Uk National Insurance Class 3 Voluntary Contributions

[walking wallet]

I have just received a request to pay my UK National Insurance Class 3 voluntary contributions

for the period of 09/04/06 to 07/04/07 .

I have been paying NI voluntary contributions since I left the UK

About 12 years ago.

Along with the payment request I also received a notification as shown below,

As far as I can make out, its basically this … pay now and may be you will

Have paid too much, don’t pay now and you may run out of time, or you will

Have to pay at a higher rate …? Have I read this right …?

I will reach state pension (65) in 6 years time.

Your comments please….

IMPORTANT INFORMATION Please read this carefully before you decide to

Pay any voluntary class 2 or 3 contributions

On 25 may 2006 the government published a pensions Bill

‘Security in retirement towards a new pensions system (Cm 6841)

The proposals include changes designed to increase the number of

People who would become eligible for a full State Pension. These

Proposals are reflected in the Pensions Bill currently being considered

By Parliament. This note only deals with the state pension, it does not

Cover any other benefits that are dependent on the payment of National

Insurance Contributions.

Who is affected

If the proposals become law , state pension awards will be worked out differently

For people who reach state pension age on or after the 06 April 2010, that is men

Born on or after 06 April 1945 and women born on or after 06 April 1950.

What is being proposed?

The key proposed changes that could affect your decision to pay voluntary

Contributions are …..

A gradual increase in state pension age from 65 to 58 between 2024 and 2046

A reduction in the number of qualifying years needed to get a full basic state

Pension , at the moment women need between 39 and 44 years depending on their

Date of birth and men need 44, but under the changes , everyone would need

Just 30 years.

The minimum number of qualifying years needed to get some basic state pension

Would be reduced to one.

Home Responsibilites Protection ( HRP ) years , which under current rules reduce the

Number of qualifying years needed for a full basic pension would be replaced by a

Weekly National Insurance credits for …

Parents awarded child benefit for a child under the age of 12 and approved foster

Carers.

Carers who provide 20 hours or more weekly care for someone whi is sick or

Severely disabled.

How does this affect me ?

You may have been advised that under the current rules you have a shortfall

In your National Insurance record and you now ….

Want to make up the shortfall

Need to consider paying voluntary contributions

Ned to make a further payment of voluntary class 2 or 3 contributions

In order to make the tax year in question qualify for state pension proposed

Under the current rules….

If the proposals in the pensions bill become law YOU MAY NOT NEED TO PAY

THE VOLUNTARY CLASS 2 OR 3 CONTRIBUTIONS. This is because you are

Due to reach state pension age on or after 6 April 2010 and ….

You may have already qualified for a basic state pension under the proposed

New rules or …..

You may anticipate working and paying enough contributions to qualify for a

Full basic state pension under the proposed new rules.

YOU SHOULD CONSIDER VERY CAREFULLY WEATHER YOU SHOULD

DELAY PAYING CLASS 2 OR 3 CONTRIBUTIONS until it is clear weather the rules

Will change.

If you nevertheless decide to pay the contributions, you might not be able to get

A refund if it turns out that you need not have paid them. However, if you delay

Pasyment the contributions may have to be paid at a slightly higher rate ( if you

Delay payment the normal time limits for paying class 2 or 3 contributions still apply )

[briley]

My recommendation?

Provided you have paid 30 years of contributions stop paying. If the law changed doesn't go through (should do within 5 years) then you pay the higher rate, won't be that much more, normally about 20-50 pound more.

You might have paid enough even under the old rules. If you paid from age 16 to now (age 59?) then you have paid 43 years. You only need 39 years contributions (40 years but one is given free!) to get 100% pension.

Well worth completing a form to get a pension forecast.

[walking wallet]

Thank you briley , ive just downloaded the forcast from and will be sending it off , and see just what

the situation is..?

Thanks for your reply

[GuestHouse]

I've just recently paid up some missing contributions, although unlike yourself I have not yet reached to full (Proposed) 30 year minimum.

I certainly see the merit in Briley's suggestion, wait and see seems a good option if you are already over the 30 year minimum.

I personally think this ability to maintain payments to the UK state pension from overseas is a real bargain (it would be better still if the UK Government would only pay annual increases in Thailand - I have suggested before that it would be a good idea for British TV members to campaign on just that, why ever we do not is beyond me).

[niggle]

This letter has been sent out over the past 6 months or so. Really it depends on your age and circumstances as to whether you feel you need to pay. As a guide, I am 54, retired 4 months ago. My state pension forecast says that if I continue to pay NI contributions until I am 65 (just over 10 years) it will make about £10 per week to my pension.

Needless to say I don't think I will bother !

[GuestHouse]

One important Issue.

This applies to everyone with a record of missing contributions. There is a cut of date after which you can no longer pay off missing contributions. So, if for example, you are missing five years of contributions it might be worth paying the oldest of those five years.

KEEP IN MIND the proposed changes are only that, proposals. It could be that they don't go through, so don't be caught out by this maximum period of delayed payment rule.

[Prakanong]

Thank you to the OP and other postes for reminding me to get my arse in gear and arrange to pay while i am overseas.

[walking wallet]

Thanks Guy's . ive just noticed at the bottom of the last payment page

it say's .... Send your Payment , but there's no rush as the payment

date deadline is 6 April 2009

GuestHouse.... do you think they have sent this payment request to me

because I have some missing contributions , I thought I was up to date..?

Thanks .....

[GuestHouse]

I think they have probably sent you a standard letter. It seems many people received them.

I asked for an update in the full knowledge that I was behind with a few payments.

----

As an aside, I discussed this issue with my accountant, my question being should I pay and did he think I would actually get a pension when I come to retire.

His comment was simple:

Look at it as a very secure bet: There is a very slim chance it might not come off and a very high chance that you'll be picking up a hundred pounds or more a week when you retire.

It doesn't seem much I know, but imagine if you met a guy in the pub and he told you someone sends him a hundred pounds every Thursday - You'd think he was making it up.

What a bargain!

[walking wallet]

Thanks again GuestHouse, well let's see what my pension Forcast will say , when it arrives

as you say ...what a bargain !!

Thanks WW

[the gent]

Paying my national insurance contributions over the past 35 years to obtain a pension which has been described at best as ' nugatory ' never quite struck me as a bargain. Dead money perhaps, but never a bargain.

The British state pension is abysmal and must rank as one of the worst in the developed world. Frankly, given the choice I would have opted out years ago and used the money to back second favourites ! More fun and the dividend would have been better.

[highchol]

I thought it was 6 years or so you could pay " back dues" , so I cant see a reason to pay now..better wait and see if and what rule changes are implemented..

However if not paying dues now some of the possible other entitlements you may expect to receive may not be available.

I also have in the back of my mind that a pension forecast was only available to current residents, so if not resident you wouldnt be entitled to a forecast. This seems a ludricrous " chicken & egg " situation.

All above is from memory when I was looking into my situation about 3 years ago.

Im in the wait and see mode and not paying, hoping the 30 years contribution rule comes into being.

All the booklets are available on line and as you would expect they are an insomnia cure.

[Prakanong]

Related question

Do years in full time education or on the dole get credited?

Does it start rom 16 or 18?

I do hope 16 for work but Ii did do 4 years fulltime education in my mid to late 20's plus I had 1 year receiving the dole while doing a part time course (this was allowed ;-)! )

[jamesinchina]

Non residents are required to use an alternative forecast form - I have just done it

brgds

[highchol]

Related question

Do years in full time education or on the dole get credited?

Does it start rom 16 or 18?

I do hope 16 for work but Ii did do 4 years fulltime education in my mid to late 20's plus I had 1 year receiving the dole while doing a part time course (this was allowed ;-)! )

Certainly dole years are credited.

You pay Ni at 16 if your working so that must be starting point.

Im not sure about full time education but I would tend to think it should be based on:-

retirement at 65, full pension after 49 years so 16 + 49 = 65 ?

Maybe some " mickey mouse " courses dont count though.

[Prakanong]

Related question

Do years in full time education or on the dole get credited?

Does it start rom 16 or 18?

I do hope 16 for work but Ii did do 4 years fulltime education in my mid to late 20's plus I had 1 year receiving the dole while doing a part time course (this was allowed ;-)! )

Certainly dole years are credited.

You pay Ni at 16 if your working so that must be starting point.

Im not sure about full time education but I would tend to think it should be based on:-

retirement at 65, full pension after 49 years so 16 + 49 = 65 ?

Maybe some " mickey mouse " courses dont count though.

Cheers for the answer - I am glad dole years count and I was paying NI at 16 as I went downt pit then ;-)

Not really a mickey mouse course either (some might say it was though) - a BA from a good Uni (Sheffield) plus a post grad from another one.

I need to enquire about reiprocal agreements from anotther EU country where I paid their equivalent for 2 years as well.

If I pay now and a little back money i will have the 30 years almost - hope they reduce it but should still manage the 44 years if i get the credits - I have no plans of retirement just yet as I do enjoy my work and i need the money.

Edited May 11, 2007 by Prakanong

[quiksilva]

Can I get the necessary forms at the Embassy?

[briley]

I believe that full time education after 16 counts for years of contributions, but only after some date. Mine (from the 60's) did not count.

Forms are not at the Embassy, but they are on the web site. You can do the forecast on the web by registering with the UK gov portal, but they will only send the code required to a UK address and it must be used withing a few days of receipt, so someone in the UK must e-mail you the information.

[walking wallet]

If you live outside the UK and want a State Pension forecast contact Inland Revenue Centre for Non-Residents.......

If you are abroad or planning to go abroad in the near future, and not within 4 months of Retirement Pension age, you can ask us for a Retirement Pension forecast. You can download the application form CA3638 (PDF 206K) and send it to HMRC Residency Newcastle. If you cannot download the form you can call HMRC Residency and ask them to send it to you. If you are in the UK please ring 0845 915 4811 or call 44 191 203 7010 if you are calling from overseas.

Download forms here.....

http://www.hmrc.gov.uk/cnr/faqs_general.htm

WW

[torrenova]

I was "offered" to pay into the scheme for X years back in the vain hope that in about 40 years I'd get back something. Chucked it in file 13 (otherwise known as the bin). The system is flawed, it cannot be self supporting so therefore, it will not pay out the amount "promised" or the costs to support it will rise so far that people will not pay it. Either way, for those in their 20s and 30's you'd be better spending it dow the pub or at least doing something constructive with it.

Pensions cannot be paid out of income received if the last 50+ years contributions have been pissed up against the wall as all governments have done !

[Khun Bob]

Being in my 30's I have to agree with guesthouse that the money should be there.

The government is wriggling on other pensions - ie second state pension and it predecessor and has been offering incentives for the past 10 tears to get people to go the way they want. If the UK gov doesnt pay out on stste pensions in 20 years time there will be big issues - no government will get away with it. There is enough people coming into the UK to maintain the acquisition of taxes.

Question is why would the government want to reduce the number of qualifying years to 30 ? Surely this would make more people qualify and they would have to pay out more - or are there a few gotchas to go along with it. I saw this several months ago and just dont understand it - there must be a catch - and I dont know what it is at the moment... (then again cant say I have looked that hard). Even pghone calls to the NI are suggesting the same as allready has been suggested on there - wait and see. I beleive the decision will be made in december this year - but I was told that some months ago and that date could have changed.

Also bear in mind that if you have taxed income in the UK, if you have earned below the single persons allowance you can get this back and use it to pay for your NI contributions...

[sumrit]

Something else for men to consider when working out if you've paid enough contributions. Between the ages of 60 - 65 any man not working and not claiming any unemployment benifits will still have his contributions credited free. So, for example, if somebody retires at 55 on a private pension/means after working full time since the age of 16 they will have made 39 years worth of contributions. the government will give 5 years of contributions for the years when they're 60 - 65 making the required total of 44 years to qualify for a full state pension. So that person would not have to make any contributions from the age of 55. The only downside is that you must be living in the UK during the '60 - 65 year old' period to qualify. If you are living abroad they will not give the contributions. Not sure if living abroad only means outside the EU or not but it might help in deciding whether to make contributions for the earlier 'retired years'. I think you also have to ask for the contributions to be credited, its not done automatically. If you don't ask you will get the standard request to make class 3 contributions to meet the required number of contributed years.

Edited May 14, 2007 by sumrit