Tax & Accounting News

Calculating National Insurance contributions

27/05/2010

This April saw the first step towards harmonisation of the State Pension Age (SPA)  for men and women as the female retirement age began to rise.

For women born between April 6 and May 5 1950, their SPA will be 60 years and one month, for women born a month later it will be 60 years and two months, and so on, until the SPA for women eventually reaches 65, the same as the current age for men.

However, these regular changes could cause confusion for women who continue working beyond the SPA and their employers, since workers are no longer required to pay National Insurance (NI) after they reach that age. However, since the SPA for women will be changing every month, it may be difficult for employers to keep track of when they should stop payments.

Fortunately, the Department for Work and Pensions have created at online calculator, which can work out an employee’s SPA from their date of birth. Any firm which has employees approaching retirement age, who plan to continue to work, would be well advised to be prepared for these changes and ensure they calculate the correct date to stop paying NI.

The calculator is available at http://pensions.direct.gov.uk/en/state-pension-age-calculator/home.asp.