Never ending national insurance payments

bostonerimus

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years. My forecast is for 179.60/week and I'm now at 37 years and I keep contributing just incase Rishi moves the goal on me again.

Are you entitled to both the US and UK state pensions? 

Yes, I can start US SS at 62 although I'll probably just take it at 65 when my Medicare starts. My UK SP will start at 67.

Surprised that you claim both. A flaw in both the US and UK systems. 

Not at all a flaw. I have paid into the US system for 22 years and qualify for US social security. I have 37 years of full UK NI contributions and so also qualify for the flat rate UK state pension. There is a reciprocal social security agreement between the US and the UK so I will get UK SP index linked payment increases, but I qualify for both pensions just because I have enough payments into each system. The strange thing is that the UK allows expats to keep paying into the system and that the Class 2 NIC rate is so low. I think it was designed so that short term expats could stay in the system with the idea they would return and up until around 1990 they actually had to pay Class 3 which is a lot more and a lot more sensible IMO. I can see a Chancellor imposing a rule that UK SP is only payable to UK residents as long term expats can't vote in UK elections, but I don't think the US would do that so that would be another reason to move back to the UK.

nigelbb

bostonerimus said:

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years. My forecast is for 179.60/week and I'm now at 37 years and I keep contributing just incase Rishi moves the goal on me again.

Are you entitled to both the US and UK state pensions? 

Yes, I can start US SS at 62 although I'll probably just take it at 65 when my Medicare starts. My UK SP will start at 67.

Surprised that you claim both. A flaw in both the US and UK systems. 

Not at all a flaw. I have paid into the US system for 22 years and qualify for US social security. I have 37 years of full UK NI contributions and so also qualify for the flat rate UK state pension. There is a reciprocal social security agreement between the US and the UK so I will get UK SP index linked payment increases, but I qualify for both pensions just because I have enough payments into each system. The strange thing is that the UK allows expats to keep paying into the system and that the Class 2 NIC rate is so low. I think it was designed so that short term expats could stay in the system with the idea they would return and up until around 1990 they actually had to pay Class 3 which is a lot more and a lot more sensible IMO. I can see a Chancellor imposing a rule that UK SP is only payable to UK residents as long term expats can't vote in UK elections, but I don't think the US would do that so that would be another reason to move back to the UK.

Imposing a rule that UK state pension is only payable to UK residents is never going to happen not least because it would be incredibly unfair to those who have retired abroad & rely on their UK state pension. There are over 12 million people receiving UK state pension with a million of them living abroad.

nigelbb

Thrugelmir said:

bostonerimus said:

Thrugelmir said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years. My forecast is for 179.60/week and I'm now at 37 years and I keep contributing just incase Rishi moves the goal on me again.

Are you entitled to both the US and UK state pensions? 

Yes, I can start US SS at 62 although I'll probably just take it at 65 when my Medicare starts. My UK SP will start at 67.

Surprised that you claim both. A flaw in both the US and UK systems. 

I don't think that it's a flaw to receive pensions from two different countries. I receive a UK state pension of just under £150/week based on 30 years of contributions (some voluntary) which is reduced because I was contracted out of SERPS in an occupational pension scheme. I also worked in France for 15 years & receive French pensions amounting to over €2,000/month. My basic French pension is under €600/month but there is a large earnings related element.

p00hsticks

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years.

Are you sure about that (you sound like you were born before 1990) ? Until 2010 the requirement for a full state pension was 44 years NI for men and 39 for women, whcih included 3 years credits for the ages 16-18. It then dropped to 30 years for both men and women, with the removl of the 16-18 credits, before being raised to 35 with the intorduction of the new State Pension in 2016.

Audaxer

michaels said:

squirrelpie said:

michaels said:

I had my full SP entitlement at 50 so any NI have paid since (lets call it at least £5k per year or a lifetime of class 2) then gets me precisely zero more pension - and I thought I was doing the 'safe' option not opting out of serps

https://www.bbc.co.uk/news/newsbeat-10078062
https://www.gov.uk/national-insurance/what-national-insurance-is-for

Had I opted out of SERPS the NI I am now paying would mean I still end up with the same state pension and I would have a nice additional pension pot.  So those who have paid less NI than me over the years and will now be getting pension for the NI they are paying where I have already paid in more and am getting no further personal pension benefit from payments I am making now.

Perhaps you can see some way in which that is fair but it is beyond me.

Interested to know how many full years of NI contributions you have paid to date?

bostonerimus

p00hsticks said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years.

Are you sure about that (you sound like you were born before 1990) ? Until 2010 the requirement for a full state pension was 44 years NI for men and 39 for women, whcih included 3 years credits for the ages 16-18. It then dropped to 30 years for both men and women, with the removl of the 16-18 credits, before being raised to 35 with the intorduction of the new State Pension in 2016.

Yes sorry I should not have said "started out". I got a letter from HMRC a few years before I reached 30 years of contributions to say that I didn't need to pay more beyond that. Then I got another saying the new number was 35 years and explaining the flat rate pension. I was glad as I would only have qualified for basic SP under the old system and got a considerable top up under the new flat rate pension and the extra 5 years were well worth it. Given everything that's happening I can easily imagine the number of years to qualify for full pension creeping back up to 40 or more so I keep paying the low Class 2 while I can.

Ganga

bostonerimus said:

p00hsticks said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years.

Are you sure about that (you sound like you were born before 1990) ? Until 2010 the requirement for a full state pension was 44 years NI for men and 39 for women, whcih included 3 years credits for the ages 16-18. It then dropped to 30 years for both men and women, with the removl of the 16-18 credits, before being raised to 35 with the intorduction of the new State Pension in 2016.

Yes sorry I should not have said "started out". I got a letter from HMRC a few years before I reached 30 years of contributions to say that I didn't need to pay more beyond that. Then I got another saying the new number was 35 years and explaining the flat rate pension. I was glad as I would only have qualified for basic SP under the old system and got a considerable top up under the new flat rate pension and the extra 5 years were well worth it. Given everything that's happening I can easily imagine the number of years to qualify for full pension creeping back up to 40 or more so I keep paying the low Class 2 while I can.

Can you buy them in advance ? i mean for the next few years in case they change the rules and prevent you purchasing them.

Malthusian

Ganga said:

Can you buy them in advance ? i mean for the next few years in case they change the rules and prevent you purchasing them.

No. You can backdate voluntary NI contributions if you've got gaps, but you can't buy them in advance. I'd be interested to know if there was any tax system in which you could pay tax in advance - it would hamper the government's fiscal policy and be highly inequitable (as only the rich could afford to hedge against tax rises by paying in advance).

nigelbb said:

Imposing a rule that UK state pension is only payable to UK residents is never going to happen not least because it would be incredibly unfair to those who have retired abroad & rely on their UK state pension.

And far more important than it being unfair, it would massively increase costs on the Exchequer, as people who would have retired abroad would instead stay here and increase costs for the NHS, social care, housing benefit, etc etc etc, on top of their State Pension.

Receiving two State Pensions from different states is really not that unusual, at least in a European context where State Pensions are a mixture of Universal Basic Income (current UK system) and earnings-linked defined benefit pension (most European countries + the old SERPS system).

Outside Europe / the US, where "State Pensions" are poverty relief and/or mandatory private saving, i.e.  the well-off are on their own, it may be more unusual.

Audaxer

bostonerimus said:

p00hsticks said:

bostonerimus said:

I've been paying voluntary Class 2 NI for most of my working life and started out needing 30 years of contributions for the full state pension, then the number was raised to 35 years.

Are you sure about that (you sound like you were born before 1990) ? Until 2010 the requirement for a full state pension was 44 years NI for men and 39 for women, whcih included 3 years credits for the ages 16-18. It then dropped to 30 years for both men and women, with the removl of the 16-18 credits, before being raised to 35 with the intorduction of the new State Pension in 2016.

Yes sorry I should not have said "started out". I got a letter from HMRC a few years before I reached 30 years of contributions to say that I didn't need to pay more beyond that. Then I got another saying the new number was 35 years and explaining the flat rate pension. I was glad as I would only have qualified for basic SP under the old system and got a considerable top up under the new flat rate pension and the extra 5 years were well worth it. Given everything that's happening I can easily imagine the number of years to qualify for full pension creeping back up to 40 or more so I keep paying the low Class 2 while I can.

If your SP forecast shows that you are already due to get the maximum £179.60 per week, I can't see that paying any more voluntary NI will make any difference. Even if the rules change from 35 to 40 years, I think that would only be applicable to people who started contributing since 2016.

bostonerimus

Malthusian said:

Ganga said:

Can you buy them in advance ? i mean for the next few years in case they change the rules and prevent you purchasing them.

No. You can backdate voluntary NI contributions if you've got gaps, but you can't buy them in advance. I'd be interested to know if there was any tax system in which you could pay tax in advance - it would hamper the government's fiscal policy and be highly inequitable (as only the rich could afford to hedge against tax rises by paying in advance).

nigelbb said:

Imposing a rule that UK state pension is only payable to UK residents is never going to happen not least because it would be incredibly unfair to those who have retired abroad & rely on their UK state pension.

And far more important than it being unfair, it would massively increase costs on the Exchequer, as people who would have retired abroad would instead stay here and increase costs for the NHS, social care, housing benefit, etc etc etc, on top of their State Pension.

Receiving two State Pensions from different states is really not that unusual, at least in a European context where State Pensions are a mixture of Universal Basic Income (current UK system) and earnings-linked defined benefit pension (most European countries + the old SERPS system).

Outside Europe / the US, where "State Pensions" are poverty relief and/or mandatory private saving, i.e.  the well-off are on their own, it may be more unusual.

Getting state pension from two countries allows for interesting comparisons ie US social security (SS) is more generous than the UK flat rate pension. The employee equivalent of NI in the US ie FICA and Medicare tax is 7.65% compared to Class 1 NI at 13%. The amount of SS has an earnings related component. but it is weighted towards the lower paid. Someone on 30k GBP will actually pay about the same in payroll taxes as someone in the US earning an equivalent amount of $40k/year because of the UK's 0% NI earnings allowance, but their US SS today would be equivalent of 15kGBP compared to the UK flat rate pension of 9kGBP. I will get three times as much US SS as UK SP when I retire because my life time average earnings is part of the SS amount calculation.

If you have 30 years of payroll tax contributions in the US the lowest SS amount you can get is $10.6k, but very few people get that little, the average is $20k and the maximum amount is $40k, I expect to get a bit over $30k