Uk National Insurance Contributions

[rak sa_ngop]

The following is an excerpt taken from an e-bulletin from The Fry Group (www.thefrygroup.co.uk) and is partly related to a discussion in an earlier thread this year regarding the UK National Health service

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ISSUE 26 - JUNE 2006

Providing For Your Retirement

The UK Government has announced that it will be introducing many of the recommendations made following Lord Turner’s recent pension review. We look at what the changes mean, and the importance of making adequate plans for retirement.

Reform of the UK state pension has been predicted for some time. The Government commissioned an independent pensions review to assess the current system and propose changes. The recommendations from the review were issued in December 2005, and our E-Bulletin in December 2005 reported on the Commission’s findings.

On 26th May 2006, the Government issued a white paper announcing the following changes:

* The state pension age for men and women will increase to 66 in 2024, 67 in 2034 and 68 in 2044. Each of these changes will be phased in over the two preceding years.

* The state pension will be linked to earnings rather than prices. Further details will be announced at the start of the next Parliament.

* The number of years’ contributions required for people to qualify for a full basic state pension will be cut to 30.

* From 2012, workers will be automatically enrolled into a new, low-cost national savings scheme. There will be the opportunity to opt out of this scheme.

The reforms address the fact that people are living longer and also ensure that women and carers do not lose out if they take time out from working to raise a family or care for a relative.

For British expatriates the announcements mean that 30 years of national insurance contributions will be necessary to guarantee a UK state pension, rather than the current 44 for men and 39 for women. As a result, the state pension does provide a very cost-effective means of saving for retirement.

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I personally have been advised by my financial advisors (WT Fry) to stop making my Class 3 National Insurance Contributions (7.35 pounds a week) as I have more than 30 years of contributions already (confirmed by a recent pension forecast from the Inland Revenue). As this reforrm is still a White Paper and has not become law yet, in the event that the changes are not made I will make up the missing contributions at a later date. I do not know what would happen to any surplus contributions beyond 30 years if these changes do become law but one can only expect the obvious.

I recommend that members speak to their own advisors before acting on the above information. Hopefully the above info has not been superceded yet and is still valid.

[soap]

lets hope the 30 years is ching ching

[jingjingna]

I am aware of the 30 Years National Insurance contributions for women but I am not so sure it is the same for men.

[JohnC]

If this becomes law I suspect the situation in respect of extra years payments will remain the same as now, at the moment those of us that left school at 15 have a working life of 50 years however, the state pension contributions reach their maximum at the 44 year point therefore if you never miss a year you pay an extra 6 years contributions (50 - 44) without being able to increase your state pension. By deduction therfore if you only need 30 years contributions any extra years from then on will go to the government pot! I note there is no mention of ex pats who are denied the annual pension increase despite having completed 44 years contributions! I am considering raising this with the European Parliament as I think it infringes our paid up rights!