There appears to be confusion about the payment of National Insurance Contributions as well as the benefits of the State Pension for UK Expats.
This post is intended to provide you with a basic understanding of the basics of the state pension. It also outlines the steps you will need to follow if you wish to make voluntary contributions or make up for any missed payments.
This information will allow you to make an informed decision about how to proceed.
Basic Facts:
You must have at least one qualifying year to be eligible for a basic state pension. A qualifying year is one in which any of the following applies.
* You have enough income to pay National Insurance contributions
* You are considered to have paid National Insurance Contributions
* You are eligible for sufficient National Insurance Contributions
To receive the full basic state pension, you must have attained 30 qualifying years if you were born after April 6, 1945.
The full basic state pension for tax year 2011/2012 will be GBP102.15 per weekly. It will rise annually by 2.5 percent or the highest earnings, prices, or both.
Your pension will be reduced if you have less than 30 years of qualifying experience. E.g. If you had only 15 years, you’d get GBP51.08 per Week (15/30 = 50% off GBP102.15).
Step 1: Find out where you’re at the moment.
The first thing you should do is to contact Newcastle’s state pension forecasting group and request a forecast.
This will give you information about the number of years you have been able to qualify and the amount of state pension you can expect.
You can reach them at +44 191 218 3600. They will send you the appropriate form to complete and return to you if you contact them. Remember to bring your NI number with you when calling HMRC.
You can also download the appropriate form from their website to speed up the process and then send it to them directly. It can be sent to the following address:
The Pension Service, Tyneview Park Whitley Road Newcastle upon Tyne NE98 1BA England. State Pension Forecasting Team.
Give them a few more weeks to get back to your.
Step 2: Make Voluntary Contributions
If you haven’t started making regular voluntary contributions, this is the next step. You can either make a Class 2 or 3 contribution.
You must be a Class 2 contributor and have been employed or self-employed for at least one year immediately prior to your departure. If you have any doubts about your eligibility, please contact the International Caseworker Team at +44 191 258 4811 National Insurance Contributions.
You will need to make Class 2 contributions if you are not eligible.
These are the benefits of Class 2 Contributions:
* They count towards your State pension when you retire
* They will allow you to receive the Employment and Support Allowance (previously known under the Incapacity Benefit), and bereavement benefits upon your return to the UK.
The benefits of Class 3 contributions are less. They don’t give you the Employment and Support Allowance if you return to the UK.
Additionally, Class 3 contributions can be more costly. The payment for Class 2 contributions is equivalent to GBP2.50 per Week (2011/2012). GBP12.60 per Week is the equivalent of Class 3 payments (2011/2012).
As you can see it is sensible to pay Class 2 Contributions whenever possible.
You will need to fill out the form CF83 in order to start contributions (Class 2 and 3) Google search “NI38” will return a copy.
You can make monthly payments by Direct Debit, or an annual payment.
Step 3: Make up for lost years
If you have not made any contributions in a while and you still don’t have 30 qualifying years, you can make up the years you didn’t have by making up for them going back 6 years. The State Pension Forecast, mentioned above, will show you how much you have to pay each year.
The forecast letter will contain instructions on how to pay for these years that have not been paid.
Ross Naylor, a UK-qualified financial advisor, is an expert. For the past 10 years, he has provided common-sense financial advice to British expatriates.