NI contribution on pension

Discussion in 'Armed Forces Pension Scheme' started by Tankiep, Apr 4, 2011.

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  1. as i'm paying tax on mil pension does anyone know if there is also a small NI contribution mixed up in that as well? Clearly it's not stated on yearly statement/forecast but saw comments on another website that tax deduction also includes this NI deduction, doesn't sound right!

    thanks
     
  2. No. Your pension is classed as earned income for tax purposes but not for NI purposes.

    What you will have seen that muddies the water is the budget proposal to merge tax and NI to give a combined rate of 32%. There was also a line which said that special arrangements will have to be made in relation to pensions as they do not attract NI. Imagine the uproar if they increased pensioners' liabilities by, effectively, 60%!
     
  3. Thanks for the reply. Didn't think it sounded right. Reason I asked is that a number of ex-pats I know in germany are sorting out their health insurance prior to retiring early ie they're in receipt of mil pension and are fully 'paid up' as regards NI contributions. The NHS and German health providers will cover them for 2 years but after that they'll have to pay for themselves. Clearly their thoughts were that if they were still paying NI on their pensions would they be able to get medical cover beyond the initial 2 years. Your answer has sorted that one out for them !!