minimum wage of £7.20 an hour do not apply to self employed.

21 Mar

london 10.12am 11.7C cloudy/sunshine monday 2016

i read in the metro newspaper today that the self employed wont be able to get that minimum wage that comes in april 1st for the over 25s. firms may employ the self employed to get round it. i heard also the new budget have abolished class 2 contributions of national insurance. before it self employed have to pay it, it is about £2.50 a week as well as the class 4. the class 2  is compulsory. and serves to give a record of your contributions. but with it being abolished they only have to pay class 4 contributions which is 8% on earnings from about £8000 a year to £40 odd thousand a year. above that it is 10%.

what i want to ask is how is govt going to track if a self employed have been contributing national insurance over his lifetime? if he earns less than that £8000 odd(8060) a year, he wont need to pay class 4, so will have no record of contributing to that 35yrs to get the full pension. those who never earn more than that minimum may never be able to access a pension at all. i suppose u could say it is fair, as they never contributed to their pension at all… whereas in the present system, anyone paying that class 2 , it used to be even cheaper than £2.50 a week, can get the full pension for a low fee, even though they never earn enough to pay class 4 . someone who earns a lot may be paying a huge amount and only get the same pension as that other person.

added. 7.40pm tuesday 22.3.16 well i got my answer about how if u are low paid and dont pay national insurance contributions how do u keep up your credits for the state pension. the answer is here.


Steve Webb replies: If you are a low-paid worker with one or more jobs, the two important numbers you need to know are £112 per week and £155 per week.

The figure of £155 per week is called the ‘Primary Threshold’ for National Insurance Contributions. Above this level of earnings you have to pay National Insurance Contributions (NICs) and you build up rights to contributory benefits such as the state pension, employment support allowance and jobseekers allowance.

Between £112 per week and £155 per week you do not have to pay any NICs, but you are credited into the system as if you had paid.

But if you earn less than £112 per week you neither pay NICs nor are credited into the system. If you fail to contribute for a significant number of years, you may find that you do not get a full state pension at retirement.

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it is a sign of a welfare state, that some people will be paying over the odds, whilst others gets it for free. it is something that those of us who like the idea of  a welfare state to provide basic cover accept, as part of the price of it.  it is important though to have a limit to the benefit each person can get,otherwise it can be abused. people should not object to a limit . otherwise u get families with 12kids,living in a huge council rent paid house, getting benefits that are worth  more than the income of any ordinary household with two parents and two kids working their tits off. limits are needed to stop people taking the mickey and abusing the system. 

added. 7.49pm tuesday 2016 dont go away there is more. i just heard from my friend about pension credit. it is to top up your income if u get a low state pension, because u have not contributed enough length of years, to make up to £155. a week. so when i heard that , i did a double take. so u dont contribute enough years and so perhaps your  state pension is maybe half, and you can claim pension credit which brings it up . if that is the case why do i need to get the full 35yrs contribution. no need. as when i retire i get the full pension anyway via pension credit. the only downside i can see is that u must not work anymore, because if u just earn more than £5 a week,that pension credit is immediately reduced, though pro rata or at one go i do not know. .

though of course, u could still earn up to the personal allowances and get that income tax free.

hmm, you can see the old really have it good in this country. no wonder so many of them eat too much, drink too much and get fat and suffer lots of medical problems, with stomachs full of medicines and a great strain on the national health;  and get bored out of their minds, while being a big drain on the treasury. 

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