Low earners risk missing out on state pension qualifying year despite exclusivity clauses ban

The government has widened a ban on exclusivity causes for low-income workers to allow them to work multiple jobs and boost their income, although Interactive Investor (II) has raised concerns over low-paid workers' state pensions.

Under the changes, gig-economy and part-time workers could see their total take-home pay from multiple jobs rise above the lower earnings limit for National Insurance, which is £123 a week, or £6,396 a year.

However, II explained that because National Insurance is calculated per job rather than on total income earned, they would still not receive a qualifying year towards their state pension entitlement as a result of earning above the limit, if each individual job is less than the limit.

Savers need 35 qualifying years, either through employment paying above £123 a week or through National Insurance credits, to get the full state pension when they retire, and at least 10 qualifying years to get any state pension.

Commenting on the changes, II head of pensions and savings, Becky O’Connor, said: "Many workers with multiple jobs that each pay less than £123 a week could be aggrieved to find their hard work still does not contribute to their National Insurance record, despite their overall earnings being high enough to qualify if NI was calculated on total income.

“While their total income across all jobs will be considered for calculating their income tax liability, it doesn’t work that way for National Insurance, which is calculated by individual employers.

“If workers are eligible for National Insurance credits for other reasons, such as looking after children, then they can build up qualifying years this way, despite earning less than the lower earnings limit.”

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