Is It Worth Paying Ni Insurance Contributions To Claim A Future Uk Pension?

[Luang]

Further to another thread, is it worth paying this in the current climate of insecurity regarding pension age and payments in the UK?

My personal situation is that i started an employer pension in the UK but cannot continue that here in Thailand (sorry you anti-Brits but my rear is covered now na!). So my choice seems to be pay NI for many years (25 yrs till retirement...going up) to the government and hope they don't change the rules, or,...... say stuff it, take a risk and just save as much as possible. Then i guess there is no overseas income coming in which could affect future retirement visas etc? What about all the other Brits here.....what are your thoughts and opinions?

P.S. I havent researched all info. and regulations regarding Thai visa requirements so please treat the post as such.

Thanks,

Luang.

[JohnC]

Well basically it depends how many years contributions you have already made as the law changes from 5th April 2010 so that anyone 65 after that date only needs 30 years of contributions for a full pension, anything less is paid pro rata. Also the retirement age will be raised as follows.

State Pension age for men and women will increase from 65 to 66 between April 2024 and April 2026

State Pension age for men and women will increase from 66 to 67 between April 2034 and April 2036

State Pension age for men and women will increase from 67 to 68 between April 2044 and April 2046

Current pension is £95 per week but of course currently living in Thailand means UK pensioners do not get the annual increase so their pension is frozen at the rate it is when they first claimed. Only you can decide by doing the sums if it is worth continuing to pay contributions until you reach the 30 year mark at which point you can discontinue.

[wileycoyote]

Personally,if you can afford it ,I would pay for it.

There are moves that Health Care might be linked to it.

Wiley Coyote

[geriatrickid]

I pay into my national pension plan and I still pay taxes. I am a long way away from a state pension. However, I don't know what the future holds for me, i.e. whether or not I will be living in Thailand or elsewhere once I get old or start thinking of retiring at around 55. It's my emergency fund if I lose every other asset.

The good thing about a state pension is that it is guaranteed by the government. The UK hasn't defaulted on its national debt and I think the sovereign state is a better bet than the private sector because the state has a guaranteed source of revenue: the tax payer. Barring catastrophe, there will always be a state pension. If the state pensions disappear, it will happen after the private sector collapses. If you look at the current situation, it was the government that bailed out the private sector.

If you are still hesitant, wait and see. Keep paying for another year and review the subject again. Consider future NHS implications as well.

[briley]

Definitely worth paying the 30 years for a full pension.

But don't be too quick to pay. I pay up regularly and now have 35 years of contributions when the Gov. changed the rules to 30. If I'd been a little slower I'd have saved a bit.

[thecatman]

I think alot depends on your age, and just how many years of contributions you have paid up already. I have 20 or 21 years paid up at the moment (I'm 38), so I'll definately be paying up the rest of the quota to get my 30 years in. However, had the rules not changed, and 40 years was still needed, then I wouldn't be so sure.

Edited November 19, 2009 by thecatman

[fletchsmile]

The attached publication may be useful in helping you decide.

Personally I've been very much happier being outside the whole NIC/tax system and not having thrown good money after bad, while watching it deteriorate. However, I recently decided to start paying voluntary contributions again for a while. Key reasons among others:

1) HM Revenue clarified you can in many cases pay Class 2 (now 2.40 per week vs 2.30 last year) compared to around 12.05 per week this year for class 3 contribution (8.10 last year). Previously they couldn't seem to work out their own rules as to Class 2 at 2 quid or class3 at 8 quid!

2) As time marches by and the dates get closer I thought it worth chipping in to top up a bit just in case.

3) I was dubious whether it was worth it at over 400+ pounds a year for class 3, and my suspicions were confirmed when they raised it a whopping 50% to 600+ pounds a year, highlighting the sh*t the whole thing is in. In contrast 100+ for Class 2 NIC isn't too bad and I guess like the lottery you need to buy tickets sometimes to "win" .

4) Instead in the years I didn't pay I just stuck the 400+ money elsewhere. You can buy back years anyway (although this may change too - and is another reason to perhaps consider getting in agan). That money has grown much more than if I'd paid into the state pension scheme for their measly annual increases.

After a few years, there is a good chance I will stop again for a while. You only need 30 years (currently) for max pension.

So generally the closer to the moving target of 65 the more worthwhile it is. Whether you can pay the cheaper class2 vs higher class3 is also another factor. The further away the less I would bother (and less I did). In theory you only need to start mid thirties to get the max pension as it stands, and some would argue later at 40+ if you back pay up to 6 (?) years. The problem is they might move the goalposts yet again by increasing/decreasing years, extending the retirement age, stopping back payments etc etc - in short so much uncertainty

All a bit of a miss really, but that's how I looked at it, what I did, and what I'm doing.

Edited November 19, 2009 by fletchsmile

[maahuanao]

Definitely worth paying the 30 years for a full pension.

But don't be too quick to pay. I pay up regularly and now have 35 years of contributions when the Gov. changed the rules to 30. If I'd been a little slower I'd have saved a bit.

How do you know how many years you've paid? I've had a few spells out of the country over the years so really have no idea how many years' worth I've accumulated.

[briley]

maahuanao - Ask the contributions people in Newcastle.

You can get a forecast on the internet but you must register, give a UK address and use the code you receive within 30 days. Bit of a hassle when out of the UK but it is do-able. Once registered yo can do other things as well.

[phutoie2]

I no longer have a UK permanent address but HMRC send the occasional letter to my Thai address and the latest one is from the Newcastle office informing me that I did not pay any NI for year 07/08 and I can send them a cheque for 405 GBP to add towards my basic state pension.

The letter goes on to explain my current situation and that I have 36 years already counting towards the state pension and from 6 April 2010 it is changing to 30 years and if I do not want to!, I do not have to pay.

However the qualifying years for bereavement benefits are not changing and it remains at 44 years for men/39 for women.

I may want to consider this if I die and my wife or civil partner are under state pension age.

In true British style the letter gives an office phone number for overseas residents and office opening hours, then when you read the accompanying HMRC leaflet they send you, it reads, please do not telephone the office number on the letter asking for information on state pensions or bereavement benefit as they will not be able to help you!!.

Instead they provide a list of web pages you should look at on the "Directgov" website

[thecatman]

I no longer have a UK permanent address but HMRC send the occasional letter to my Thai address and the latest one is from the Newcastle office informing me that I did not pay any NI for year 07/08 and I can send them a cheque for 405 GBP to add towards my basic state pension.

Yes, I also received a letter like this recently. Basically, if your contributions are short in any year, then they will contact you (usually a couple of years later) to ask if you wish to complete your contributions for that said year.

In recent years (apart from the one I received the letter for because I stayed in Thailand) I have been going back to UK to work for 4 months per year. This period of work has been sufficient for me to pay the necessary amounts into my N.I. contributions.

[sinbin]

In recent years (apart from the one I received the letter for because I stayed in Thailand) I have been going back to UK to work for 4 months per year. This period of work has been sufficient for me to pay the necessary amounts into my N.I. contributions.

I fail to see that, to be classed as a resident you have to stay in the UK for 183 days of the the year. Once you have left the UK for a period of 183 days your pension is frozen as of that date, until you return and live there for another 183 days. You say you only go back for 4 months in any year so you basically aren't a UK resident. You may well pay one years contribution in 4 months but you'll get no incremants as you don't qualify.

There is a claim going through the courts at this time as to whether the UK government is acting fairly in freezing your pension once you have been out of the country for 183 days. The verdict is expected in April 2010, I understand.

Edited November 20, 2009 by sinbin

[thecatman]

In recent years (apart from the one I received the letter for because I stayed in Thailand) I have been going back to UK to work for 4 months per year. This period of work has been sufficient for me to pay the necessary amounts into my N.I. contributions.

I fail to see that, to be classed as a resident you have to stay in the UK for 183 days of the the year. Once you have left the UK for a period of 183 days your pension is frozen as of that date, until you return and live there for another 183 days. You say you only go back for 4 months in any year so you basically aren't a UK resident. You may well pay one years contribution in 4 months but you'll get no incremants as you don't qualify.

There is a claim going through the courts at this time as to whether the UK government is acting fairly in freezing your pension once you have been out of the country for 183 days. The verdict is expected in April 2010, I understand.

Well that's strange then. The last letter I received stated the number of years that I had paid in full N.I. and some of those later years have been while I've been living 8 months here, 4 months home.

Also, why would they then send me a letter to say that my contributions for 07/08 needed to be paid in order for that year to count towards my 30 years if that was not the case and I was indeed classed as a non-citizen??

Please, I'm not saying you're wrong with what you've quoted, far from it, I'm just telling you what's happened in my situation thus far.

Edited November 20, 2009 by thecatman

[briley]

Sinbin - slight error

Yes you get no increase in pension if outside the UK for over 6 months, but when you retire you do get the full rate at that date. So if you retire this year you will get around GBP100 pw (current rate) frozen at that rate even if you have been non-resident for hundreds of years.

Don't hold your breath waiting for the court hearing. I personally very much doubt it will come down in pensioners favour. But once the case is over the UK gov might have a change of heart. I'm hoping.

But for thecatman I'd start 'living' in the UK for some time before retirement. Then you retire as a UK resident and can quietly stay that way. These days I see little advantage in being non-resident if not working.

[thecatman]

Sinbin - slight error

Yes you get no increase in pension if outside the UK for over 6 months, but when you retire you do get the full rate at that date. So if you retire this year you will get around GBP100 pw (current rate) frozen at that rate even if you have been non-resident for hundreds of years.

Don't hold your breath waiting for the court hearing. I personally very much doubt it will come down in pensioners favour. But once the case is over the UK gov might have a change of heart. I'm hoping.

But for thecatman I'd start 'living' in the UK for some time before retirement. Then you retire as a UK resident and can quietly stay that way. These days I see little advantage in being non-resident if not working.

So am I right in thinking I really ought to be living in the UK for the last couple of years before I retire to benefit from any pension increases after I retire (assuming I have 30 years N.I. paid up)??

Edited November 20, 2009 by thecatman

[PattayaParent]

I think alot depends on your age, and just how many years of contributions you have paid up already. I have 20 or 21 years paid up at the moment (I'm 38), so I'll definately be paying up the rest of the quota to get my 30 years in. However, had the rules not changed, and 40 years was still needed, then I wouldn't be so sure.

Exactly my situation at 50.

If it had remained as 40 contributions needed then I wouldn't have bothered but I've recently backpaid 11 years and will pay the future 11 years I need for a full pension.

[sinbin]

So am I right in thinking I really ought to be living in the UK for the last couple of years before I retire to benefit from any pension increases after I retire (assuming I have 30 years N.I. paid up)??

That is what I was trying to put over. Plus because you only spend 4 months in the UK every year I think you'll have problems, come the day. People who say they have lived in the UK for the qualifying period are in for a shock. As the new chipped passports will varify their movements. Edited November 20, 2009 by sinbin

[sinbin]

Well that's strange then. The last letter I received stated the number of years that I had paid in full N.I. and some of those later years have been while I've been living 8 months here, 4 months home.

Also, why would they then send me a letter to say that my contributions for 07/08 needed to be paid in order for that year to count towards my 30 years if that was not the case and I was indeed classed as a non-citizen??

Please, I'm not saying you're wrong with what you've quoted, far from it, I'm just telling you what's happened in my situation thus far.

You may well receive letters stating your contributions but it won't show what incremants you'll receive come 65, or whatever. That will be worked out, as and when, by your contributions and your circumstances at the time of applying.

[sinbin]

Sinbin - slight error

Yes you get no increase in pension if outside the UK for over 6 months, but when you retire you do get the full rate at that date.

Thanks 'Briley" but I read it differently. I believe your pension frozen after 183 days outside of the UK until time to getting. Hopefully the legal position will be defined in April.