Her Majesty’s Revenue and Customs has spoken out, asking people to stop paying Class 3 Voluntary National Insurance Contributions.
The reason for the statement is that State Pensions are set to change from 6 April 2010 and the number of qualifying years needed for a full State Pension reduces.
At the moment a man needs 44 qualifying years and a woman needs 39 to be entitled to a full State Pension. The proposal is to drop these to 30 for both men and women.
The only problem is that by delaying voluntary payments until after the proposed new rules come in could be costly. This would be the case if the new rules were rejected and the need to pay voluntary contributions arose again. The Revenue did say the cost of making those voluntary contributions would rise if the new State Pension proposals did not come in.
Our view
It is never simple with the Revenue. They also said that if people continue to make voluntary payments and they then become unnecessary because the individual paying them already had sufficient contributions, refunds would be hard to get hold of.
We, like many others in the industry believe that the proposed State Pension changes will be effected. It is therefore essential that anyone looking to make voluntary National Insurance contributions to make up their years seeks independent financial advice.