Living Overseas - Missing NI Contributions - Should I buy the missing years?

Schisty

I am signed up to the newsletter and saw that the deadline for paying for missing NI contributions has been extended so I signed up to check my record. It says:

• 10 years of full contributions
• 27 years to contribute before 5 April 2049
• 15 years when you did not contribute enough

I have been living overseas for the last ten years and have no plans to return to the UK in the near future because I have kids in school here and we don't want to put them through the ordeal of moving both countries and schools. However, once they are old enough (in about eight-ten years time) we will be heading back to live in the UK. 

I have a couple of questions that I am struggling to find answers for and need some help with please.

1. Should I pay for the missing years? There are 11 years that I can pay for, they mainly cost about 825 quid per year it will be about 9 grand in total to pay all of those years. But, I read that by the time I retire in 2049 the pension will be worthless so it is not worth it and I would be better off investing elsewhere.

2. Should I be paying for the NI contributions on a voluntary basis while I am overseas? I struggled to find info on the gov website and found myself going around in a loop. I found some answers on reddit that suggested I could make Class 2 Contributions. This appears to be a better solution and if do this for the next 25 years I should qualify for a full state pension.

I have tried calling the Future Pensions people to ask about these things but I still have not managed to speak to an actual person.

Thank you for any help!

molerat

Firstly do you actually need 27 year's contributions to reach the maximum, the often misquoted  35 years does not apply to you.

Why do you think the pension will be worthless ? It increases with inflation each year - at least until it comes into payment dependant on your location.  The current £185.15 becomes £203.85 from next month.

Class 2 comes with certain conditions - do you meet those ? https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions

NI38 - Social Security abroad (publishing.service.gov.uk)

Whether you pay class 2 or class 3 they are definitely worth it, the only downside is not living long enough to collect.

You need to work out how much more you need to get to the max, find out if you are eligible for class 2 both past and present and go from there

How much is your forecast to April 2022 ?

Does your forecast show a COPE ?

Linton

Schisty said:

I am signed up to the newsletter and saw that the deadline for paying for missing NI contributions has been extended so I signed up to check my record. It says:

• 10 years of full contributions
• 27 years to contribute before 5 April 2049
• 15 years when you did not contribute enough

I have been living overseas for the last ten years and have no plans to return to the UK in the near future because I have kids in school here and we don't want to put them through the ordeal of moving both countries and schools. However, once they are old enough (in about eight-ten years time) we will be heading back to live in the UK. 

I have a couple of questions that I am struggling to find answers for and need some help with please.

1. Should I pay for the missing years? There are 11 years that I can pay for, they mainly cost about 825 quid per year it will be about 9 grand in total to pay all of those years. But, I read that by the time I retire in 2049 the pension will be worthless so it is not worth it and I would be better off investing elsewhere.

2. Should I be paying for the NI contributions on a voluntary basis while I am overseas? I struggled to find info on the gov website and found myself going around in a loop. I found some answers on reddit that suggested I could make Class 2 Contributions. This appears to be a better solution and if do this for the next 25 years I should qualify for a full state pension.

I have tried calling the Future Pensions people to ask about these things but I still have not managed to speak to an actual person.

Thank you for any help!

Where did you read this?  I hope you dont pay any subcriptions for this nonsense.  State Pension increases by the triple-lock each year.  This is the maximum of:

1) CPI
2) Rise in wages
3) 2.5%

One can see the 2.5% going at some time since it obviously is not sustainable in the long term.  However in my view there is no chance of the SP not being inflation linked.  No government could get elected on such a policy. It probably would not get support from their own MPs, never mind the opposition, wanting to keep their seats at the subsequent election as it would lead to millions of 70+ people in dire poverty.

Even if you pay the full amount for a voluntary year you will still get your money back from extra SP within 4 years . After then, for the rest of your life it is all free guaranteed inflation-linked extra income. No investments could come anywhere close to this.

So yes you should pay voluntary NI.  Other people can tell you about how to pay class 2 Voluntary NI.  It is worth doing sooner rather than later as it is an unbelievable generous deal that may not continue.

Schisty

molerat said:

Firstly do you actually need 27 year's contributions to reach the maximum, the often misquoted  35 years does not apply to you.

No, I think just another 20 to get me up to the 30 for a full pension.

Why do you think the pension will be worthless ?

Reddit. When I was trying to find answers to my questions I saw more and more posts about this point. Thank you for giving me a better answer! But your point of living long enough to collect is quite a real one. Judging by my family history I anticipate that I will live for an additional seven years after retirement.  

find out if you are eligible for class 2 both past and present and go from there

Thanks, I will do that. I have drafted a letter to send to the HMRC along with the CF83 form. 

How much is your forecast to April 2022 ?

Your forecast is £185.15 a week, £805.07 a month, £9,660.86 a year

But it also says:

You need to continue to contribute National Insurance to reach your forecast

Estimate based on your National Insurance record up to 5 April 2022

Does your forecast show a COPE ?

No, I could not see anything about COPE.

Thanks for your detailed reply.

bostonerimus

For information on overseas NI payments read NI38 and you can apply using form CF83

https://www.gov.uk/government/publications/social-security-abroad-ni38

If you think you'll be able to get enough NI contributions after you return to the UK to qualify for full pension then it would not be useful to make catch up payments now. However, rules and circumstances can change. When I left the UK on a 4 year post doc I was planning to return, but started paying voluntary NI anyway. After 36 years as an expat I now have enough voluntary NI to qualify for a full pension, so you need to think about all the possible scenarios and make a reasoned choice. Don't forget the "Insurance" component here, the best choice might not be the least expensive. Also if you have a spouse what are they doing?

Schisty

Thank you - I spoke to the HMRC and read the documentation. I think I am going to be eligible to pay Class 3, not class 2 because I was not working immediately before leaving to go and work overseas. I will send off my forms and see what they say. Thanks for all of your replies.