UK pensions

[Liquorice]

Don't worry Bill, happens to us all.

Getting older and losing some brain cells, makes it easier to manage the one's we have left.

Your secrets are safer with friends as well, because they can't remember them either.

[Liquorice]

transam, on 23 Mar 2015 - 17:19, said:

siampolee, on 23 Mar 2015 - 17:09, said:

Quote

Billd766 post # 1103.

Old age affects the brain cells Taff. At least it does mine.

Quite often I will think of something and by the time I get the computer cranked up I have forgotten what it was. My house is full of notes that obviously meant something at the time but as I don't time and date them when I do find them again I have no idea what they mean.

I and I suspect a few others could join your ''Old folks Club''

Can I be an "Honorary Member"......... .....Please........

You've misspelt 'Hornier' wrong again transam................I use speelcheck to avoid those mistakes.

[steve187]

contributions can be topped up by paying class 2 NI contributions about £2.50 a week, if living in Thailand

[Ricardo]

contributions can be topped up by paying class 2 NI contributions about £2.50 a week, if living in Thailand

If only that were so !

I spent the last 15 years, of my working-life in the UK, paying self-employed ... then retired to Thailand aged 50. But when I now ask to pay an extra 4-years' worth at Class-2, because 'they' have moved the goal-posts subsequently so that I'd need an extra 4 -years to get the full pension, they won't let me, and insist that I must pay much-higher Class-4.

If I were self-employed here, and could show audited-accounts to prove it, then it might be different.

What part of the phrase "retired to Thailand at 50 years old" don't they get ?

[Liquorice]

@ Ricardo

Class 2 contributions are for self employed only.

Class 3 contributions are voluntary contributions to fill gaps in your record in order to qualify for state pension.

Your entitled to pay Class 3 even when living abroad, provided you made at least 3 years contributions in the UK (which you have).

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

I should contact HMRC again. Currently £13.90 a week for class 3 though.

[steve187]

check again

here - http://www.pensionsadvisoryservice.org.uk/about-pensions/the-state-pension/voluntary-ni-contributions

[Jip99]

contributions can be topped up by paying class 2 NI contributions about £2.50 a week, if living in Thailand

If only that were so !

I spent the last 15 years, of my working-life in the UK, paying self-employed ... then retired to Thailand aged 50. But when I now ask to pay an extra 4-years' worth at Class-2, because 'they' have moved the goal-posts subsequently so that I'd need an extra 4 -years to get the full pension, they won't let me, and insist that I must pay much-higher Class-4.

If I were self-employed here, and could show audited-accounts to prove it, then it might be different.

What part of the phrase "retired to Thailand at 50 years old" don't they get ?

A friend retired here at the age of 42 and topped his contributions up by claiming to be operating a taxi service in his Thai village. No 'audited accounts' (hahaha) required.

[Liquorice]

steve187, on 23 Mar 2015 - 19:26, said:

check again

here - http://www.pensionsadvisoryservice.org.uk/about-pensions/the-state-pension/voluntary-ni-contributions

Steve go further with the link you provided.

Click on 'Periods spent abroad'.

You can only pay class 2 if you 'continue' to be self employed abroad.

Ricardo stated he has retired to Thailand.

[Liquorice]

Jip99, on 23 Mar 2015 - 19:35, said:

Ricardo, on 23 Mar 2015 - 18:57, said:

steve187, on 23 Mar 2015 - 18:31, said:

contributions can be topped up by paying class 2 NI contributions about £2.50 a week, if living in Thailand

If only that were so !

I spent the last 15 years, of my working-life in the UK, paying self-employed ... then retired to Thailand aged 50. But when I now ask to pay an extra 4-years' worth at Class-2, because 'they' have moved the goal-posts subsequently so that I'd need an extra 4 -years to get the full pension, they won't let me, and insist that I must pay much-higher Class-4.

If I were self-employed here, and could show audited-accounts to prove it, then it might be different.

What part of the phrase "retired to Thailand at 50 years old" don't they get ?

A friend retired here at the age of 42 and topped his contributions up by claiming to be operating a taxi service in his Thai village. No 'audited accounts' (hahaha) required.

A nod's sometimes as good as a wink Jip.................amazing Thailand.

[steve187]

They have archived some links, so i can only assume some changes have taken place, they have also brought out a class 3A for people retiring before April 2016 to top up. and extended some top up periods for others.

so maybe once the 35 years is set in stone, something new may happen, I have had to start paying class 2 again as for some reason i only had 30 years, and i will (maybe) need 35 but i'm still self employed in the UK as is my wife. maybe i took no notice of the self employed part, as it would not effect me.

If the rules have changed then I am sorry to have mislead people.

edit - taken from a .gov archived page 21st July 2014

''If you want to pay voluntary National Insurance contributions while abroad, either of the following conditions must apply:

• you must have lived in the UK for a continuous three-year period at any time before making your payments
• before you went abroad, you paid National Insurance contributions for three years or more

There are other criteria you will need to meet, depending on the class of contribution you want to pay. These are covered in the section 'What class of contribution to pay' below.''

''In order to pay voluntary Class 2 contributions you must either have been:

• 'ordinarily' employed or self-employed immediately before you went abroad
• 'ordinarily' employed or self-employed but became unemployed immediately before you went abroad to work ('unemployed' means registered as unemployed with the Department for Work and Pensions and looking for work)''

[Ricardo]

@ Ricardo

Class 2 contributions are for self employed only.

Class 3 contributions are voluntary contributions to fill gaps in your record in order to qualify for state pension.

Your entitled to pay Class 3 even when living abroad, provided you made at least 3 years contributions in the UK (which you have).

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

I should contact HMRC again. Currently £13.90 a week for class 3 though.

Firstly, thanks for the helpful info, hope it helps pre-warn someone else reading this thread.

My only problem with doing that is that it's five-times the cost !

I should have lied to them, and paid it after I left (and became non-resident for UK-tax), but at that time I was assured by Newcastle that I already had one year's contributions more, than I would ever need !

It's hard to stay within their rules, when they keep on moving the goalposts, after one has made decisions & is committed.

FWIW I view early-retirement at being voluntarily-unemployed, without recourse to public-funds, and am quite happy to be so. I have no gripe about not being able to claim off the Social, it was my own free choice, and correct at-the-time. My 'employment' since then is managing our investment-funds, keeping-track of world economic-trends, and adjusting our strategy as-required.

I'd still be willing to pay the extra class-2 contributions, but not at five-times the price !

I didn't get where I am today (shades of Reggie Perrin, or rather, his boss ?) by being a mug !

[steve187]

ricardo ,

if you became self employed in the UK again you could start to pay class 2 again. but they announced in the last budget that class 2 is being scrapped, i can not find any details on the web, at the moment maybe too soon.

as it stands you will get a 31/35 pension should the 35 years come into play. it will work out at about £4.28 per week per year paid, giving you about £133 a week.

What i can not understand is that it was 44 years for men, they then reduced to 30 years, where was the sense in that, it would bring a lot more immigrants into the pension bracket, they are now going to change back to 35 years, which has caught me out a bit.

[Expattaff1308]

The International Consortium of British Pensioners (ICBP)

New article in the Eastern Eye ethnic newspaper in the UK, featuring Baroness Benjamin.

http://www.britishpensions.com/…/03/Eastern-Eye-23.03.15.jpg

[Liquorice]

steve187, on 24 Mar 2015 - 08:36, said:steve187, on 24 Mar 2015 - 08:36, said:

ricardo ,

if you became self employed in the UK again you could start to pay class 2 again. but they announced in the last budget that class 2 is being scrapped, i can not find any details on the web, at the moment maybe too soon.

as it stands you will get a 31/35 pension should the 35 years come into play. it will work out at about £4.28 per week per year paid, giving you about £133 a week.

What i can not understand is that it was 44 years for men, they then reduced to 30 years, where was the sense in that, it would bring a lot more immigrants into the pension bracket, they are now going to change back to 35 years, which has caught me out a bit.

@Steve and Ricardo.

Maybe it is my interpretation of the information you so kindly gave the link to Steve, but I think Ricardo would get a full Tier State Pension based on the 30 year qualification rule. Single Tier State Pension Fact Sheet - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf

Quote

If you contribute entirely to the new single-tier scheme, it will replace today’scomplicated state pension with a single amount based on 35 qualifying years of National Insurance contributions. If you have fewer than 35 years when you reachState Pension age you will get a pro-rata amount.

The key word here being 'entirely'. Ricardo hasn't/wouldn't have contributed a single penny to the new scheme, so that suggests his state pension will be based on the scheme he paid into, which was only 30 qualifying years.

It then states:

Quote

If you have made National Insurance contributions or received credits under the current system they will be converted into a single-tier foundation amount. Providing you meet the minimum qualifying year requirement, you will get no less than the amount calculated using the present scheme rules.

Again, my interpretation is that if you have paid anything into the old scheme (prior to April 2016), then providing you have 30 qualifying years you will get the full amount of the new tier state pension at retirement.

I think Ricardo stated he had 31 qualifying years.

To me that also suggests that anyone who paid into the old scheme, even if they had a shortfall of contributions, would still have it calculated on the basis of 30 years contributions and not 35.

As an example, a person who reaches age 65 in 2018 but only has 27 years contributions.

Lets say the new flat rate pension is £165 per week in 2018.

I believe that person would get 27/30th of the new rate pension....................that would be £148.50

I'll stand corrected, but that is how it reads to me.

Providing you meet the minimum qualifying year requirement, you will get no less than the amount calculated using the present scheme rules.

Therefore Ricardo having 31 years contributions under the old 30 year qualifying scheme, would therefore receive the full new state pension at the time of reaching retirement age. Maybe I'm missing a factor in here but that's how I'm understanding the information.

[MAZ3]

I wonder where this rule change will leave me?,paid over 35 years NIC,but 29 were opted out. Only 1% less,but may make a big difference?.

Not even our Pension Trustees could explain how much less we will get!.

I've got over 10 years(at the present rate)before I draw the BSP,I'll wait and see if paying extra to top-up any deficit is worth it.

[Chivas]

Anyone care to Comment on this...........I was going put in the dedicated thread but it attracts less visitors

Pension Pots can be taken from April 6th in Cash rather than having to Purchase an annuity as at present........

Now if the entire Pot is taken in one go 25% is tax free and 75% is subject to tax at your prevailing rate........Am sure we all agree......Life Companies issues tax paid certificate and you can submit this to the Inland Revenue and you may receive a rebate depending if you didnt use all your Personal allowance.......hopefully we all agree

However

What if you only want to take £25,000 out of Pot thats valued at £100,000..........

Now my interpretation is that quarter is tax free hence £6250 and the balance is taxed and remitted to you...............

But reading other forums and other Poster views many are under the impression that the entire £25,000 will be tax free because it equates to 25% of the Pot

However I personally cannot see that this is correct BECAUSE the Value of the remainder of the Pot will still be fluctuating and could soar to 200k as an example or worse case scenario drop to vitually nothing..........Now if that happened you having drawn out 25k would have had your entire Pension Pot tax free..........

Surely EACH drawdown/withdrawal whatever you want to call it is subject to the first scenario I stated..........?? ie £6250 tax free the balance taxed....??

Hope to hell thats clear for others to understand......!!

[JB300]

I wonder where this rule change will leave me?,paid over 35 years NIC,but 29 were opted out. Only 1% less,but may make a big difference?.

Not even our Pension Trustees could explain how much less we will get!.

I've got over 10 years(at the present rate)before I draw the BSP,I'll wait and see if paying extra to top-up any deficit is worth it.

I don't think that anybody more than 12-18months away from receiving a state pension knows with any certainty what they're going to get anymore so I (at 49) after paying NI for 25 years am going to assume that I'm going to get sweet FA... Anything more than that is a bonus.

I did the maths on AVCs when I first became a Non-UK resident for tax purposes (43) & at that time calculated I'd have to live another 35 years to break even, so given my final salary pension reduces its payout by whatever state pension I receive at 65, decided it simply wasn't worth it.

I do admit to being a little peeved at having paid the maximum NI you could pay from 1989 until they removed the ceiling (then I paid a lot more) I'll receive a much lower state pension than people who have contributed much less, but that's life...

[MAZ3]

I've planned my retirement without my State pension,it will probably be more like 70 if/when I get there!.

But if I do they will be a clawback from my final salary pension,not sure of the percentage yet.

It all stinks,paid all my life and people without paying a penny can get benefit's similar to my pension.

[mikecwm]

@ Ricardo

Class 2 contributions are for self employed only.

Class 3 contributions are voluntary contributions to fill gaps in your record in order to qualify for state pension.

Your entitled to pay Class 3 even when living abroad, provided you made at least 3 years contributions in the UK (which you have).

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

I should contact HMRC again. Currently £13.90 a week for class 3 though.

Firstly, thanks for the helpful info, hope it helps pre-warn someone else reading this thread.

My only problem with doing that is that it's five-times the cost !

I should have lied to them, and paid it after I left (and became non-resident for UK-tax), but at that time I was assured by Newcastle that I already had one year's contributions more, than I would ever need !

It's hard to stay within their rules, when they keep on moving the goalposts, after one has made decisions & is committed.

FWIW I view early-retirement at being voluntarily-unemployed, without recourse to public-funds, and am quite happy to be so. I have no gripe about not being able to claim off the Social, it was my own free choice, and correct at-the-time. My 'employment' since then is managing our investment-funds, keeping-track of world economic-trends, and adjusting our strategy as-required.

I'd still be willing to pay the extra class-2 contributions, but not at five-times the price !

I didn't get where I am today (shades of Reggie Perrin, or rather, his boss ?) by being a mug !

Even at 5 times the cost for Class 3 years (over Class 2) - there is no better investment you can make. Within 2 1/2 years of starting your pension you will have recouped that outlay. It's all gravy after that.

Just be careful not to die in the first couple of years - not that you would be concerned then anyway.

I've successfully topped my years up from 14 to the required 30. All at Class 3 rates - over a period of about 6 years.

Sure it seemed like a lot of money at the time, but I figured the maths out.

When I start receiving my pension I'll also have over 3 years of delay, (an extra 10.2% / year) which also adds in those 3 years of inflation adjustment.

Should give me a little over 150 pounds a week.

Much better than the approx 50 pounds I could have expected without paying back years and starting it at 65.

[JB300]

@ Ricardo

Class 2 contributions are for self employed only.

Class 3 contributions are voluntary contributions to fill gaps in your record in order to qualify for state pension.

Your entitled to pay Class 3 even when living abroad, provided you made at least 3 years contributions in the UK (which you have).

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

I should contact HMRC again. Currently £13.90 a week for class 3 though.

Firstly, thanks for the helpful info, hope it helps pre-warn someone else reading this thread.

My only problem with doing that is that it's five-times the cost !

I should have lied to them, and paid it after I left (and became non-resident for UK-tax), but at that time I was assured by Newcastle that I already had one year's contributions more, than I would ever need !

It's hard to stay within their rules, when they keep on moving the goalposts, after one has made decisions & is committed.

FWIW I view early-retirement at being voluntarily-unemployed, without recourse to public-funds, and am quite happy to be so. I have no gripe about not being able to claim off the Social, it was my own free choice, and correct at-the-time. My 'employment' since then is managing our investment-funds, keeping-track of world economic-trends, and adjusting our strategy as-required.

I'd still be willing to pay the extra class-2 contributions, but not at five-times the price !

I didn't get where I am today (shades of Reggie Perrin, or rather, his boss ?) by being a mug !

Even at 5 times the cost for Class 3 years (over Class 2) - there is no better investment you can make. Within 2 1/2 years of starting your pension you will have recouped that outlay. It's all gravy after that.

Just be careful not to die in the first couple of years - not that you would be concerned then anyway.

I've successfully topped my years up from 14 to the required 30. All at Class 3 rates - over a period of about 6 years.

Sure it seemed like a lot of money at the time, but I figured the maths out.

When I start receiving my pension I'll also have over 3 years of delay, (an extra 10.2% / year) which also adds in those 3 years of inflation adjustment.

Should give me a little over 150 pounds a week.

Much better than the approx 50 pounds I could have expected without paying back years and starting it at 65.

Can you please share your calculations on how you get full payback after 2 1/2 years?

It's been a longtime (over 5 years) since I looked into this but at that time I calculated it would take around 35 years to break even for the contributions they were quoting me,

[steve187]

class 3 NI are about £13.55 a week lets say £15.00, that's £780 a year, say a state pension will be £150,00 a week divided by 35 years = £4.28 per week for every year you buy. thats £222.56 a year. so 3.5 years to break even. If somehow you can pay class 2, its less than a year to break even.

[Liquorice]

Chivas, on 24 Mar 2015 - 23:00, said:Chivas, on 24 Mar 2015 - 23:00, said:

Anyone care to Comment on this...........I was going put in the dedicated thread but it attracts less visitors

Pension Pots can be taken from April 6th in Cash rather than having to Purchase an annuity as at present........

Now if the entire Pot is taken in one go 25% is tax free and 75% is subject to tax at your prevailing rate........Am sure we all agree......Life Companies issues tax paid certificate and you can submit this to the Inland Revenue and you may receive a rebate depending if you didnt use all your Personal allowance.......hopefully we all agree

However

What if you only want to take £25,000 out of Pot thats valued at £100,000..........

Now my interpretation is that quarter is tax free hence £6250 and the balance is taxed and remitted to you...............

But reading other forums and other Poster views many are under the impression that the entire £25,000 will be tax free because it equates to 25% of the Pot

However I personally cannot see that this is correct BECAUSE the Value of the remainder of the Pot will still be fluctuating and could soar to 200k as an example or worse case scenario drop to vitually nothing..........Now if that happened you having drawn out 25k would have had your entire Pension Pot tax free..........

Surely EACH drawdown/withdrawal whatever you want to call it is subject to the first scenario I stated..........?? ie £6250 tax free the balance taxed....??

Hope to hell thats clear for others to understand......!!

Hi Chivas, do you mind if I clarify some points you made.

Firstly from April 2015 only those aged over 55 and considering retirement will be able to access their pots.

Those who are already drawing from a private/company pension will not get access to the remainder of their pots until April 2016.

You also misinterpret the tax implications.

Scenario 1.

Assuming you retire April 2015 and working on your figure of a £100,000 pot.

You can withdraw 25% tax free, that is £25,000. That does not affect your personal allowance.

The remainder is taxed at 20% up to the higher tax limit (around £42,285).

Thereafter the remainder would be taxed at 40%

i.e. £100,000 pot.

£25,000 tax free

£10,600 tax free personal allowance (assuming you have no other income. i.e. early retirement,not taking state pension)

£35,600 - £42,285 taxed at 20%. That's £6,685 taxed at 20% (£1,337 tax deducted)

£42,285 - £100,000 taxed at 40%. That's £57,715 taxed at 40% (£23,086 tax deducted)

If my maths is correct from a pot of £100,00 you'd pay £24,423 tax.

If at the same time of cashing your pot you started to receive state pension, then that would take up most of your personal income allowance and you'd pay around £25,000 tax.

You can only receive the tax free lump sum once, thereafter you are subject to tax above your personal allowance of £10,600.

Assuming you retire April 2015, the state pension is £155 per week, personal allowance is £10,600, and you have a private pension pot of £100,000.

You can withdraw £25,000 tax free from your pension pot.

Your annual state pension would be £8,060pa

You could withdraw another £2,540pa from your pot tax free. (£8060 + £2540 = £10,600)

Anything above that extra £2,540pa from your pension pot would be taxed at 20% up to the higher limit of £42,285pa

[mikecwm]

@ Ricardo

Class 2 contributions are for self employed only.

Class 3 contributions are voluntary contributions to fill gaps in your record in order to qualify for state pension.

Your entitled to pay Class 3 even when living abroad, provided you made at least 3 years contributions in the UK (which you have).

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

I should contact HMRC again. Currently £13.90 a week for class 3 though.

Firstly, thanks for the helpful info, hope it helps pre-warn someone else reading this thread.

My only problem with doing that is that it's five-times the cost !

I should have lied to them, and paid it after I left (and became non-resident for UK-tax), but at that time I was assured by Newcastle that I already had one year's contributions more, than I would ever need !

It's hard to stay within their rules, when they keep on moving the goalposts, after one has made decisions & is committed.

FWIW I view early-retirement at being voluntarily-unemployed, without recourse to public-funds, and am quite happy to be so. I have no gripe about not being able to claim off the Social, it was my own free choice, and correct at-the-time. My 'employment' since then is managing our investment-funds, keeping-track of world economic-trends, and adjusting our strategy as-required.

I'd still be willing to pay the extra class-2 contributions, but not at five-times the price !

I didn't get where I am today (shades of Reggie Perrin, or rather, his boss ?) by being a mug !

Even at 5 times the cost for Class 3 years (over Class 2) - there is no better investment you can make. Within 2 1/2 years of starting your pension you will have recouped that outlay. It's all gravy after that.

Just be careful not to die in the first couple of years - not that you would be concerned then anyway.

I've successfully topped my years up from 14 to the required 30. All at Class 3 rates - over a period of about 6 years.

Sure it seemed like a lot of money at the time, but I figured the maths out.

When I start receiving my pension I'll also have over 3 years of delay, (an extra 10.2% / year) which also adds in those 3 years of inflation adjustment.

Should give me a little over 150 pounds a week.

Much better than the approx 50 pounds I could have expected without paying back years and starting it at 65.

Can you please share your calculations on how you get full payback after 2 1/2 years?

It's been a longtime (over 5 years) since I looked into this but at that time I calculated it would take around 35 years to break even for the contributions they were quoting me,

Okay - calculator ready? Pencil sharpened?

Here we go.

I've gone back through all the letters I sent with the payments. Bear in mind for older years you are paying back are at a lower rate than current years - which helps - some of mine went back as far 1976 - that was 630 pounds, while 1977 was only 192 pounds. They tell you what the rates are for each year - and I didn't argue with them.

Many years were at 405 pounds. I think that really low one for 1977 might have been because I had already paid some NI - before emigrating to OZ.

My total for 16 years is 6247-20 pounds (no pound key on this laptop - bear with me).

If I received my pension at 65 when it was approx 100 pound / week and I only had 14 years I would receive 2426.66 / year

(14 / 30 X 100 X 52).

Now with 30 years and still using the same weekly rate - 100 pounds I make it 5200 pounds / year.

The difference = 2773.34 pounds.

So I paid them 6247, and receive an extra 2773. Divide the first by the second and I get it to 2.25 years.

So at my new rate it takes 2 1/4 years to recover those extra 16 years I paid.

Sounds like a good deal to me.

Try and find another investment as good as that one - an extra 2773 pounds in the hand every year - for as long as I live - and I'm planning on 100.

[Liquorice]

steve187, on 25 Mar 2015 - 07:51, said:

class 3 NI are about £13.55 a week lets say £15.00, that's £780 a year, say a state pension will be £150,00 a week divided by 35 years = £4.28 per week for every year you buy. thats £222.56 a year. so 3.5 years to break even. If somehow you can pay class 2, its less than a year to break even.

Steve is correct.

Using Steves figure of £150pw as full pension.

Someone falling short of 4 years contributions would only get 26/30 of £150. i.e. £130pw.

Paying a years class 3 contribution would be £13.55 x 52 = £704.60

£704.60pa x 4 years shortfall = £2,818.40 total.

The difference between the £130pw pension (shortfall payment) and the full pension £150pw is £20.

£2,818.40 shortfall payments divided by £20 = 140.9

So after 140 weeks (just over 2 1/2 years) on full state pension of £150 you would recoup your outlay.

£20 x 140.9 weeks = £2,818.

Bare in mind if you paid the shortfalls at £13.55 but your pension increased annually, then your outlay could be recouped in just over 2 years.

[steve187]

Having developed a new hobby of reading up on state pension changes, i see that as from April 2016, a state pension deferment will be reduced from 1% for every 5 weeks deferment to 1% for every 10. making a maximum of 5% a year.

at the below class 3 rates it will take 3 years to break even on a new single tier pension

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953

You’ll pay different rates if you pay voluntary contributions by 5 April 2019 to make up for gaps between April 2006 and April 2017.

Your contribution What it covers Rate you pay until 5 April 2019 Class 2 Gaps between 6 April 2006 and 5 April 2011 £2.65 a week Class 2 Gaps between 6 April 2011 and 5 April 2017 Rate from the year your contribution covers Class 3 Gaps between 6 April 2006 and 5 April 2010 £13.25 a week Class 3 Gaps between 6 April 2010 and 5 April 2017 Rate from the year your contribution covers

[Liquorice]

steve187, on 25 Mar 2015 - 09:30, said:

Having developed a new hobby of reading up on state pension changes, i see that as from April 2016, a state pension deferment will be reduced from 1% for every 5 weeks deferment to 1% for every 10. making a maximum of 5% a year.

at the below class 3 rates it will take 3 years to break even on a new single tier pension

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953

You’ll pay different rates if you pay voluntary contributions by 5 April 2019 to make up for gaps between April 2006 and April 2017.

Your contribution What it covers Rate you pay until 5 April 2019 Class 2 Gaps between 6 April 2006 and 5 April 2011 £2.65 a week Class 2 Gaps between 6 April 2011 and 5 April 2017 Rate from the year your contribution covers Class 3 Gaps between 6 April 2006 and 5 April 2010 £13.25 a week Class 3 Gaps between 6 April 2010 and 5 April 2017 Rate from the year your contribution covers

Isn't the UK Pensions system so marvellously simplistic that each individual can work out exactly what they've paid and what their entitled to....NOT!

[Liquorice]

MAZ3, on 24 Mar 2015 - 21:05, said:

I wonder where this rule change will leave me?,paid over 35 years NIC,but 29 were opted out. Only 1% less,but may make a big difference?.

Not even our Pension Trustees could explain how much less we will get!.

I've got over 10 years(at the present rate)before I draw the BSP,I'll wait and see if paying extra to top-up any deficit is worth it.

Maz. at a guess you'll get 6/30 of the old rate state pension because you opted out.

Where you will be worse off is had you not contracted out, you would get the new flat rate pension, which will jump approx. £40 a week from the old rate, whereas your private pension will have no such increase other than the average interest it accrues.

If your reading all the posts, you'll see we have established that it is beneficial and viable to pay shortfalls.

In your case I don't think you will have the option to pay for shortfalls for the years you were contracted out.

That was a choice made by yourself or the company at that time and you didn't make the same NI contributions as those who didn't contract out.

You do have the choice to pay class 3 NI for the remaining 10 years, but you really need to know if you will be paid your state pension at the lower rate or the new flat rate in order to calculate what period of time it would take for you to recoup those payments. Your Pension provider should be able to tell you that.

Bare a thought for those retired expats already in receipt of their state pension, who are probably sickened to the teeth reading this thread, because their pensions are frozen..............they have no options.

[JB300]

class 3 NI are about £13.55 a week lets say £15.00, that's £780 a year, say a state pension will be £150,00 a week divided by 35 years = £4.28 per week for every year you buy. thats £222.56 a year. so 3.5 years to break even. If somehow you can pay class 2, its less than a year to break even.

I can't remember the exact number but this was around 3 years after leaving the UK & they were asking for a few thousand £s to "Catch Up" (now I think about it, there was also 18 months of me being self-employed as well) & my projected State Pension was around £2,100 pa (around £40 per week) so the difference before & after paying wasn't worth it to me.

Obviously my projected payment are so low because I was contracted out of SERPS for the majority of my career (around 21 years) & it's possible that the £40 per week would have risen if I had started to pay but as I said, I'm assuming £0 from them & have planned accordingly.

Does raise an interesting point though, is the new minimum pension payable to somebody who was contracted out of SERPS or is this yet one more factor to consider in the new "Simplified" state pension scheme?

Edit: I think Faz has answered my question above (& Steve below, thanks guys) & I'm expecting to get around 4/30ths of the BSP or as I planned next to sweet FA.

Can't grumble though, I'm happy with the 21/60ths (index linked) of my final salary at 60, reducing by whatever I do get from BSP at 65

[steve187]

the single tier pension is available to 'contracted out' people, but you will get a percentage deduction for those years, as you would on the current system.

see here- https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

edit pension forecast forms here - https://www.gov.uk/state-pension-statement

[MAZ3]

MAZ3, on 24 Mar 2015 - 21:05, said:

I wonder where this rule change will leave me?,paid over 35 years NIC,but 29 were opted out. Only 1% less,but may make a big difference?.

Not even our Pension Trustees could explain how much less we will get!.

I've got over 10 years(at the present rate)before I draw the BSP,I'll wait and see if paying extra to top-up any deficit is worth it.

Maz. at a guess you'll get 6/30 of the old rate state pension because you opted out.

Where you will be worse off is had you not contracted out, you would get the new flat rate pension, which will jump approx. £40 a week from the old rate, whereas your private pension will have no such increase other than the average interest it accrues.

If your reading all the posts, you'll see we have established that it is beneficial and viable to pay shortfalls.

In your case I don't think you will have the option to pay for shortfalls for the years you were contracted out.

That was a choice made by yourself or the company at that time and you didn't make the same NI contributions as those who didn't contract out.

You do have the choice to pay class 3 NI for the remaining 10 years, but you really need to know if you will be paid your state pension at the lower rate or the new flat rate in order to calculate what period of time it would take for you to recoup those payments. Your Pension provider should be able to tell you that.

Bare a thought for those retired expats already in receipt of their state pension, who are probably sickened to the teeth reading this thread, because their pensions are frozen..............they have no options.

I agree,it's absolutely disgusting that where you chose to retire(and save the NHS etc costs),has any bearing on your increases. Especially based on so called agreements from the 1950's,with a lot the Commonwealth Counties excluded. Everyone should get their pension on their NIC and not pot luck where they live!.

I will contact my Pension Admin and ask the figures for the clawback and NI people for my NIC figures to work out if(or can I)it's worth topping up my contributions or not.

My sister did(she had the old low Married Women's NI)and it's literally paid off,after about 2/3 years and now she's in pocket for 5 years and counting.