Have you topped up a UK pension to cover gaps?

[Brissy1]

The difficult bit will be finding the NI number from 35 years ago.

Eligibility
Plan your retirement income: step by step - GOV.UK

"If you live or work abroad (or have previously)
To pay Class 2 or Class 3 voluntary contributions you must have either:

• previously lived in the UK for 3 years in a row
• paid contributions or had Class 2 contributions treated as having been paid for at least 3 years

To pay Class 2 voluntary contributions both of the following must also apply:

• you worked in the UK immediately before leaving
• you’re currently working abroad (or you worked while you were abroad)

Between November 2017 and April 2019, HMRC’s guidance was incorrect. It said all these conditions must be true."

 

[MEL_Traveller]

So if i am eligible for class 2, and they reckon I have 9 years’ service (although the first and last are only half years?) - how much should I buy? 1 year to make 10. 3 years ‘just to be safe’ (covering the one year, plus the two part years)… or go all out and buy 10 years worth of the stuff?

 

[andye]

So if i am eligible for class 2, and they reckon I have 9 years’ service (although the first and last are only half years?) - how much should I buy? 1 year to make 10. 3 years ‘just to be safe’ (covering the one year, plus the two part years)… or go all out and buy 10 years worth of the stuff?

( As a general rule), If you think you'll live until 68, as many class 2s as you can afford

 

[MEL_Traveller]

( As a general rule), If you think you'll live until 68, as many class 2s as you can afford

i shall start the paperwork!

 

[SydneySwan]

( As a general rule), If you think you'll live until 68, as many class 2s as you can afford

And you can continue to pay class 2s for each year going forward. They are currently around £180 per year (class 3s are around £910 per year) and you can setup a direct debit arrangement to pay them. Each year paying class 2s at £180 should earn you about £330 per year in increased pension payments.

So if i am eligible for class 2, and they reckon I have 9 years’ service (although the first and last are only half years?) - how much should I buy? 1 year to make 10. 3 years ‘just to be safe’ (covering the one year, plus the two part years)… or go all out and buy 10 years worth of the stuff?

Don't be concerned about half years - if the record shows you have qualified for a year then you have qualified.

Things to consider;

Death - no refunds or payments to your estate if you die before drawing the pension. No pension for your surviving partner.

Legislative - UK pension is contributory so making it means-tested is much harder than in Australia where pension is welfare. The so-called 'Triple Lock' of annual indexation of payments in the UK could be abandoned as the current system is generally considered untenable (i.e. too expensive) longer term.

Frozen payments from date of eligibility - you receive the same pension amount as UK residents with the same number of years of pension eligibility when you drawdown your pension but there is no annual indexation of payments if you drawdown your pension whilst living in Australia, NZ, Canada and many other countries. You can mitigate this risk by retiring to the UK, the Philippines or most European countries which do receive indexed payments.

Currency - if the pound becomes the new Argentinian peso or the Australian dollar starts to emulate the Swiss franc then your pension payments decline when converted back to AUD. Of course if the reverse happens then happy days. Let's not go there.

 

[mel-world]

And you can continue to pay class 2s for each year going forward. They are currently around £180 per year (class 3s are around £910 per year) and you can setup a direct debit arrangement to pay them. Each year paying class 2s at £180 should earn you about £330 per year in increased pension payments.

Could you expand on this a little. I thought the buying of years was a once only decision as you applied.

 

[Princess Fiona]

I’m so glad I saw this thread. I now have a Govt Gateway account and will be paying up the gap in contributions before the April 25 deadline.

Thanks to all for the info !!!!

 

[SydneySwan]

Could you expand on this a little. I thought the buying of years was a once only decision as you applied.

It is for past years but what about the current and future years? If you have 10 years to UK pension age then you can buy those years as they come. You cannot prepay them.

A small clarification here. You need 35 years of credits to get a full UK pension. If you buy too many years, there are no refunds. So if you already have, for example, 30 years of credits and 10 years to UK pension age then only buy 5 more years.

Edited to add clarification.

 

[Brissy1]

It is for past years but what about the current and future years? If you have 10 years to UK pension age then you can buy those years as they come. You cannot prepay them.

It just gets better and better!
Still trying to find Mrs B's NI number

 

[MEL_Traveller]

And you can continue to pay class 2s for each year going forward. They are currently around £180 per year (class 3s are around £910 per year) and you can setup a direct debit arrangement to pay them. Each year paying class 2s at £180 should earn you about £330 per year in increased pension payments.


Don't be concerned about half years - if the record shows you have qualified for a year then you have qualified.

Things to consider;

Death - no refunds or payments to your estate if you die before drawing the pension. No pension for your surviving partner.

Legislative - UK pension is contributory so making it means-tested is much harder than in Australia where pension is welfare. The so-called 'Triple Lock' of annual indexation of payments in the UK could be abandoned as the current system is generally considered untenable (i.e. too expensive) longer term.

Frozen payments from date of eligibility - you receive the same pension amount as UK residents with the same number of years of pension eligibility when you drawdown your pension but there is no annual indexation of payments if you drawdown your pension whilst living in Australia, NZ, Canada and many other countries. You can mitigate this risk by retiring to the UK, the Philippines or most European countries which do receive indexed payments.

Currency - if the pound becomes the new Argentinian peso or the Australian dollar starts to emulate the Swiss franc then your pension payments decline when converted back to AUD. Of course if the reverse happens then happy days. Let's not go there.

brilliant, thanks.

it’s not a lot, but this seems a cheap way to get the bare minimum, just one year on my case. My class 3 top up is £825. Even if i didn’t get class 2, which i think i can… a single class 3 to make me eligible for the part pension, for life, would be worth it!

 

[ncm]

The experience for SWMBO and I was that it was straightforward to be classified for Class 2 NICs from Oz and to then top-up the available missing years. This was done over the phone with the help of the friendly Geordie staff from HMRC and snail-mailing the paperwork to the UK. No 'UK pension experts' were needed.

Once the back payments were made we then set up a direct debit which comes out of a UK account on the 2nd Friday of each month (tomorrow actually) and ensures we should hit max pension a few years before it is required.

The DD amount depends on how many weeks are in the month but is either £13.80 or £17.20 (£3.40/week). I'm pretty sure this DD can be set at less regular intervals. The HMRC website does take a few months to show the credit in your history for the previous year's payments e.g. 2023/24 has still not credited yet despite the tax year ending on 4 April. It does tick over eventually mid-year though.

One thing to note - the Triple Lock Guarantee has been a boon for the max pension amount as a consequence of the very high inflationary environment in the last 2-3 years. It has gone up >10% over that time (which means that if you've retired in Oz and stuck with a frozen pension from 2021 or prior you've missed all that). As previously noted in this thread the TLG may be removed as a measure to improve the UK's dire fiscal position. I would hope that if they 'enhance' that feature then maybe they look at unfreezing pensions for Oz, NZ, Canada, SA etc. as a balancing measure.
This isn't financial advice.

 

[SydneySwan]

As previously noted in this thread the TLG may be removed as a measure to improve the UK's dire fiscal position. I would hope that if they 'enhance' that feature then maybe they look at unfreezing pensions for Oz, NZ, Canada, SA etc. as a balancing measure.
This isn't financial advice.

My bolding. There is unfortunately zero chance that this will happen. In the UK these two situations are not viewed as linked in anyway and besides the freezing of pension payments to pensioners in Australia, NZ, Canada, etc. is not widely known and understood amongst the UK hoi polloi. The best way to get pension payments unfrozen is to support those groups that are lobbying for change;

British Pensions in Australia - Home - British Pensions in Australia
Silver voices - Join Us | Silver Voices

There is also a petition on change.org everyone can sign.

 

[MEL_Traveller]

Well… just spent the last hour filling in the on line form! Seems they will assess and then write to me with my options to top up! Will be amazed if this works out!

Thanks again for this thread!

 

[FlyingFiona]

Well… just spent the last hour filling in the on line form! Seems they will assess and then write to me with my options to top up! Will be amazed if this works out!

Thanks again for this thread!

You're welcome! Let us know how you get on.

 

[StayGoldPonyboy]

I'm also giving it a look.

Trying to validate myself on the UK gov hasn't worked due to name change... Might need to phone for advice.

Thanks for the helpful thread everyone

 

[FlyingFiona]

I only have rough dates (approximate month - it was 18 years ago!) for my final date with my company in the UK and move to Australia. Has anyone applied successfully for Class 2 with approximate dates?

 

[MEL_Traveller]

I only have rough dates (approximate month - it was 18 years ago!) for my final date with my company in the UK and move to Australia. Has anyone applied successfully for Class 2 with approximate dates?

Good question! I did the same on my application, submitted last week. In the free text box I said ‘months are accurate, but exact start and end days within those months are approximate given the lapsed time’.

 

[FlyingFiona]

Good question! I did the same on my application, submitted last week. In the free text box I said ‘months are accurate, but exact start and end days within those months are approximate given the lapsed time’.

I'll do the same then. I'd be interested to hear what the outcome is for you (if you're happy reporting back). I'll do the same!

 

[MEL_Traveller]

I'll do the same then. I'd be interested to hear what the outcome is for you (if you're happy reporting back). I'll do the same!

No idea how long it will be! But will report back!

 

[Chalkie]

My +1 (who is a CA by training and to whom numbers come easy) did this. He worked out that he need only draw his UK pension for 3 years from 67 to recover the top-up payment (at class 3 level), and everything after that was money for jam.

Our UK record-keeping has always been in order as I was a partner in a UK-based firm, so the paperwork was easy for us.

One thing to look carefully at is how the contribution years are calculated. +1 had three stints working in the UK and it seems that part years were included in the calculation for how many years he contributed. This was very much to his advantage.