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Revenue on defensive amid claims of overpaid NI

The Revenue has rejected accusations that it is encouraging people to pay extra National Insurance contributions to top up their basic state pension although they will lose their money when the White Paper reforms are enforced.

Under the current system, people who fail to pay enough NI contributions to qualify for the BSP can pay additional class 3 contributions to become eligible. The option is mainly taken up by women as only 49 per cent of women qualify for the basic state pension compared with 91 per cent of men.

Plans outlined in the Pensions White Paper to reduce the qualifying period for the BSP to 30 years for men and women could make extra contributions unnecessary for people who reach state pension age on or after April 6, 2010.

Standard Life head of pensions policy John Lawson says the Revenue should warn people, particularly women, to stop paying class 3 contributions if they have already accrued 30 years’ contributions or are likely to do so by retirement as the Revenue will not refund overpaid contributions.

Lawson says: “The Government should reward all those people who have paid class 3 contributions with an increased basic state pension if it transpires they had enough years to qualify for a full basic state pension without having to pay class 3 contributions.”

A Revenue spokesman says: “We do not encourage customers to make Class 3 payments. It is down to the customer to make an informed decision about what is best for their particular situation.”

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