like my much promised endowment!

I often feel we're all being conned. And to hear you're lay-about brother has better provisions..... makes you want to march on Downing Street.