What is Pension?
The State Pension is a regular income paid by the UK Government to people who have reached the State Pension age.
The State Pension is intended to ensure everyone has a basic amount of money to support them in their old age. State Pensions are funded by National Insurance (NI) contributions. You will receive a State Pension in your own right ( i.e. regardless of whether you’re married or not), and what you'll receive doesn’t depend on how much you have earned but on your own NI record. To get the full State Pension, you need to have 35 years’ worth of NI contributions or credits. (https://www.pensionsadvisoryservice.org.uk/about-pensions/the-state-pension).
A pension is a fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement from work in the form of periodic payments. In simple terms, a pension scheme is just a type of long term savings plan to help you save money for later life.
A pension created by an employer for the benefit of an employee is commonly referred to as an occupational or employer pension. This is paid in addition to the state pension.
Establish your status with HMRC.
What is NI (National Insurance)
National Insurance (NI) is a system of taxes paid by workers and employers, used primarily to fund state benefits. (https://en.wikipedia.org/wiki/National_Insurance )
You pay National Insurance contributions to qualify for state benefits, including the State Pension. You pay National Insurance if you’re 16 or over and either:
Class 1: Employees earning more than £157 a week and under State Pension age - they’re automatically deducted by your employer
Class 2: Self-employed people - you don’t have to pay if you earn less than £6,025 a year (but you can choose to pay voluntary contributions)
Class 3: Voluntary contributions - you can pay them to fill or avoid gaps in your National Insurance record
Class 4: Self-employed people earning profits over £8,164 a year
Establish your status with HMRC
Are you an employee or a self-employed person?
https://www.gov.uk/employment-status
https://www.gov.uk/employment-status/selfemployed-contractor
Check your status by phone
at https://www.gov.uk/government/organisations/hm-revenue-customs/contact/statuscustomer-service-team
Check your status online
https://www.gov.uk/guidance/check-employment-status-for-tax
Ministers of religion who live on fees or gifts can indeed be self-employed. “Ministers of religion who do not get a salary or stipend but live on fees or gifts, for example, ministers of the Pentecostal Church, are self-employed earners liable for Class 2 and Class 4 social security contributions. Their assessment should be as for sole traders. Business expenses claimed may include expenses of running the home such as heating, lighting, domestic help or garden maintenance."
Ministers who get a salary or stipend are employed earners, and the church will deduct the NI and taxes and pay the Government
Are you an Employee or a Self-employed person?
State Pension and NI Contribution
In April 2016, the old Basic State Pension and State Second Pension were replaced with a
single-tier State Pension. The new State Pension arrangement will only apply to members
reaching their State Pension Age from April 2016 onwards – existing State Pensions will be
unaffected. The maximum entitlement under the new state pension is currently £155.65 per
week for a single person. To receive the full amount of State Pension from your State Pension
Age, you will need 35 qualifying years, earned by either making National Insurance
contributions or receiving National Insurance credits. If you have 10 or more qualifying years,
you will receive some level of the new state pension.
https://www.gov.uk/guidance/planning-for-retirement-if-youre-aged-50-or-over
https://www.gov.uk/government/news/eight-things-you-need-to-know-about-pensions
Check your state pensionable age
Establish Accumlated State Pension Years
Gaps in your NI contribution
Find how to pay for the gaps(up to 6 years) and do a
financial appraisal, is it worth it?
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntarycontributions
Action Points - Going Forward
A. Register as self-employed if your church does not class you as an employee,
B. Register for self-assessment tax form and NI contributions and
C. Complete your self-assessment form annually online,
D. Pay the NI. Call them to find out how much NI you owe, they may tell you, it is voluntary, still pay it
You will need a name and password from HMRC
Register as self-employed
https://www.gov.uk/log-in-file-self-assessment-tax-return
Register for self-assessment and NI contributions
https://online.hmrc.gov.uk/shortforms/form/CWF1ST?dept-name=CWF1&sub-dep
A layman’s guide
http://www.litrg.org.uk/tax-guides/tax-basics/do-i-need-complete-tax-return
Ministers of religion and their allowable expenses
https://www.gov.uk/government/publications/self-assessment-ministers-of-religion-sa102m
Pension for the Self-Employed
Company pension for the self-employed
There is a government scheme – NEST (National
employment saving trust)
https://www.nestpensions.org.uk/schemeweb/NestWeb/public/members/contents/joining-nest.html
Or do your own with other private providers, e.g.
https://genistar.co.uk/what-we-do
If you need to speak to a consultant regarding further details on private pension, please complete this form:
https://forms.gle/zA6qDxnU8iut3B989