Paying previous years UK NI contributions, cost increases

[BacktoDemocracy]

Just a note, after checking to pay NI for my wife this year we became aware, from a Sunday Times article, that if you want to pay previous years missing payments, then from April '19 you will be charged a flat fee of £15/wk whereas previously it was at the rate charged in the year owing, which for class 2 was in the £2/wk region

Times is paywalled, but chefk elsewhere.

[Nemesis]

9 hours ago, BacktoDemocracy said:

Just a note, after checking to pay NI for my wife this year we became aware, from a Sunday Times article, that if you want to pay previous years missing payments, then from April '19 you will be charged a flat fee of £15/wk whereas previously it was at the rate charged in the year owing, which for class 2 was in the £2/wk region

Times is paywalled, but chefk elsewhere.

Although it was beiieved that Class 2 voluntary payments (which is what most people abroad pay) would be scrapped in April, I thought the plan has been abandoned?

https://www.moneysavingexpert.com/news/2018/09/tax-cut-plans-for-self-employed-abandoned/

Edited January 21, 2019 by Nemesis

[BacktoDemocracy]

6 hours ago, Nemesis said:

Although it was beiieved that Class 2 voluntary payments (which is what most people abroad pay) would be scrapped in April, I thought the plan has been abandoned?

https://www.moneysavingexpert.com/news/2018/09/tax-cut-plans-for-self-employed-abandoned/

I don't know about class 2, I think that change has been abandoned, this is about class 3, which is payment for missed contributions in previous years which will now be at a standard rate of 15 pounds rather than at the rate in the year you are repaying and that starts in April this year.

But as I say this was from a sunday times article yesterday, so anybody who is planning on making up past years please check by ringing the NI people who are usually helpful 

[Amber Snowball]

9 hours ago, BacktoDemocracy said:

I don't know about class 2, I think that change has been abandoned, this is about class 3, which is payment for missed contributions in previous years which will now be at a standard rate of 15 pounds rather than at the rate in the year you are repaying and that starts in April this year.

But as I say this was from a sunday times article yesterday, so anybody who is planning on making up past years please check by ringing the NI people who are usually helpful 

There is a bit on the gov.uk website as well. I looked up my record and there is a notation about the cost increases.

[Marisawright]

21 hours ago, Nemesis said:

Although it was beiieved that Class 2 voluntary payments (which is what most people abroad pay) would be scrapped in April, I thought the plan has been abandoned?

By the look of it, the original plan was abandoned, this new increase looks a bit different.

[Paul1Perth]

Don't know if I understand this retirement stuff right but if you pay up to date your NI in the UK and get a full UK pension doesn't it just offset what you get from the Aus pension? If that's the case why bother catching up the contributions?

[Marisawright]

9 minutes ago, Paul1Perth said:

Don't know if I understand this retirement stuff right but if you pay up to date your NI in the UK and get a full UK pension doesn't it just offset what you get from the Aus pension? If that's the case why bother catching up the contributions?

Because the Australian pension is means-tested, so if you have a decent balance in superannuation, you won't receive it.  Whereas you'll get the British pension once you reach retirement age, regardless.

Also I have seen a few people who are planning to retire in the UK so they can't get the Australian pension at all.

[Amber Snowball]

9 hours ago, Paul1Perth said:

Don't know if I understand this retirement stuff right but if you pay up to date your NI in the UK and get a full UK pension doesn't it just offset what you get from the Aus pension? If that's the case why bother catching up the contributions?

Slightly different to this but I don’t think I need to back pay any years because I will be working long enough now I am back in the UK to make the 35 years required, so paying extra won’t increase my pension amount. Paying missing years isn’t the best course for everyone as far as I can tell.

[Flappers263]

does anyone have the link to where I can check my NI contributions and see if I have to make up any years please?

[Paul1Perth]

19 hours ago, Marisawright said:

Because the Australian pension is means-tested, so if you have a decent balance in superannuation, you won't receive it.  Whereas you'll get the British pension once you reach retirement age, regardless.

Also I have seen a few people who are planning to retire in the UK so they can't get the Australian pension at all.

It has to be a really "decent balance" before it affects the aussie pension. A homeowning couple can have assets of $375,000 and still get a full pension. Not including the house. 

Don't think our super will put us over the mark, if it does we'll spend some.

[Marisawright]

3 hours ago, Paul1Perth said:

It has to be a really "decent balance" before it affects the aussie pension. A homeowning couple can have assets of $375,000 and still get a full pension. Not including the house. 

Any professional couple who have spent most of their working life in Australia should easily have that kind of balance by the time they retire (unless they've been in one of those rip-off retail super funds).

[Marisawright]

13 hours ago, Amber Snowball said:

Slightly different to this but I don’t think I need to back pay any years because I will be working long enough now I am back in the UK to make the 35 years required, so paying extra won’t increase my pension amount. Paying missing years isn’t the best course for everyone as far as I can tell.

It's certainly not a given. As you say, the first thing is to look at how many years you have already paid - but 35 years is a lot of years, so someone who's spent 20 years in Australia is unlikely to make the total.  

I'm pretty sure the 35 years has to be before you reach the minimum retirement age, not the actual age you retire.  

There are people who argue it's not worth paying because the British govt keeps increasing the pension age, and also the amount isn't much.  Personally I've already earned back the amount I paid in.

Edited January 23, 2019 by Marisawright

[Paul1Perth]

31 minutes ago, Marisawright said:

Any professional couple who have spent most of their working life in Australia should easily have that kind of balance by the time they retire (unless they've been in one of those rip-off retail super funds).

Compulsory super started the week I got my first job here, in 92. Before that you didn't have to have it. I've been paying into it ever since, been on a decent salary, full time and I won't be close to the max when I retire. Only ever paid the minimum up until I did the transition to retirement at 60, so 5 years ago. I've been with different companies but have consolidated a couple of times.

Any spare cash we had went into the mortgage. 

Super funds have been crap this year with virtually no return. Hopefully pick up a bit before I call it quits.

The British pension people were right on the ball, got a letter with a personal code in it a week after I hit 65. Went on the website, entered the code and applied. Got a call from the UK office a week later from a guy doing my claim, checking I was legit. He told me I'll get a letter anytime now that will tell me how much I'm going to get. Way I understand it though it will be classed as income here so will just offset what I would have got from the Aussie pension. Which is fair enough.

 

[Marisawright]

25 minutes ago, Paul1Perth said:

Compulsory super started the week I got my first job here, in 92. Before that you didn't have to have it. I've been paying into it ever since, been on a decent salary, full time and I won't be close to the max when I retire. Only ever paid the minimum up until I did the transition to retirement at 60, so 5 years ago. I've been with different companies but have consolidated a couple of times.

According to the Association of Superannuation Funds of Australia, the average super balances at retirement were $292,500 for men and $138,150 for women. Add those two together and you're over the limit.  And that is the average, so although a lot of people will have less, a lot of people will have more, too.  Also, of course, it assumes you've got no other savings except the house.  

 

[BacktoDemocracy]

18 hours ago, Flappers263 said:

does anyone have the link to where I can check my NI contributions and see if I have to make up any years please?

You have to go on to the UK govt website, National Insurance queries, and then register to get access to view your account, you will need your NI number and I think your uk passport details, but if all else fails you can ring them, bit expect a long call but they are helpful and resolved my wifes repayment issue in about 5 mijutes once we got to speak to a humsn, once you get in to your accoun,t if you owe years you need a ref number and the amount to repay in order to do it

[BacktoDemocracy]

21 hours ago, Amber Snowball said:

Slightly different to this but I don’t think I need to back pay any years because I will be working long enough now I am back in the UK to make the 35 years required, so paying extra won’t increase my pension amount. Paying missing years isn’t the best course for everyone as far as I can tell.

I would really check that out, they have changed the number of years you have to pay in and what you qualify for, I'm not sure, but if you pay back years at the class 2 rate that is about 148 GBP/year and that counts towards the required 35 years, now whether after  that 35 years it  reduces down what you pay in the future I'm not sure about but as an employee you will be paying something like 5% of income, as I say I'm not sure, but you might decide at some point to not work and then paying NI in the future may have gone up a lot so I would consider it carefully if you can back pay years at 150 quid each it might just make sense for that level of investment when you think the pension at the moment is in the region of 140 GBP /week and payment of years with a class 2 stamp get you a full years contribution but I think  if you are in a govt job pension scheme you are part contracted out so only get a part years worth qualifying towards the state pension.

I emphasise do check it carefully, best thing I did was keep on paying that class 2 contributions, made up for the part years when I was contracted out

[BacktoDemocracy]

On 22/1/2019 at 08:25, Paul1Perth said:

Don't know if I understand this retirement stuff right but if you pay up to date your NI in the UK and get a full UK pension doesn't it just offset what you get from the Aus pension? If that's the case why bother catching up the contributions?

It is important because if you end up going back to UK for whatever reason you have safeguarded your UK pension for the equivalent of peanuts, you just need to check that the payments get recorded properly.

 After pension age any time spent in the UK will see you getting the properly uprated pension in the UK

[Amber Snowball]

1 hour ago, BacktoDemocracy said:

I would really check that out, they have changed the number of years you have to pay in and what you qualify for, I'm not sure, but if you pay back years at the class 2 rate that is about 148 GBP/year and that counts towards the required 35 years, now whether after  that 35 years it  reduces down what you pay in the future I'm not sure about but as an employee you will be paying something like 5% of income, as I say I'm not sure, but you might decide at some point to not work and then paying NI in the future may have gone up a lot so I would consider it carefully if you can back pay years at 150 quid each it might just make sense for that level of investment when you think the pension at the moment is in the region of 140 GBP /week and payment of years with a class 2 stamp get you a full years contribution but I think  if you are in a govt job pension scheme you are part contracted out so only get a part years worth qualifying towards the state pension.

I emphasise do check it carefully, best thing I did was keep on paying that class 2 contributions, made up for the part years when I was contracted out

Thanks. When I looked it said it would cost me more than £150 per year to back pay!

I have 18 years logged already, which has changed as I had some gaps previously (?!) I have 17 years on my mortgage so there is my 35 years. My contracted out years have been filled in and the website says they no longer penalise you for those. Even if I reduce my hours in the last couple of years before drawing my nhs pension and the state pension I will still be earning more than the £112 or whatever the threshold is for NI so I think I’m ok. I hope I’m ok! I don’t want to pay years unnecessarily that’s for sure. They don’t pay you more for paying more than 35 years so I’ll keep my money. I have no hope of early retirement so I’m going to be working in some form until 67......

[tea4too]

2 hours ago, BacktoDemocracy said:

I would really check that out, they have changed the number of years you have to pay in and what you qualify for, I'm not sure, [edit]

I would echo this as a family friend has recently been told by the Pensions people that, despite having 41 years of National Insurance Contributions, she needs to buy an extra 3 years to be eligible for a full state pension. In her case it has something to do with the fact that most of her working life was in the public sector with an employer that ‘contracted out,’ however it still came as a bit of a shock given that she had paid in excess of the required number of  years. T x

[Amber Snowball]

7 minutes ago, tea4too said:

I would echo this as a family friend has recently been told by the Pensions people that, despite having 41 years of National Insurance Contributions, she needs to buy an extra 3 years to be eligible for a full state pension. In her case it has something to do with the fact that most of her working life was in the public sector with an employer that ‘contracted out,’ however it still came as a bit of a shock given that she had paid in excess of the required number of  years. T x

 

Ok. Thanks @tea4too and @BacktoDemocracy. I might have a chat with someone. Not sure who but someone!

 

 

[BacktoDemocracy]

6 minutes ago, Amber Snowball said:

Ok. Thanks @tea4too and @BacktoDemocracy. I might have a chat with someone. Not sure who but someone!

 

 

I know its a maze but if you have any previous year gaps now is the time to do it because all tho it seems a lot now,  in future it will cost you 6 times as much as far as I can make out and this govt keeps on changing things

[Amber Snowball]

29 minutes ago, BacktoDemocracy said:

I know its a maze but if you have any previous year gaps now is the time to do it because all tho it seems a lot now,  in future it will cost you 6 times as much as far as I can make out and this govt keeps on changing things

Indeed!

I will contact the pensions people tomorrow. My biggest concern is that my record changes on hmrc. The 3 years gap when I did my nurse training have suddenly been filled!

My gaps will cost me £625 per year and upwards from there........

[BacktoDemocracy]

1 hour ago, Amber Snowball said:

Indeed!

I will contact the pensions people tomorrow. My biggest concern is that my record changes on hmrc. The 3 years gap when I did my nurse training have suddenly been filled!

My gaps will cost me £625 per year and upwards from there........

Give the Ni helpline a ring, they are very helpful. They sorted my wife out in 5 minutes once she got thro all the electronic rubbish, I would really start there, they are not adversarial which is a change, you just need your NI number  and some ID proof and proof of residency, just give it a try, early morning is best.

[Marisawright]

7 hours ago, Amber Snowball said:

Thanks. When I looked it said it would cost me more than £150 per year to back pay!

I have 18 years logged already, which has changed as I had some gaps previously (?!) I have 17 years on my mortgage so there is my 35 years. My contracted out years have been filled in and the website says they no longer penalise you for those. Even if I reduce my hours in the last couple of years before drawing my nhs pension and the state pension I will still be earning more than the £112 or whatever the threshold is for NI so I think I’m ok. I hope I’m ok! I don’t want to pay years unnecessarily that’s for sure

Like I said, just check what minimum retirement age applies to you. You have to complete the 35 years before that date, even if you end up having to work longer.

at least, that was the rule when I last checked.

[Amber Snowball]

5 hours ago, Marisawright said:

Like I said, just check what minimum retirement age applies to you. You have to complete the 35 years before that date, even if you end up having to work longer.

at least, that was the rule when I last checked.

Thanks, yes I will complete them prior to 67. My age will probably increase anyway as they are talking about bringing foward the age increase.........