State pension for a self-employed EU citizen

sigfirley

I have a bit of a cunvulted question and have to ring DWP on this, but this forum is great with advice as well, so I thought of asking.

My former boss owns a IT company and is moving it to UK thus I'm looking for his options. We're a bit puzzled by his entitlement to State Pension.

He was born in '50 (wrote '59 at first, my mistake) and according to government calculators he's going to reach pension age in 2015. His working years in EU accumulate to 40 years and according to EU law it applies to pensions in any EU country. The problem is - I can't find proper government articles on it.

The other thing is - I know that he gets the right to benefits after living in UK for 1 year (Scotland, more precisely). He registered and has NIN since April this year. However, I think it only applies to those eployed by someone. Not self-employed. I know, I've read about 2 years somewhere, but can't find it anymore.

Yes, I know that as self-employed his pension would be taxed, but the question is WHEN he would be able to apply for it - 2015 or in more years.

Thank you in advance for help.

oliveoil99

A male state-pension age born in 1959 is 2025 not 2015 when he will be 66yrs old.

sigfirley

Ah yes, you are right, I made him younger :P, I forgot his birth year, I know that he reaches his pension age in 2015, will change in a sec as I get a reply . Pardon me.

Edit: I'm an idiot, he was born in 1950, sorry for the confusion.

JezR

If he is a self employed individual in the UK he would be paying Class 2 and possibly Class 4 NI.

If he is running a UK company he would pay Class 1 NI on salary as an employee of the company.

He would apply for a pension in the UK 3-4 months before reaching pension age, giving details of his past contributions in other EU countries. He would receive the vast majority of his pension from the scheme(s) elsewhere in the EU.

sigfirley

Yeah, he'll be paying Class 2 in a week - we're waiting for the papers as the company had been formally registered yesterday.

One question - he doesn't intend to use other schemes in EU as he will change his residence permamently (he's my mum's partner) - does that mean he'll have a chance to the full 110 pounds providing proper evidence for those 40 years?

JezR

If he only has 1 year of NI contributions at retirement in the UK he will only get 1/30 of a UK state pension. The rest will come from the all other schemes he has paid into according to their rules. They will however be paid into a UK bank account and they don't have to be claimed for separately; the DWP handles this.

sigfirley

Are you sure? EU laws state otherwise - that time worked in EU does count (besides Switzerland). Or do you mean that his contributions in his home country will be converted to make UK's basic state pension? Is state pension solely dependant on NI contributions, hence an UK citizen who for example had been a stay at home partner would not receive their pensions?
Trying to make sense of it :P . Probably the wisest would be to ring DWP.

Edit: Just found this in a GMB Yorkshire publication

So for example an individual, who has a six year record of National Insurance
payments in the UK, might not expect to receive any state pension here. However if they have worked for 38 years in another EEA country and paid social security there, then they would be treated as if they had paid 44 years of National Insurance in the UK, for the purposes ofcalculating whether they qualify for a pension.

JezR

EU law does not operate so that the country you live in last pays all your pension. Instead it arranges that pensions are paid pro-rata by each country according to your contributions, calculated by two methods.

Here is the DWP explanation:

How your claim is worked out

Each EEA country where you have paid insurance towards a State Pension will look at your insurance under its own scheme and will work out how much State Pension you can have. As long as you meet the rules, you will get a State Pension from each country.

Each country will also look at any insurance you have in another EEA country. This can help you to get a State Pension, or a higher State Pension, under its own scheme.

To do this, each country sends details of your insurance record to the others. Each country then works out how much to pay you. They do it in two ways:

Method A: Each country works out how much State Pension you can get, just from what you have paid into its own social security scheme.
Method B: Each country adds together your insurance in all countries. Then each one sees how much State Pension you would get if your insurance had all been paid into its own social security scheme. But each country only has to pay you part of this. How much it pays you depends on how much you have paid into its scheme.
For example, if one-third of the insurance you have paid was from the UK, then the UK would pay one-third of the total State Pension it has worked out you could get. All the other countries usually work out how much they are going to pay in the same way.

If a country has worked out your State Pension using Method A, it will usually pay it to you while you wait for Method B to be calculated. If your State Pension is higher under Method B, you will get the higher one without having to ask.

Any UK graduated contributions you have paid are not used in working out Methods A and B. But you can get a State Pension from these contributions whether or not you get a State Pension using Methods A or B above.

sigfirley

Thank you , just what I was missing. Thus it all adds up and he can apply before reaching his pension age . Still will ring DWP on this, hopefully they agree on this.

JezR

I suspect that GMB publication is old, and refers back to the time when you needed 10 years of NI contributions to get any UK pension (and 44 years for a full one).

The International Pension Centre on 0191 218 7777 should be able to help you.