Guest guest90395 Posted March 1, 2015 Share Posted March 1, 2015 Hi, I have been looking into paying our national insurance contributions from Australia in case we end up moving back at any point. But I'm confused by the difference between class 2 and class 3 - which do we need to do if we want to maximise our pensions? Many thanks Julia Link to comment Share on other sites More sharing options...
mungbean Posted March 1, 2015 Share Posted March 1, 2015 I've been curious about this too, and whether it's even worth it, compared to putting that same money into your Super in Aus instead. (Assuming that you're working.) You can get a pension estimate from https://www.gov.uk/calculate-state-pension or an accurate statement of where you're at, given how many years of NI contributions you have, at https://www.gov.uk/state-pension-statement The UK govt recently increased by 5 years the number of NI contributions you have to put in to receive the full state pension, and the pensionable age has gone up too (I will have to wait until 67 for example)... there probably is going to be a lot more messing around with pensions in the next 10 years, so it's hard to know what is the best strategy. Link to comment Share on other sites More sharing options...
Marisawright Posted March 1, 2015 Share Posted March 1, 2015 I've been curious about this too, and whether it's even worth it, compared to putting that same money into your Super in Aus instead.. That's a no-brainer, surely. You have to pay only a small amount in NI contributions and for that, you'll get a pension until the day you die, which is indexed. Superannuation is just a form of compulsory savings, it doesn't give you a guaranteed pension. When you get to retirement age, your pension will depend on how much you have in your super fund. You'll have to decide how much money you can afford to take - if you get it wrong, the pension will run out before you die. Then you'd better hope you qualify for a government pension of some kind! Link to comment Share on other sites More sharing options...
mungbean Posted March 1, 2015 Share Posted March 1, 2015 That's a no-brainer, surely. You have to pay only a small amount in NI contributions and for that, you'll get a pension until the day you die, which is indexed. When I last looked at this the additional payments were coming to several hundred pounds for every year that I had missed in NI contributions. Not a small amount. I'm actually waiting for my detailed statement at the moment so I can make a proper decision on this, but UK pensions are only index-linked if you're resident in the UK AFAIK. Also UK CPI has been less than 1% for years now, whereas Australian Super funds can be getting returns of more than 10%. Link to comment Share on other sites More sharing options...
mungbean Posted March 1, 2015 Share Posted March 1, 2015 OK I'm doing the maths here, and point taken... even a few thousand paid now could be guaranteed to be worth much more later, if you live to a ripe old age. Link to comment Share on other sites More sharing options...
Guest guest90395 Posted March 1, 2015 Share Posted March 1, 2015 Ok so it sounds like I should be paying the contributions - does anyone know if it should be class 2 or 3? Link to comment Share on other sites More sharing options...
mungbean Posted March 1, 2015 Share Posted March 1, 2015 Depends whether you're self-employed or not? OK I just checked https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions ...I see what you mean. It's pretty confusing. And the difference is quite big: £143/year for Class 2, £722/year for Class 3. Link to comment Share on other sites More sharing options...
ramot Posted March 1, 2015 Share Posted March 1, 2015 Things have changed since I qualified for my state pension 10 years ago, but it made sense for me to pay in extra then. we did the maths, and the amount paid in extra, balanced against the extra I would receive, as long as I lived 2 years after 60, then I would be in profit. so it was the right thing to do then. I can't speak for now, as the age and conditions have changed, and no one knows what else will change, so you have to decide for yourself. Link to comment Share on other sites More sharing options...
Que Sera Sera Posted March 1, 2015 Share Posted March 1, 2015 It says on the website that your partner may be able to make extra payments on your behalf? I clocked up nearly 30 years before we left the UK. If my OH were to pay my NI contributions for a few more years, am I right in thinking this could be tax deductible here? Or would that only apply to an Aussie Super top up? Link to comment Share on other sites More sharing options...
mungbean Posted March 1, 2015 Share Posted March 1, 2015 https://www.gov.uk/voluntary-national-insurance-contributions/deadlines [if] You’re a man born after 5 April 1951 or a woman born after 5 April 1953 You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2017. no rush then! Link to comment Share on other sites More sharing options...
Marisawright Posted March 1, 2015 Share Posted March 1, 2015 OK I'm doing the maths here, and point taken... even a few thousand paid now could be guaranteed to be worth much more later, if you live to a ripe old age. That's exactly it. It doesn't matter what the CPI in the UK is right now, because what you pay doesn't have any direct bearing on how much pension you get. Whereas with super, you are completely reliant on your fund's ability to grow - and if you get a stock market crash at the wrong time, you're stuffed. Link to comment Share on other sites More sharing options...
Marisawright Posted March 1, 2015 Share Posted March 1, 2015 It says on the website that your partner may be able to make extra payments on your behalf? I clocked up nearly 30 years before we left the UK. If my OH were to pay my NI contributions for a few more years, am I right in thinking this could be tax deductible here? Or would that only apply to an Aussie Super top up? Not tax deductible as far as I'm aware. If you've got nearly 30 years, I'd be writing for a pension forecast, then you'll be able to calculate whether it's worth paying the extra. Link to comment Share on other sites More sharing options...
Marisawright Posted March 2, 2015 Share Posted March 2, 2015 https://www.gov.uk/voluntary-national-insurance-contributions/deadlines [if] You’re a man born after 5 April 1951 or a woman born after 5 April 1953 You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2017. no rush then! Oh yes there is! What you're missing is that if you don't pay by April 2019, the rate will go up - and they don't say by how much. Link to comment Share on other sites More sharing options...
mungbean Posted March 2, 2015 Share Posted March 2, 2015 Oh yes there is! What you're missing is that if you don't pay by April 2019, the rate will go up - and they don't say by how much. 4 years... not like we need to decide by the weekend, then. Link to comment Share on other sites More sharing options...
Marisawright Posted March 2, 2015 Share Posted March 2, 2015 4 years... not like we need to decide by the weekend, then. It's not an issue for you since you've only just arrived, but anyone who's been here for a while may already have missed the opportunity to catch up on some missed years. Link to comment Share on other sites More sharing options...
vickyplum Posted March 2, 2015 Share Posted March 2, 2015 Happy to see this thread, as I had noted on my list of things to do/think about, that I should start paying voluntary contributions when I get to Australia, but have heard conflicting views on the subject (and personal finance is something I struggle with at the best of times!). I have paid approx. 20 years of NI contributions already so don't have many more years - relatively speaking - to go until I reach the level of full entitlement - whatever that will be if/when I get to retire...! EDIT: you can request details of missing contributions or number of qualifying years, by filling in the info here: https://online.hmrc.gov.uk/shortforms/form/NIStatement?dept-name=&sub-dept-name=&location=40&origin=http://www.hmrc.gov.uk Link to comment Share on other sites More sharing options...
mungbean Posted March 2, 2015 Share Posted March 2, 2015 It's not an issue for you since you've only just arrived, but anyone who's been here for a while may already have missed the opportunity to catch up on some missed years. Well, I've already been out of the UK for 4 years actually, and have been trying to weigh this up for a while now. You don't actually miss the opportunity, full stop -- as I understand it you would just end paying a slightly higher rate. The rules on this seem to have been relaxed since I last looked, according to the updated gov.uk website... it used to be that you had up to 6 years to pay in arrears, now if you're lucky enough to be born after 1951 it looks like you can take even longer. I think we have to appreciate that pension arrangements etc. are all very individual, and that what's a sensible strategy for one person could be totally inappropriate for someone else. Link to comment Share on other sites More sharing options...
Gbye grey sky Posted March 2, 2015 Share Posted March 2, 2015 Happy to see this thread, as I had noted on my list of things to do/think about, that I should start paying voluntary contributions when I get to Australia, but have heard conflicting views on the subject (and personal finance is something I struggle with at the best of times!). I have paid approx. 20 years of NI contributions already so don't have many more years - relatively speaking - to go until I reach the level of full entitlement - whatever that will be if/when I get to retire...! Off topic I know so apologies but I couldn't help but note that it's getting really close for you now. It seems we have shadowed each other starting the 309/100 around the same time and we will be just a couple of months behind you - albeit off to Brisbane. I assume all the preparations are now fairly advanced for you now. Link to comment Share on other sites More sharing options...
vickyplum Posted March 2, 2015 Share Posted March 2, 2015 Off topic I know so apologies but I couldn't help but note that it's getting really close for you now. It seems we have shadowed each other starting the 309/100 around the same time and we will be just a couple of months behind you - albeit off to Brisbane. I assume all the preparations are now fairly advanced for you now. Hello @Gbye grey sky - yes it's getting close indeed! I have to admit that the whole process feels completely unreal and as if it will never happen. We're going to start packing soon, so I'm sure that will give me a bit of a reality check... I've got a big list of admin-type tasks that I need to do, which I'll make a start on mid-end March. Mostly tying up loose ends, closing things, changing addresses on the things that I'll be keeping etc... My partner has spoken a couple of shipping companies and we are currently undecided between shipping using half a container (20ft) or seeing if we can get under 200kg using air freight instead. And of course I am waiting patiently to hand in my notice! How about you? What plans have you made and still need to carry out? EDIT: and thank you for asking! Link to comment Share on other sites More sharing options...
Gbye grey sky Posted March 2, 2015 Share Posted March 2, 2015 Happy to see this thread, as I had noted on my list of things to do/think about, that I should start paying voluntary contributions when I get to Australia, but have heard conflicting views on the subject (and personal finance is something I struggle with at the best of times!). I have paid approx. 20 years of NI contributions already so don't have many more years - relatively speaking - to go until I reach the level of full entitlement - whatever that will be if/when I get to retire...! EDIT: you can request details of missing contributions or number of qualifying years, by filling in the info here: https://online.hmrc.gov.uk/shortforms/form/NIStatement?dept-name=&sub-dept-name=&location=40&origin=http://www.hmrc.gov.uk My OH is in a similar position to you with around 20 years or so contributions (I have the full amount as been paying contributions every year since 1977). If you are planning or considering one day returning to the UK in your retirement then topping up those contributions is, IMHO, a worthwhile investment as it will hopefully provide you with an index linked pension until you die. If, on the other hand, you spend your dotage in Australia then your state pension will be fixed from the time that you start to draw it and so will gradually erode in value. Topping up the contributions is therefore a less clear-cut choice. Link to comment Share on other sites More sharing options...
vickyplum Posted March 2, 2015 Share Posted March 2, 2015 My OH is in a similar position to you with around 20 years or so contributions (I have the full amount as been paying contributions every year since 1977). If you are planning or considering one day returning to the UK in your retirement then topping up those contributions is, IMHO, a worthwhile investment as it will hopefully provide you with an index linked pension until you die. If, on the other hand, you spend your dotage in Australia then your state pension will be fixed from the time that you start to draw it and so will gradually erode in value. Topping up the contributions is therefore a less clear-cut choice. Yes, that's the bit I struggle with. I have absolutely no idea if we will stay in Australia for the rest of our lives, or return to the UK, or do a bit of ping pong... 15+ years from now is something I have no clue on, whatsoever! Link to comment Share on other sites More sharing options...
Gbye grey sky Posted March 2, 2015 Share Posted March 2, 2015 Hello @Gbye grey sky - yes it's getting close indeed! I have to admit that the whole process feels completely unreal and as if it will never happen. We're going to start packing soon, so I'm sure that will give me a bit of a reality check... I've got a big list of admin-type tasks that I need to do, which I'll make a start on mid-end March. Mostly tying up loose ends, closing things, changing addresses on the things that I'll be keeping etc... My partner has spoken a couple of shipping companies and we are currently undecided between shipping using half a container (20ft) or seeing if we can get under 200kg using air freight instead. And of course I am waiting patiently to hand in my notice! How about you? What plans have you made and still need to carry out? EDIT: and thank you for asking! At the risk of hijacking the thread @vickyplum we have already had quotes from 3 shipping companies but we will need our own 20ft container as we are taking most of our stuff. Haven't really had the chance to review them properly yet as trying to work out the overall value for insurance purposes which we might be over-complicating. We told our employer a couple of weeks ago. In fact we work for the same medium-sized company and although in different arms of the business we were mindful of the business impact so felt they should have the necessary time to recruit replacements and for us to effect hand-overs to them. Our house has now gone on the market and the first viewings are set for tomorrow so we have been ridiculously busy doing all those odd-jobs that you continually put off and tarting the place up. We are trying to front-load jobs so that we can enjoy the spring and summer months as much as possible. It all seemed a bit artificial in 2014 and life felt a bit on-hold tbh but since Xmas we have got those wagons rolling and really looking forward to the whole adventure now. Link to comment Share on other sites More sharing options...
vickyplum Posted March 2, 2015 Share Posted March 2, 2015 I've looked at this again, as I haven't done so for a while. I assumed I would fall into the "Living abroad and employed or self-employed immediately before leaving the UK" category, whcih is only £2.75 per week. But they if you click through to the linked page via "living abroad" it kind of muddies the waters a bit. The text mentions living in Europe, living in countries that have reciprocal agreements with the UK, but where does Australia fall in all of this? Your situation: Living abroad and employed or self-employed immediately before leaving the UK Eligible to pay voluntary contributions: Only if at some point you’ve lived in the UK continuously for 3 years or paid 3 years worth of contributions - you must also have been employed or self-employed abroad during the gap you’re making contributions for Current rates: Class 2: £2.75 a week source: https://www.gov.uk/national-insurance-if-you-go-abroad Link to comment Share on other sites More sharing options...
vickyplum Posted March 2, 2015 Share Posted March 2, 2015 At the risk of hijacking the thread @vickyplum we have already had quotes from 3 shipping companies but we will need our own 20ft container as we are taking most of our stuff. Haven't really had the chance to review them properly yet as trying to work out the overall value for insurance purposes which we might be over-complicating. We told our employer a couple of weeks ago. In fact we work for the same medium-sized company and although in different arms of the business we were mindful of the business impact so felt they should have the necessary time to recruit replacements and for us to effect hand-overs to them. Our house has now gone on the market and the first viewings are set for tomorrow so we have been ridiculously busy doing all those odd-jobs that you continually put off and tarting the place up. We are trying to front-load jobs so that we can enjoy the spring and summer months as much as possible. It all seemed a bit artificial in 2014 and life felt a bit on-hold tbh but since Xmas we have got those wagons rolling and really looking forward to the whole adventure now. @Gbye grey sky - we extended our tenancy for two months, and today we confirmed our intention to leave at the end of April. It was planned all along but this is the first "official" thing we've done so far. Not that it took any effort but as you know, getting the house emptied out and ready to hand over/sell, is one of the larger tasks...! Our possessions are fairly lean but it's still a challenge to sift through everything, bin, donate, sell or pack as appropriate. I'm definitely paying more attention to certain threads on the forum now, and keeping my eyes open for recce/arrival reports, particularly for Sydney. I won't get ahead of myself but I'll be pleased when it's all done! It's been a long process of planning, applying, waiting, planning, waiting, spending money etc. Link to comment Share on other sites More sharing options...
BearnBob Posted March 2, 2015 Share Posted March 2, 2015 Folks, Am currently speaking to a pensions expert regrading my Teacher Pension where I have 26 years service to date. We don't know if we are moving short term or for good so will be interesting what advice he offers. We have paid a fee up front so it isn't as if he is on comission to move our money. With regards to state pension I had assumed it would be frozen at the point that I leave the UK - five weeks to go. Am I reading this right that I could pay Class 2 contributions of £700 approximately a year to maintain my UK state pension and that it would therefore increase untilI reach retirement age? The joys of financial planning Bear Link to comment Share on other sites More sharing options...
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