Making Voluntary National Insurance Contributions To Maintain Your Uk State Pension

[Mumbo Jumbo]

Not sure if this is the right place to post this ..? Ive just read this ...............

Making voluntary National Insurance contributions to maintain your UK state pension entitlement is a worthwhile consideration while living abroad.

Class 2 contributions, which you are able to make if you are working overseas, protect your entitlement to UK social security benefits such as incapacity benefit and maternity allowance as well as the state pension. So, if planning to return to the UK at any point, you know you are covered for all these things. Class 3 contributions only add towards state pension entitlement, but can be paid whether living overseas or not.

Class 3 contributions cost £7.35 a week, while Class 2 contributions are £2.10.

If your circumstances change, you can switch between Class 2 or Class 3 Nics by filling in form CF83. For more information, contact HM Revenue & Customs (HMRC) at www.hmrc.gov.uk, or by calling Int 44 1912253540 from outside the UK, and 0845 9154811 in the UK.

Expatriates can have their UK state pensions paid into their local bank account in many countries. It can be paid in the currency of their choice, provided the UK has a banking agreement with that country, to avoid bank charges.

However, be aware that if you are planning to retire abroad and have built up some state pension in the UK, you may not be entitled to a state pension which is uprated in line with inflation.

About 400,000 British pensioners who live abroad get their pensions uprated in line with inflation, but about 550,000 do not because they live in Commonwealth countries.

Am i missing some thing .....So If I pay class 2 contributions, at £2.10. it seem's I get more benfits than if I pay for class 3 at £7.35 a week ...? or may be I am reading this all wrong...?

Thamks .......... Mumbo

[GuestHouse]

I believe, though I'm not entirely sure, that the Class 2 payments are only allowed if you are within the EU, outside the EU you can only pay Class 3.

I suggest that you contact the pensions service for a forcast, they will tell you what pension you can expect on your current contribution rate and they also tell you how much you need to pay to get full payment.

Contact Details for Pension Forcast

I recenlty discovered I need to pay an extra £1030 to get my full pension - but I still consider this a bargain.

----

Just an asside: I work with contract law and technical specifications, I think I do quite well at it. But believe me, there I have never ever been able to work out the meanings hidden in the pension and pension contribution leaflets - They are almost impossible to fathom... no they ARE impossible to fathom.

Edited August 18, 2006 by GuestHouse

[dboy]

if you live overseas it its now ok. it will be indexts as its payed into a uk bank acount and you can draw it overseas as though you are still in the uk. but its better if you dont tell them as certain countrys are not linked

[Mobi]

I have just received an updated pension forecast from the Revenue and Customs office.

They are aware I am living in Thailand, and have mentioned that I can pay either class 2 or class 3 contributions. However, the conditions for each are not clear in their double-speak and I will try to call them next week to clarify.

Last time I contacted them for a pension forecast (in 2005) they gave me a forecast for my basic state pension, and another forecast for my Additional State Pension. In the latest letter they just say "this forecast does not include any Additional state Pension you may be entitled to" Does anyone know why they have not told me this time? Has something changed since 2005?

Thanks

BTW I would be wary about not telling them where you are residing. These days they do extensive checks of pensioners' residences, including visits.

[chang35baht]

I believe, though I'm not entirely sure, that the Class 2 payments are only allowed if you are within the EU, outside the EU you can only pay Class 3.

I suggest that you contact the pensions service for a forcast, they will tell you what pension you can expect on your current contribution rate and they also tell you how much you need to pay to get full payment.

Contact Details for Pension Forcast

I recenlty discovered I need to pay an extra £1030 to get my full pension - but I still consider this a bargain.

----

Just an asside: I work with contract law and technical specifications, I think I do quite well at it. But believe me, there I have never ever been able to work out the meanings hidden in the pension and pension contribution leaflets - They are almost impossible to fathom... no they ARE impossible to fathom.

I`ve just tried to contact them for a forecast. The service is down till monday. Will try again then.

[Mobi]

I believe, though I'm not entirely sure, that the Class 2 payments are only allowed if you are within the EU, outside the EU you can only pay Class 3.

I suggest that you contact the pensions service for a forcast, they will tell you what pension you can expect on your current contribution rate and they also tell you how much you need to pay to get full payment.

Contact Details for Pension Forcast

I recenlty discovered I need to pay an extra £1030 to get my full pension - but I still consider this a bargain.

----

Just an asside: I work with contract law and technical specifications, I think I do quite well at it. But believe me, there I have never ever been able to work out the meanings hidden in the pension and pension contribution leaflets - They are almost impossible to fathom... no they ARE impossible to fathom.

I`ve just tried to contact them for a forecast. The service is down till monday. Will try again then.

I first contacted them on their website back in May - took ages and several reminders to even get an email acknowledgement out of them. They finally wrote to me (snail mail), and I had to fill in a load of forms. Note that nothing could be done via the internet except the intial enquiry.

Yesterday 18th August I just recieved their reply - and as I said in my earlier post, I only got half a forecast, togther with a load of indecipherable double speak.

Guesthouse, I was the FD of a multi national, city based, multi billion dollar financial organisition, and handled many complex legal matters, and I can't fathom out what the h..l they are saying either.

[chang35baht]

Mobi thanks for the heads up. Maybe I will just wait till I go back in October and I can then get confused face to face with someone.

[Mobi]

Mobi thanks for the heads up. Maybe I will just wait till I go back in October and I can then get confused face to face with someone.

The time limit for paying past contributions is "6 years from the date the contributions were first due", so you have plenty of time.

[Oswulf]

Given that the pension is not increased for people retired in Thailand, making additional contributions is a very poor investment. The only exception I can think of is if you're just under the threshold for receiving a state pension at all. IIRC, if you have only 10 years contribution, you get no pension whatsoever. If you have to have made 11 at least years' contribution the amount you get is calculated as the number of years' contribution divided by 44 multiplied by the full state pension.

However, in the last budget it was announced that they were changing the rules to make it easier for people with patchy work records to get a larger pension. The details (AFAIK) haven't been worked out yet.

[likite]

Am i missing some thing .....So If I pay class 2 contributions, at £2.10. it seem's I get more benfits than if I pay for class 3 at £7.35 a week ...? or may be I am reading this all wrong...?

If you employed or self employed anywhere in the world you can apply to pay class 2 contributions. If you have no gainful employment then you can pay class 3 contributions, again anywhere in the world. The main reason to pay contributions either class2 or class 3 is to maintain your state pension. (class 2 is the rate self employyed people pay in the UK)

Before you decide to pay contributions always get a pension forecast first as this will tell you what your entitlement is at the moment and will tell you what affect paying voluntary contributions will have on your state pension at retirement. You can decide then if it worth while.

Go to http://www.hmrc.gov.uk/pdfs/ca3638.pdf complete the form and then fax it to them at Inland Revenue Newcastle. From outside the UK

Dial international code then;

Telephone 44-191-2037010

Fax 44-191-2257800

Hope this helps

[Mobi]

Given that the pension is not increased for people retired in Thailand, making additional contributions is a very poor investment. The only exception I can think of is if you're just under the threshold for receiving a state pension at all. IIRC, if you have only 10 years contribution, you get no pension whatsoever. If you have to have made 11 at least years' contribution the amount you get is calculated as the number of years' contribution divided by 44 multiplied by the full state pension.

However, in the last budget it was announced that they were changing the rules to make it easier for people with patchy work records to get a larger pension. The details (AFAIK) haven't been worked out yet.

Not too sure I agree with this.

It will obviously depend on the individual circumstances - but if you take my sistuation as a case in point, if I pay class 2 contributions for the next 5 years - say around 600 pounds, I will increase my basic pension from78% of the full amount to 91% of the full amount - which at today's rates translates to around 570 pounds additional pension per annum. I'm ahead after one year, aren't I? Sounds like a good deal to me.

The best thing for everyone is to get a forecast, and in that forecast they will be told how much back contributions they are allowed to make and how that, plus future contributions, will affect their pension at 65. They can then do the calculation.

[Mumbo Jumbo]

I was intrested in dboy , comment ... ( if you live overseas it its now ok. it will be indexts as its payed into a uk bank acount and you can draw it overseas as though you are still in the uk. but its better if you dont tell them as certain countrys are not linked )

does any one know which country's are indexed linked to UK Pension Payments ...?

and R4199246 comments ..... ( I am a pensioner and have my pension paid into a Bank in UK but because that know I live in Thailand it has not been upgraded since 2001. )

seem's a knock back after paying so many past years into the system , There must be a way around this -- living out side of the UK after pension age and then not receiving the index payment amounts..? Does this sound Right .........

Mumbo

[Mobi]

I was intrested in dboy , comment ... ( if you live overseas it its now ok. it will be indexts as its payed into a uk bank acount and you can draw it overseas as though you are still in the uk. but its better if you dont tell them as certain countrys are not linked )

does any one know which country's are indexed linked to UK Pension Payments ...?

and R4199246 comments ..... ( I am a pensioner and have my pension paid into a Bank in UK but because that know I live in Thailand it has not been upgraded since 2001. )

seem's a knock back after paying so many past years into the system , There must be a way around this -- living out side of the UK after pension age and then not receiving the index payment amounts..? Does this sound Right .........

Mumbo

Sorry but its absolutely correct.

Thailand has no index linking and S Africa is another. there's loads of them. I bleieve I'm right in saying that America is index linked. No rhyme or reason to it - it was set up years ago and the goverment will not change it because it will cost them billions.

There was a recent case brought by S African pensioners that went all the way to the House of Lords, and the appeal was rejected. You are screwed. At least we are living in a period of relatively low inflation, which is much better tha some of the older pensioners.

Be very careful about saying you live in the UK. I know from personal experience that they go round and check if they have any suspicion that you do not reside there.

[Mumbo Jumbo]

Thanks Mobi D'Ark,

It makes me wonder just how many people there are living out of the UK and having their Pensions paid into a UK bank They possibily had before moving away from the UK, and did not let the Pensions department know..? and still don't know .

Mumbo ..........

[likite]

suggest that you contact the pensions service for a forcast, they will tell you what pension you can expect on your current contribution rate and they also tell you how much you need to pay to get full payment.

Contact Details for Pension Forcast

the contact details above are for people living in the UK follow this if living outside the UK

Go to http://www.hmrc.gov.uk/pdfs/ca3638.pdf complete the form and then fax it to them at Inland Revenue Newcastle. From outside the UK

Dial international code then;

Telephone 44-191-2037010

Fax 44-191-2257800

If you have less than 11 years pension contributions then you will get zero pension from the UK. In this instance it is always beneficial to pay to have at least 11 years as the basic state pension at 11 years is around £1050 per annum.

[sometime]

Not sure if this is the right place to post this ..? Ive just read this ...............

Making voluntary National Insurance contributions to maintain your UK state pension entitlement is a worthwhile consideration while living abroad.

Class 2 contributions, which you are able to make if you are working overseas, protect your entitlement to UK social security benefits such as incapacity benefit and maternity allowance as well as the state pension. So, if planning to return to the UK at any point, you know you are covered for all these things. Class 3 contributions only add towards state pension entitlement, but can be paid whether living overseas or not.

Class 3 contributions cost £7.35 a week, while Class 2 contributions are £2.10.

If your circumstances change, you can switch between Class 2 or Class 3 Nics by filling in form CF83. For more information, contact HM Revenue & Customs (HMRC) at www.hmrc.gov.uk, or by calling Int 44 1912253540 from outside the UK, and 0845 9154811 in the UK.

Expatriates can have their UK state pensions paid into their local bank account in many countries. It can be paid in the currency of their choice, provided the UK has a banking agreement with that country, to avoid bank charges.

However, be aware that if you are planning to retire abroad and have built up some state pension in the UK, you may not be entitled to a state pension which is uprated in line with inflation.

About 400,000 British pensioners who live abroad get their pensions uprated in line with inflation, but about 550,000 do not because they live in Commonwealth countries.

Am i missing some thing .....So If I pay class 2 contributions, at £2.10. it seem's I get more benfits than if I pay for class 3 at £7.35 a week ...? or may be I am reading this all wrong...?

Thamks .......... Mumbo

It all depends on your age and you working life at this present time, if you have paid contributions for 27 years that normally allows you to a full state pension plus any SERPS that you have accumulated. This is under the new pensions reform visit http://www.dwp.gov.uk/pensionsreform

[Neeranam]

I only paid about 4 years into the UK pension fund.

It'd be a HUGE gamble for me to pay for 35 years, whatever it is weekly.

First I might not live that long, and secondly they will probably change the law in 25 years time, the way they are going.

I'd rather gamble another way.

[Mobi]

Just alittle post script that may be of interest.

I am still persuing my pension forecast and whether I can get 100 % pension etc etc, and how many voluntary contributions I may have to make to achieve all this.

I had a long chat on the phone with a young lad at the "overseas pension forecast office" in the UK.The results of this conversation were interesting.

Firstly he said that I must be gainfully employed in Thailand in order to pay class 2 contributions (around 2 quid a week) as opposed to class 3 contributions (around 7 quid a week). I asked how can I prove that I am working? He said they just take my word for it. In other words, it seemed to be "nod nod wink wink" you must be crazy if you pay the unemployed, 7 quid rate.

The next one is very interesting - especially for me. He said there is legislation currently pending that will reduce the qualification period for a full pension from 41 years to 34 years. He was VERY confident that this change will come in - effective in about one year. He advised me not to pay anything yet (I have paid about 35 years), and await the expected change.

He also said that they are planning to reduce the minimum qualification period (which will give a 25% pension) form 11 years to just 3 years of residence or in England or 3 years contribution payments. He wasn't as confident that this will go through, but he said it stood a good chance and I should pass this info onto my fellow expats.

So there you are, fellow expats.