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Individuals may also make voluntary contributions, in order to fill a gap in their contributions record and thus protect their entitlement to benefits. Contributions are collected by HM Revenue and Customs (HMRC) through the PAYE system, along with Income Tax and repayments of Student Loans and Postgraduate Loans.
One key feature of the current scheme (dating from 2015) is that members pay no employee contribution, with the pension being entirely funded from the public purse. Each year a scheme member accumulates 1/47th of their salary, with a retirement age of 60. The annual pension payment increases each year in line with the Consumer Price Index. [35]
There was an "upper earning limit" of about seven times the lower earning limit, beyond which earnings were disregarded for NI contributions and calculation of SERPS pensions. Under the Social Security Act 1986 the target SERPS pension was reduced from twenty five to twenty per cent of average earnings between the two limits. Pensions earned ...
The HMRC rules allow for a greater range of investments to be held than personal pension schemes, notably equities and property. Rules for contributions, benefit withdrawal etc. are the same as for other personal pension schemes. Another subset of this type of pension is the stakeholder pension scheme.
NICs are payable by employees, employers and the self-employed and in the 2010–2011 tax year £96.5 billion was raised, 21.5 per cent of the total collected by HMRC. [69] Employees and employers pay contributions according to a complex classification based on employment type and income.
New-style (contribution-based) Jobseeker's Allowance (JSA(C)) entitlement is based on Class 1 National Insurance contributions in the two complete tax years preceding the benefit year of claim. This allowance is paid regardless of assets; [ 37 ] however, any personal or occupational pension over £50 a week would result in deductions.
His Majesty's Revenue and Customs (commonly HM Revenue and Customs, or HMRC) [4] [5] is a non-ministerial department of the UK government responsible for the collection of taxes, the payment of some forms of state support, the administration of other regulatory regimes including the national minimum wage and the issuance of national insurance numbers.
A QROPS cannot allow purchases of residential property or allow access before the British pension age. So, HMRC's QROPS list published on 19 May 2015 included no Kiwisaver schemes and consequently a drastically reduced New Zealand list. The changes introduced by HMRC April 2015 had a dramatic effect on many QROPS jurisdictions.