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Old_Blighty

Paying voluntary NIC to obtain a UK pension

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Hi all. First post on here, so apologies if this question has been done to death already. I am 51 years old, so a number of years yet before I hit retirement age.
I have lived in Aus now for 25 years, but only paid NI for perhaps for 5/6 years back in the UK before emigrating to Aus.
After building a portfolio of investment properties, I probably will not qualify now for an Aussie Aged Pension.
However, I have been told that I can make voluntary contributions to my NI back in the UK, and still potentially qualify for a UK pension.
As I did miss ‘many’ years of contributing, (and might not be eligible at all) - how much would I need to pay potentially to qualify for the UK pension? Knowing it’s not index linked, the diminishing spending power in time would become an issue too. I am 51 years old, so a number of years yet before I hit retirement age.

Many thanks everyone in advance.

 
 

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Reminder to other forum members, this is the partner section for Vista Financial only to reply.  Thank you.

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34 minutes ago, MaggieMay24 said:

Reminder to other forum members, this is the partner section for Vista Financial only to reply.  Thank you.

My apologies - I hadn't noticed that.

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On 14/10/2020 at 12:37, Old_Blighty said:

Hi all. First post on here, so apologies if this question has been done to death already. I am 51 years old, so a number of years yet before I hit retirement age.
I have lived in Aus now for 25 years, but only paid NI for perhaps for 5/6 years back in the UK before emigrating to Aus.
After building a portfolio of investment properties, I probably will not qualify now for an Aussie Aged Pension.
However, I have been told that I can make voluntary contributions to my NI back in the UK, and still potentially qualify for a UK pension.
As I did miss ‘many’ years of contributing, (and might not be eligible at all) - how much would I need to pay potentially to qualify for the UK pension? Knowing it’s not index linked, the diminishing spending power in time would become an issue too. I am 51 years old, so a number of years yet before I hit retirement age.

Many thanks everyone in advance.

 
 

Hello

 

So to be able to receive any UK State Pension benefits you need a minimum of 10 years of contributions nowadays however it is possible to buy back years and as previously suggested pay years as you go.

You should in the first instance apply for a State Pension Forecast: https://www.which.co.uk/money/pensions-and-retirement/state-pension/your-state-pension-forecast-explained-a24r12y9jt41#:~:text=You can call the Future Pension Centre (0800,You'll get your statement within 10 working days.

Once you receive this you will know how many years short you are, next you apply to buy back (top up) missed years.

You may be able to buy these years at class 2 rates which are ridiculously cheap (typically you need to have been working in the UK immediately prior to leaving and for the year you wish to top up at class 2 working in Australia). 

Application form for this attached.

You used to only be able to buy back 6 years however of late we are seeing offers to buy back much more than this, 13 years for our latest client case.

Once you have done this HMRC automatically send you every year an offer to buy the current years contributions.

If you have an in date UK passport you are able to set up an account online and see your record which makes life a lot easier.

Hope this helps. 

Andy

 

  

Edited by Andrew from Vista Financial
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Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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On 15/10/2020 at 12:15, Andrew from Vista Financial said:

You may be able to buy these years at class 2 rates which are ridiculously cheap (typically you need to have been working in the UK immediately prior to leaving and for the year you wish to top up at class 2 working in Australia). 

Hi Andy, please can you explain how it's possible to buy years at class 2 rates? When I log into my government gateway account I am only able to buy them at class 3 rates, which are almost £800 per year. I was working in the UK until this January, when I returned to Australia. I have 25 years fully paid up, and I would certainly like to pay up future years if I can do so at class 2 rates. Many thanks in advance.

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I'd also like to know if there's a way to pay "gap" years through the Government Gateway.   I have just managed to sign up and can see the gaps in my record but it doesn't explain how to pay for them.

It certainly seems like a good deal to me.  On my calculations, if I pay 6 years missing contributions, I'll get the money back in just under 4 years - even at frozen rates.

Edited by Marisawright

Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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21 hours ago, Marisawright said:

I'd also like to know if there's a way to pay "gap" years through the Government Gateway.   I have just managed to sign up and can see the gaps in my record but it doesn't explain how to pay for them.

It certainly seems like a good deal to me.  On my calculations, if I pay 6 years missing contributions, I'll get the money back in just under 4 years - even at frozen rates.

 

23 hours ago, Wanderer Returns said:

Hi Andy, please can you explain how it's possible to buy years at class 2 rates? When I log into my government gateway account I am only able to buy them at class 3 rates, which are almost £800 per year. I was working in the UK until this January, when I returned to Australia. I have 25 years fully paid up, and I would certainly like to pay up future years if I can do so at class 2 rates. Many thanks in advance.

Hi

So the form is attached to my second reply above.

You will need to apply for HMRC to assess you first and then if accepted they will send you a list of all of the previous years you are entitled to top up at class 2.

Just be careful though when paying for years prior to 2015/16 IF you were close to the old 30 years (which was the full amount required at that time) as paying these does not always benefit you as they may not be allocated to your record.

We are aware of this happening on a few occasions. We have found in cases like this paying one at a time to make sure it is credited is the way to go. Post 15/16 years though never seem to be an issue and we have found that they have always been credited. 

Andy

Edited by Andrew from Vista Financial

Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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36 minutes ago, Andrew from Vista Financial said:

So the form is attached to my second reply above.

You will need to apply for HMRC to assess you first and then if accepted they will send you a list of all of the previous years you are entitled to top up at class 2.

Ah, thanks.  I was hoping they might have got into the 21st century and have electronic forms. Too much to hope for!

As I'm in Melbourne in lockdown and don't possess a printer, I'm going to have to use my ingenuity.  On the (extremely rare) occasions I need to print anything these days, I'd normally pop into the library.

Edited by Marisawright

Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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22 hours ago, Andrew from Vista Financial said:

Just be careful though when paying for years prior to 2015/16 IF you were close to the old 30 years (which was the full amount required at that time) as paying these does not always benefit you as they may not be allocated to your record.

We are aware of this happening on a few occasions. We have found in cases like this paying one at a time to make sure it is credited is the way to go. Post 15/16 years though never seem to be an issue and we have found that they have always been credited. 

Andy

Many thanks for this, Andy. All my unpaid years are prior to 2015/16 - I was in the UK from Dec 2014 to Jan 2020, and was working during that time. All I know is that I need 37 years to get a full pension entitlement because I opted out of SERPS at some point in the past, so I need to pay for another 12 qualifying years between now and 2034.

@Marisawright, could you complete the form digitally, and then email it to a friend in the UK to print out and post locally? That's what I'm planning to do. I have edited it, so I have a document with just the last 2 pages - if you would like a copy, then let me know.

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16 minutes ago, Wanderer Returns said:

 could you complete the form digitally, and then email it to a friend in the UK to print out and post locally? That's what I'm planning to do. I have edited it, so I have a document with just the last 2 pages - if you would like a copy, then let me know.

Well duh, why didn't I think of that?  Brilliant, thanks.

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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34 minutes ago, Marisawright said:

Well duh, why didn't I think of that?  Brilliant, thanks.

Can you do an electronic signature ? 

The form requires a signature, I think there is a program for this ???

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 Perth WA  / UK / Queensland

 

 

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5 minutes ago, AliQ said:

Can you do an electronic signature ? 

The form requires a signature, I think there is a program for this ???

There are two types of electronic signature - one where you simply type the name, which I don't think they would accept because all their instructions say it has to be printed off and completed.  The other would be if you have a tablet or device where you can sign using a stylus, which I don't have.  

What I've done before is paste a copy of my signature into the space, and it's been accepted - which is scary when you think about it!

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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8 hours ago, AliQ said:

Can you do an electronic signature ? 

The form requires a signature, I think there is a program for this ???

 

8 hours ago, Marisawright said:

There are two types of electronic signature - one where you simply type the name, which I don't think they would accept because all their instructions say it has to be printed off and completed.  The other would be if you have a tablet or device where you can sign using a stylus, which I don't have.  

What I've done before is paste a copy of my signature into the space, and it's been accepted - which is scary when you think about it!

What I do is use an image file of my signature (with a transparent background), which I drop onto the document in the appropriate place. You can use image editing software, but I just  use https://smallpdf.com/ which allows you to edit and download up to 2 PDF files a day for free. I used it to edit the file I mentioned earlier - which is attached below 🙂 

Class2-NIC-Application-last2pages.pdf

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50 minutes ago, Wanderer Returns said:

 

What I do is use an image file of my signature (with a transparent background), which I drop onto the document in the appropriate place. You can use image editing software, but I just  use https://smallpdf.com/ which allows you to edit and download up to 2 PDF files a day for free. I used it to edit the file I mentioned earlier - which is attached below 🙂 

Class2-NIC-Application-last2pages.pdf

Yes that’s what I do

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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On 18/10/2020 at 12:30, Andrew from Vista Financial said:

 

So the form is attached to my second reply above.

 

What a confusing form!   I don't want to pay ongoing voluntary contributions, I only want to pay the shortfall - so I assume I tick "no" for "I wish to apply for voluntary contributions" and just tick yes to number 7?  Seems so pointless to fill in all the other information which isn't relevant.  

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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On 17/10/2020 at 16:00, AliQ said:

 

I made a payment not so long ago. You need to post them your completed form CF 83, which is the last two pages of form NI38.

They then reply in writing with the sum payable, how many years you can pay for, if you wish to pay that is, and how to pay.

Forms are on the HMRC website. They will not use email, but I found them helpful by phone, but that was pre covid.

You have to tick which class you wish to pay, they will check if you are eligible. It's class 2 if you are currently in employment, if not, it's class 3.

An update. I struggled to complete form CF83 because I don't want to pay ongoing contributions, I just want to pay gap years. 

If you want to pay gap years ONLY, it's the wrong form. 

I had a Pension Forecast from 2014, which included a table of gap years and how much to pay.   I used the Overseas Pension Centre's online enquiry form to send them an email, stating that I still wished to pay gap years and requesting an updated table.

Today I got an email from them with an updated table and the form to be submitted along with the payments.  

SU117.pdf

ins13.pd.pdf

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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On 31/10/2020 at 08:18, Marisawright said:

I had a Pension Forecast from 2014, which included a table of gap years and how much to pay.   I used the Overseas Pension Centre's online enquiry form to send them an email, stating that I still wished to pay gap years and requesting an updated table.

@Marisawright thanks for the update. Does the updated table show the amounts you need to pay for each tax year based on Class 2 NI contributions?

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1 minute ago, Wanderer Returns said:

@Marisawright thanks for the update. Does the updated table show the amounts you need to pay for each tax year based on Class 2 NI contributions?

No only Class 3 as I’m already retired

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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