Will I get a Basic State PensionPosted 2018 by Chris Davies
Many of our director/shareholders quite legitimately take their remuneration in the form of a small salary and the remainder in dividends.
In most cases this avoids expensive National insurance charges which can be 12% for the employee and a further 13.8% for the employer.
But I am often asked if I am not paying any National Insurance how will I get the Basic State Pension?
The answer is that for NIC purposes there is both a Lower Earnings Limit (LEL) and a Primary Threshold (PT). as at the time of writing the LEL is £503 per month and the PT is £702 per month.
National insurance contributions are only paid once the salary exceeds the PT. However, between the PT and the LEL employees do not pay National Insurance but they get the benefits of paying. There is therefore a lot to be said for taking a salary between the LEL and the PT as Basic State Pension rights are accrued at no cost.
Of course if you have any concerns about your State Pension entitlement this can always be checked by completing your information at https://www.gov.uk/check-state-pension