National insurance stamps

[Zed]

Hi there, I'm 38 and have lived in Australia for nearly 10 years now. Someone said to me I should continue to pay my national insurance in the UK so I can claim that pension too. I only paid about 10 years worth in the UK and haven't paid any since living here. Can anyone advise if this is true and how I should go about it? I'm reading lots of differing articles online. Thanks

[Ausvisitor]

Google National Insurance Voluntary payments UK and you'll find the government advice on it.

You need 35 years to qualify for a full pension but anything over 15 (i think) entitles you to something.

I seem to recollect a year's contribution is about £700 but as each year of "stamp" increases your entitlement by around £5 a week it only requires you to live to 70 in order to ultimately make that cash outlay back

Uk pension though will reduce your Oz entitlement to pension so it's worth getting some advice from a Oz tax/financial advisor to determine if you'd really just be throwing money away by contributing to UK stamp (by that i mean your Oz entitlement dwindles to zero because your UK income - which you had to pay for - negates your qualification to the "free" Oz aged pension)

[Marisawright]

9 hours ago, Ausvisitor said:

Uk pension though will reduce your Oz entitlement to pension so it's worth getting some advice from a Oz tax/financial advisor to determine if you'd really just be throwing money away by contributing to UK stamp (by that i mean your Oz entitlement dwindles to zero because your UK income - which you had to pay for - negates your qualification to the "free" Oz aged pension)

I'm not sure it's worth getting professional advice as it's not a lot of money.   On balance, I think it's worth paying contributions for the UK pension for two reasons.   

One, the UK pension is not means tested, so you'll start receiving it as soon as you reach the eligible age - and of course, it continues until you die.  If you look at how little you''re paying for stamps each year, that's a pretty good deal.  

Two, if you have a decent superannuation balance, you may not get much if any Australian pension for years after you reach eligible age - so you won't need to worry about the UK pension affecting it anyway.    Even once you do start getting the Australian pension, it's not a dollar-for-dollar adjustment.  So your Australian pension is reduced because you're getting the British pension, but not by the whole amount.  So you'll still be ahead. 

[Zed]

Thank you.....this gives me something to work on. Appreciate your help. 

[le petit roi]

From memory you can backdate NI contribution payment up to 6 years but that may still not be the case.

I have the most recent HMRC form for NI contributions in front of me that I received only last week (the letter was dated 4th April ). To summarise:

I've been asked to pay Class 2 NIC which is 159.20 GBP per year.

If you want to talk to them, the telephone number (from overseas) is +44 191 203 7010

To write to them, the address is: 

National Insurance Contributions and Employer Office

HM Revenue and Customs

BX9 1AN

Best to have your NI Number available when you call or quote it in all written correspondence. The post is pretty crap now with the coronavirus upheaval hence would likely be best to call them or contact them via an email address or electronic form provided at the HMRC website.

[Lavers]

For Zed would it not be 30 years contributions?

Mine shows as 30 years for full pension.

[AliQ]

6 hours ago, Lavers said:

For Zed would it not be 30 years contributions?

Mine shows as 30 years for full pension.

You get a pro rota pension according to the years you have paid into.

If you have only contributed / paid  into ten years of National Insurance payments, and not or never made any more payments at all, then come retirement age, you only get a pension pro rota to those ten years. You will not get a full pension.

[Lavers]

33 minutes ago, AliQ said:

You get a pro rota pension according to the years you have paid into.

If you have only contributed / paid  into ten years of National Insurance payments, and not or never made any more payments at all, then come retirement age, you only get a pension pro rota to those ten years. You will not get a full pension.

Sorry I meant the 35 years thing, did that not just come in a few years ago? and if you where paying in before that date you only do 30 years for full pension.

[AliQ]

23 minutes ago, Lavers said:

Sorry I meant the 35 years thing, did that not just come in a few years ago? and if you where paying in before that date you only do 30 years for full pension.

Sorry, I misunderstood. Not 100% sure about the 30 / 35 year date.

[Marisawright]

6 hours ago, AliQ said:

You get a pro rota pension according to the years you have paid into.

If you have only contributed / paid  into ten years of National Insurance payments, and not or never made any more payments at all, then come retirement age, you only get a pension pro rota to those ten years. You will not get a full pension.

Well, that's why the OP is asking.   By continuing to pay NI contributions while he's working in Australia, he can significantly increase the pro rata pension he will get. 

[Ausvisitor]

On 19/06/2020 at 18:47, Lavers said:

Sorry I meant the 35 years thing, did that not just come in a few years ago? and if you where paying in before that date you only do 30 years for full pension.

It's a bit more complicated.

They did some form of calculation to see where you sat in terms of already given contributions and state second pension (SERPS - which many opted out of).

Some people stayed on 30 years, some with lower contirbution amounts (mainly due to opt-out) moved to the 35 year. Some got a newer target in the middle, and some with a very high SERPS balance who hadn't yet reached an equivalent monthly payout of the state pension had their requirement dropped below 30 years.

But on balance if you started before the changes (and are late 20s or older) most people will be nearer the 30 year target than the 35 year one

[martymarty5436425]

The Government Gateway has a useful tool for forecasting pension here:

https://www.gov.uk/check-state-pension

You will have to login with the gateway ID for the forecast to be shown for your record.  It'll show current pension if you stop contributing NICs and a forecast assuming you work to state pension age or complete 30 (or 35) years of contributions.  

There's a link on the forecast page that allows you to see all past year records so you can see how many years NICs you have paid, what years are missing and how many years you need to get full pension at state pension age.

You can top up any missing years within the last six years and continue to top up from there. The cost will differ depending on your situation (and so what class of NICs you are eligible to pay).  You can find out more about this here:

Given most on this forum are moving to Aus, the most likely class will be class 3 (living abroad but making voluntary contributions rather than out of PAYE).  The weekly cost for this currently is: £15.30.  

Hope this helps. 

[martymarty5436425]

8 minutes ago, martymarty5436425 said:

8 minutes ago, martymarty5436425 said:

You can find out more about this here:

https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

 

[Zed]

Brilliant help. Thanks all

[le petit roi]

On 29/06/2020 at 20:07, martymarty5436425 said:

Given most on this forum are moving to Aus, the most likely class will be class 3 (living abroad but making voluntary contributions rather than out of PAYE).  The weekly cost for this currently is: £15.30.  

I've just been asked to pay Class 2  NIC which is 159.20 GBP per year.

If you live abroad it could be either Class 2 or Class 3 (refer to here: https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions)

 

[Johnny Kash]

9 minutes ago, le petit roi said:

I've just been asked to pay Class 2  NIC which is 159.20 GBP per year.

If you live abroad it could be either Class 2 or Class 3 (refer to here: https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions)

 

Class 2 is obviously preferable if youre eligible.  I know the UK govt were planning on pulling it a couple of years ago but made a U-turn.

Im wondering if its the case that once youve been assessed as being eligible for class 2 and start paying the direct debits then thats you lodged in that system even if the govt decide to pull it again?   or would they just move you onto class 3 if and when they decide to do that?

Its something were looking into as I got my statement which shows 24 years of contributions.   I was amazed that I earnt some  qualifying years from part time work pushing trollies in a supermarket when I was stilll at school in 1989 (old gipper ) 

[Ausvisitor]

9 hours ago, Johnny Kash said:

Class 2 is obviously preferable if youre eligible.  I know the UK govt were planning on pulling it a couple of years ago but made a U-turn.

Im wondering if its the case that once youve been assessed as being eligible for class 2 and start paying the direct debits then thats you lodged in that system even if the govt decide to pull it again?   or would they just move you onto class 3 if and when they decide to do that?

Its something were looking into as I got my statement which shows 24 years of contributions.   I was amazed that I earnt some  qualifying years from part time work pushing trollies in a supermarket when I was stilll at school in 1989 (old gipper ) 

I'm pretty sure back in the day you got pension credits whilst in full time education; they've stopped that now, but I have something similar on my NI record and there is no way the actual earnings were anywhere near enough

[Fisher1]

If you are thinking of contributing to the UK pension for a number of years, be careful because it may not be worth it.  Nobody on here has mentioned frozen pensions?  Are you aware that if you live in Australia your UK state pension is ‘frozen?’  In my case, as a recent immigrant here, that means that from the day I left the UK I receive no further cost of living rises.  In the case of someone contributing from here and resident at the time the pension falls due, the pension payable is frozen - I’m not sure at what point the freeze is applied to your (potential) payment but I know it makes a big difference.    There’s a group called British Pensioners in Australia who have a facebook page - this is a really helpful group and if you post your question on there I’m sure someone will be able to tell you more.

Of course, if you are at all likely to re-settle in the UK at some point in the future you should probably make the contributions because you won’t get an Australian pension paid outside Australia, even if you are otherwise entitled to one.
 

The current UK pension is round about £8,000 a year (depending on your contributions) and is one of the meanest in Europe. Currently it is paid at age sixty six, but this age is set to increase.

I’m not saying don’t pay, but do check first because the UK govt don’t tell you. If it were me, I’d top up to ten years so that my previous payments weren’t wasted and leave it at that.

 

good luck!

[Marisawright]

48 minutes ago, Fisher1 said:

If you are thinking of contributing to the UK pension for a number of years, be careful because it may not be worth it.  .... Are you aware that if you live in Australia your UK state pension is ‘frozen?’ .....- I’m not sure at what point the freeze is applied to your (potential) payment but I know it makes a big difference.

For someone overseas, it's frozen at the amount you get paid when the pension starts.   

I looked at it and although it's frozen, it was such a bargain that it was worth it.  By the time I found out I could make extra contributions, I could only do it for a year, (plus backpaying six years).   I think I paid less than £2,000 altogether.   Considering I will get paid a pension for the rest of my life, even if it never increases, that small amount was worth it.

Edited July 1, 2020 by Marisawright

[ramot]

32 minutes ago, Fisher1 said:

If you are thinking of contributing to the UK pension for a number of years, be careful because it may not be worth it.  Nobody on here has mentioned frozen pensions?  Are you aware that if you live in Australia your UK state pension is ‘frozen?’  In my case, as a recent immigrant here, that means that from the day I left the UK I receive no further cost of living rises.  In the case of someone contributing from here and resident at the time the pension falls due, the pension payable is frozen - I’m not sure at what point the freeze is applied to your (potential) payment but I know it makes a big difference.    There’s a group called British Pensioners in Australia who have a facebook page - this is a really helpful group and if you post your question on there I’m sure someone will be able to tell you more.

Of course, if you are at all likely to re-settle in the UK at some point in the future you should probably make the contributions because you won’t get an Australian pension paid outside Australia, even if you are otherwise entitled to one.
 

The current UK pension is round about £8,000 a year (depending on your contributions) and is one of the meanest in Europe. Currently it is paid at age sixty six, but this age is set to increase.

I’m not saying don’t pay, but do check first because the UK govt don’t tell you. If it were me, I’d top up to ten years so that my previous payments weren’t wasted and leave it at that.

 

good luck!

Having lived with a frozen pension for 15 years, you are right to remind posters.

I was in a different position to younger posters when I moved here, as I had not worked much after I married, but had 17 years topped up for child rearing. I did decide to top up my pension, but was only 2 years off being eligible for the state pension. I worked out that as long as long as I lived for 2 years after receiving the pension the extra paid balanced out to the increase. So nearly 16 years later it was worth it, but honestly wouldn’t know if it’s worth it for younger people.

Also don’t forget that if you return to UK for a holiday, you contact the pensions dept. give them your dates and your pension while there is increased to what it actually would be had you never left, it then reverts back to the original frozen amount on your return!!! As pre Covid we go to UK for 3 months most years we claim every penny. 

 

[Marisawright]

1 hour ago, ramot said:

I did decide to top up my pension, but was only 2 years off being eligible for the state pension. I worked out that as long as long as I lived for 2 years after receiving the pension the extra paid balanced out to the increase. So nearly 16 years later it was worth it, but honestly wouldn’t know if it’s worth it for younger people.

That's true.  My situation was not unlike yours - I think I had about 12 years already paid and topped up 6 (the maximum allowed) and it was worth it.  

My own feeling is that it is probably worth it for anyone who has already paid 10 or 15 years NI contributions, especially if there's any chance they might want to go back to the UK at some point.   The annual contribution is surprisingly small and unless you're counting every penny, you're not likely to miss it - whereas once you retire, you value every penny of income you can get!

[NickyNook]

I topped up my contributions too. I only had 8 years on my record but under the new (current) rules that meant I would get nothing when I hit retirement age. I paid the full rate for two year's contributions to bring them up to the minimum 10 years. For me, it meant the difference between getting nothing and getting something. I calculated that I will be in front after about 27 weeks. 

[Fisher1]

11 hours ago, ramot said:

Having lived with a frozen pension for 15 years, you are right to remind posters.

I was in a different position to younger posters when I moved here, as I had not worked much after I married, but had 17 years topped up for child rearing. I did decide to top up my pension, but was only 2 years off being eligible for the state pension. I worked out that as long as long as I lived for 2 years after receiving the pension the extra paid balanced out to the increase. So nearly 16 years later it was worth it, but honestly wouldn’t know if it’s worth it for younger people.

Also don’t forget that if you return to UK for a holiday, you contact the pensions dept. give them your dates and your pension while there is increased to what it actually would be had you never left, it then reverts back to the original frozen amount on your return!!! As pre Covid we go to UK for 3 months most years we claim every penny. 

 

Oh yes, we were back last year and claimed then. Every penny, even if it isn’t very much yet - it’s a principle!

[ramot]

1 hour ago, Fisher1 said:

Oh yes, we were back last year and claimed then. Every penny, even if it isn’t very much yet - it’s a principle!

It’s certainly worth it 16 years on, we go back most years as our grandsons are there, we leave it in a UK account and have some nice spoil them money there and rent money as we don’t stay with our son

[Fisher1]

46 minutes ago, ramot said:

It’s certainly worth it 16 years on, we go back most years as our grandsons are there, we leave it in a UK account and have some nice spoil them money there and rent money as we don’t stay with our son

I was actually surprised to be about £25 a month better off - we’d only been here two years!