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Topping up NIC for UK state pension from Aus


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OK so I've got my letter from HMRC telling me I've got 25 qualifying years of NI up to 05/04/2015. Figures below are UK pounds if no symbol.

 

They say I can pay 9 years back (2006/7 - 2014/15) at 52 x 13.25 per week (some years slightly less) so around 700 per year cost. Which I'm thinking may be worth it.

 

Doesn't actually tell me if these are class 2 or 3, but if I tell them about employment since 2006 I may be able to pay cheaper class 2 - so I'm inferring the 13.25 per week is class 3... so if I tell them the history I could end up paying less?

 

So I go on their calculator, and it tells me that with 25 years, from age 67 (I am now 49) I 'may' get 115.95 per week. So far so good. I increase that to 30 years and it gives me the same answer, 115.95.... but the calculator is using the current state pension system, not the new one from April 2016 I would get in 2033.

 

Any idea how much more per week I would actually get?

 

The other issue is that I'm thinking we as a couple can receive $284 (around 150 UKP) per *fortnight* from the Aus pension before losing 50c in the $, but I guess maximising the UK pension is still better? The new asset test of $375,000 won't affect us, we will be well below.

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Hi

 

Yes these are class 3 rates, definitely apply for class 2, much much cheaper at around 140GBP per year currently.

 

The current full basic state pension is 30 years and pays around 115GBP pw, so 25 years would give around 95.45GBP pw(83%).

 

Regards the Oz State Pension, this is means tested under the income and assets test so whichever gives the lower result is what is paid. There are thresholds for both, you have pointed out the assets test and the income test lower threshold is $284 pf and upper is $2,878 pf for couples.

 

Also the Pensions may kick in at different times, in my experience paying class 2 seems to be very worthwhile for most people.

 

(this is a very quick response as I have an appointment now) :)

Edited by Andrew from Vista Financial
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  • 3 months later...
  • 1 month later...

The other issue is that I'm thinking we as a couple can receive $284 (around 150 UKP) per *fortnight* from the Aus pension before losing 50c in the $, but I guess maximising the UK pension is still better? The new asset test of $375,000 won't affect us, we will be well below.

 

Centrelink will take your UK pension into account when working out how much Aussie pension to pay - so some people say it's not worth boosting the UK pension because all it will do is reduce your Aussie one!

 

However, you also have to remember that the Aussie pension is means-tested, so it could still be worth boosting your UK pension. For me, it's definitely worth it because I won't get the full Aussie pension for several years after retirement due to my assets - whereas I will get my UK pension straight away.

 

You can see how it would affect your Australian pension by using this calculator:

http://yourpension.com.au/APCalc/index.html

 

...and do notice that your superannuation is also an asset, a lot of people assume it's not.

Edited by Marisawright
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  • 1 month later...

I've heard that it's possible to claim NIC credit for years worked in Aus prior to 2001 (not sure if I've got the year correct) due to the two way agreement at the time. Does anyone know how to apply this? I have a statement from National Insurance and no allowance has been made for these years.

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Going by the OP's post, he had 25 years paid and could pay back an extra 9 years....making 34 years in total.

Given that the "current" state UK pension stops counting for inputs at 30 years, is there any point paying more than 30 years contributions at this point?

 

I'm assuming that the UK will probably raise the NI requirement to +30 years, but we don't know for sure yet?

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I've heard that it's possible to claim NIC credit for years worked in Aus prior to 2001 (not sure if I've got the year correct) due to the two way agreement at the time. Does anyone know how to apply this? I have a statement from National Insurance and no allowance has been made for these years.

 

You can only claim your Australian years if you are living permanently in the UK.

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Personally I would not pay the extra NIC as you will loose from your Centrelink pension if you are entitled to one Plus once you claim your UK pension it's frozen if you are living in Oz there are no annual increases for cost of living index

 

That makes sense on the surface, but a lot depends on your financial situation. In my case, I have enough assets that I won't be entitled to much Aussie pension for several years after retirement age. Whereas I will get my UK pension from the moment I reach that age. So even in those few years, I will get enough UK pension to make it worth paying the extra.

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  • 1 month later...

I asked the nice people at HMRC about this and they kindly sent me a letter stating I have 29 years of NI contributions, however, as of 6th April 2016 I "only" need 10 years of contributions as I won't reach pensionable age until after 6th April 2016. They don't expand upon what level of pension I will receive or whether it is worth me paying the extra year to hit the 30 years prior to the 6th April deadline? Does anyone know whether paying the Class 2 contributions for a year is worth me doing???

Apologies if I've missed something on another thread!

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I asked the nice people at HMRC about this and they kindly sent me a letter stating I have 29 years of NI contributions, however, as of 6th April 2016 I "only" need 10 years of contributions as I won't reach pensionable age until after 6th April 2016. They don't expand upon what level of pension I will receive or whether it is worth me paying the extra year to hit the 30 years prior to the 6th April deadline? Does anyone know whether paying the Class 2 contributions for a year is worth me doing???

Apologies if I've missed something on another thread!

 

Could that be 10 years of contributions required to get "any" pension, rather than the full amount?

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That was sort of my question - what the letter says is "To get the new State Pension you will need at least 10 qualifying years on your NI contribution record when you reach State Pension age"

This seems to suggest that if I pay the extra year I'll get the full pension (whatever that is) but I didn't want to throw money at HMRC if I'm not going to get anything in return???

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it's 30 years for full state pension now, so you'd miss out on 1/30th if you stay at 29 years. Not a huge amount under current rules.

 

What i can't find out is if it rises to 35years for a full pension after April 2016, can you then do 6 years backpay to make it up to "full" again.

Will they change the rules, or the cost and ability to pay Class 2 from abroad. Questions...risk.

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I asked the nice people at HMRC about this and they kindly sent me a letter stating I have 29 years of NI contributions, however, as of 6th April 2016 I "only" need 10 years of contributions as I won't reach pensionable age until after 6th April 2016. They don't expand upon what level of pension I will receive or whether it is worth me paying the extra year to hit the 30 years prior to the 6th April deadline? Does anyone know whether paying the Class 2 contributions for a year is worth me doing???

 

The 10 years is the minimum to get any kind of pension at all. You're currently 1 year's contributions short of getting the full pension. What you need to do is

 

- Ask for a PENSION FORECAST, and then they'll tell you exactly how much you'll get.

- Calculate the difference between that and the full pension.

- Look at how much it would cost you to back-pay a year's contribution.

- Calculate how long it will take for the extra pension to pay back that extra contribution.

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  • 3 years later...
On 04/06/2015 at 09:56, Andrew from Vista Financial said:

Hi

 

Yes these are class 3 rates, definitely apply for class 2, much much cheaper at around 140GBP per year currently.

 

The current full basic state pension is 30 years and pays around 115GBP pw, so 25 years would give around 95.45GBP pw(83%).

 

Regards the Oz State Pension, this is means tested under the income and assets test so whichever gives the lower result is what is paid. There are thresholds for both, you have pointed out the assets test and the income test lower threshold is $284 pf and upper is $2,878 pf for couples.

 

Also the Pensions may kick in at different times, in my experience paying class 2 seems to be very worthwhile for most people.

:)

Hi, Andrew

Sorry to resurrect an old thread, but I was sent a letter in 2015 giving details of repaying past NI years at Class 2 (as you said around 140GBP per year). Now when I log onto HMRC under my page the higher class 3 is being quoted for my missing years (around 700GBP per year, which many not be worth it) - has class 2 for people living abroad been abolished?  My 2015 letter said I had until April 2019 to pay so hopefully that would still be valid? 

Many thanks

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