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Buying additional years
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ok I'm confused. Maybe someone can tell me what they think I should do/would do in my shoes? As per earlier in the thread I have 26 years of UK contributions and a gap of five years that I currently have the option to fill (until July), and I think I worked for four of those in another EU member state (not Germany!) I think I might be able to buy those back at a cheaper rate because of the fact that I was working elsewhere at the time (would it be sufficient just to have lived elsewhere at the time to buy at the cheaper rate or do I need to have been contributing elsewhere as well? Asking as I think I might struggle to pull together the evidence of working).Given all that should I try and buy those years or am I wasting my money? Conscious you guys are not financial advisers (or at least aren't getting paid for it) so really grateful for any help given.1
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There are indeed EU-wide rules but they do not work as you suggest. It is definitely worth paying the UK years - they will increase your UK pension in exactly the same way as they would for any other person claiming the UK pension and my help in relation to the pension in the other country.
Each country does 2 calculations and awards you the higher amount as your pension from that country:
1. They apply their rules to your contribution record in their country. This is called the Independent Benefit and would be nil if you did not have enough contributions to meet any minimum requirements.
2. They calculate a "theoretic amount" of pension by assuming all of your contribution periods in all countries were in fact in their country - any overlaps, e.g. because you have paid UK voluntary NI, are counted only once, with priority given to their contribution periods (of course). This is also known as aggregation and would hopefully get you past those minimum requirements. They pro-rate the theoretical amount based on your actual contribution periods in their country. This is called the Pro-rata Benefit.
So, if you had, say, 5 UK years and 30 in another EU country, then calculation 1. would give a UK pension of £0 as you do not have 10 UK years. However, calculation 2. uses the maximum 35 years to give a theoretical amount of £203.85 per week. This is then pro-rated as 5/35 x £203.85 = £29.12 per week. This would be paid to you by the UK.
The other country would do the same 2 calculations using their rules and pay you the higher amount as a pension from them.
So, there is no downside to paying UK voluntary contributions, only upsides...2 -
Just chiming in as I had a notification that my name was mentioned. Doubt was cast by an enquirer a couple of pages back as to whether pension entitlement could be built up in two countries for the same contribution year. I faced exactly this question, and I was told by the authorities in my country of residence that there was no point in applying to pay UK voluntary NICs because I couldn't pay contributions in two countries for the same year. This seemed quite reasonable to me at the time and I accepted it at face value, even thinking it was just common sense. However, it wasn't quite right. For some reason, you can buy years of voluntary contributions in one country, provided you pay compulsory contributions in the other. With Class 2 available to overseas workers who previously worked in the UK, it is a very useful way to maximise your UK pension in addition to your foreign one.1
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pinnks said:No, that isn't what I was trying to convey.
If you are working in a country you generally have to pay into their state pension (social security) system and, if not working for any reason, you can often pay voluntarily or get credits. Whatever you pay into the system for a particular country will count towards the pension in that country but if you have not been there for long you may fall foul of minimum period rules.
The aggregation/pro-rata rules in the EU rules on the coordination of social security systems (EC 883/2004) are designed to ensure that people are not disadvantaged if they exercise their EU rights and freedoms (the UK is still party to those rules for those covered by the Withdrawal Agreement and under the Trade Coordination Agreement for at least the next 15 years.
When you come to claim your pension(s), which you do via the pension authority in your country of residence for all EU pensions (they then send all relevant info to all relevant countries based on a form that is called CFN901 in the UK), each country does 2 calculations and pays the higher amount as your pension as noted in 1 and 2 in my earlier post. So, the minimum amount you can get is the same as a person with the exact same domestic record would get if they had not moved around Europe. If you buy voluntary UK years they count towards your UK pension and feed into part 2 of any other EU countries in which you have contributed.
When years are aggregated for part 2 of the calculations, the pension authority adds all your NI records together. Where a period in, say, the UK, overlaps with a period in, say, Germany, then priority is given to the domestic period and the "foreign" overlapping period is not used. Add to this that some countries work in days, some in weeks and the UK in full years and it gets complicated to get your head round!
Anyway, if you lived in the UK until you were 21, in, say, July of a year, you would probably have full years from NI credits or payments for the tax year in which you turned 16 until 5 April before you left the UK. You would also have an NI record from 6 April to, say, 1 July as the UK system is based on weeks even though only full years are counted for our pension. Let's say you also buy 1 UK year (to keep it simpler!) at some point in the future, while contributing in Germany, thus generating an overlap with your German contributions.
Your German record would of course start from that July when you arrived and continue until you claim your pension. Germany uses months, not days or weeks, but a single day in a month makes that month count - yeah, I know, it's complicated!
When Germany does its aggregation in part 2, it will literally list your UK weeks (converted ultimately to months based on the days of those weeks falling in various months), then your German months and then that future NI year you buy (52 or 53 weeks) and then more German months and so on. Where a UK week overlaps with a German month, they identify it and exclude it. You then end up with a contiguous, gapless, record from when your UK record started until you reach pension age in Germany and that contiguous record feeds into calculation 2. The German system is earnings-related, so they take your months and your earnings factors and deemed earnings for periods of credits and crunch out a pension. This number if then pro-rated back to your actual German months and compared with the number falling out of the part 1 calculation.
So, you get full credit in the UK for all of your UK NI years on your record, irrespective of how they were accrued. You also get full credit for all of your German years on your German record but in addition, the UK applies the EU rules if you have less than 10 UK years and Germany applies those rules come what may (our system is not earnings-related, so there is no point aggregating if you have more than 10 UK years) and another number pops out of part 2. You get the higher amount, so it's a win/win situation.
Is this making any sense???0 -
SwiftSuzie said:Just chiming in as I had a notification that my name was mentioned. Doubt was cast by an enquirer a couple of pages back as to whether pension entitlement could be built up in two countries for the same contribution year. I faced exactly this question, and I was told by the authorities in my country of residence that there was no point in applying to pay UK voluntary NICs because I couldn't pay contributions in two countries for the same year. This seemed quite reasonable to me at the time and I accepted it at face value, even thinking it was just common sense. However, it wasn't quite right. For some reason, you can buy years of voluntary contributions in one country, provided you pay compulsory contributions in the other. With Class 2 available to overseas workers who previously worked in the UK, it is a very useful way to maximise your UK pension in addition to your foreign one.As far as I'm aware you can't pay mandatory contributions in two countries at once - there are rules to decide which country they have to be paid in, at least if there's a social security agreement.May I ask where you live(d)? Possibly it's a case that officials in a country that doesn't offer the option to pay voluntary contributions while living abroad aren't aware that you can do just that in other countries.0
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I'm outside EU, but it was simply an error or a half truth. I was told I couldn't pay contributions in both countries for the same year. What I should have been told was I couldn't pay voluntary contributions in both countries for the same year.0
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Suhusa said:SwiftSuzie said:Just chiming in as I had a notification that my name was mentioned. Doubt was cast by an enquirer a couple of pages back as to whether pension entitlement could be built up in two countries for the same contribution year. I faced exactly this question, and I was told by the authorities in my country of residence that there was no point in applying to pay UK voluntary NICs because I couldn't pay contributions in two countries for the same year. This seemed quite reasonable to me at the time and I accepted it at face value, even thinking it was just common sense. However, it wasn't quite right. For some reason, you can buy years of voluntary contributions in one country, provided you pay compulsory contributions in the other. With Class 2 available to overseas workers who previously worked in the UK, it is a very useful way to maximise your UK pension in addition to your foreign one.As far as I'm aware you can't pay mandatory contributions in two countries at once - there are rules to decide which country they have to be paid in, at least if there's a social security agreement.May I ask where you live(d)? Possibly it's a case that officials in a country that doesn't offer the option to pay voluntary contributions while living abroad aren't aware that you can do just that in other countries.
What you can't do is have 2 different countries being your competent authority. That generally goes by residence status as far as can tell, at least until you claim your pension when the S1 procedure can kick in if you live in one country but another country is your competent authority for healthcare and pensions.0 -
retiringtoosoon said:pinnks said:No, that isn't what I was trying to convey.
If you are working in a country you generally have to pay into their state pension (social security) system and, if not working for any reason, you can often pay voluntarily or get credits. Whatever you pay into the system for a particular country will count towards the pension in that country but if you have not been there for long you may fall foul of minimum period rules.
The aggregation/pro-rata rules in the EU rules on the coordination of social security systems (EC 883/2004) are designed to ensure that people are not disadvantaged if they exercise their EU rights and freedoms (the UK is still party to those rules for those covered by the Withdrawal Agreement and under the Trade Coordination Agreement for at least the next 15 years.
When you come to claim your pension(s), which you do via the pension authority in your country of residence for all EU pensions (they then send all relevant info to all relevant countries based on a form that is called CFN901 in the UK), each country does 2 calculations and pays the higher amount as your pension as noted in 1 and 2 in my earlier post. So, the minimum amount you can get is the same as a person with the exact same domestic record would get if they had not moved around Europe. If you buy voluntary UK years they count towards your UK pension and feed into part 2 of any other EU countries in which you have contributed.
When years are aggregated for part 2 of the calculations, the pension authority adds all your NI records together. Where a period in, say, the UK, overlaps with a period in, say, Germany, then priority is given to the domestic period and the "foreign" overlapping period is not used. Add to this that some countries work in days, some in weeks and the UK in full years and it gets complicated to get your head round!
Anyway, if you lived in the UK until you were 21, in, say, July of a year, you would probably have full years from NI credits or payments for the tax year in which you turned 16 until 5 April before you left the UK. You would also have an NI record from 6 April to, say, 1 July as the UK system is based on weeks even though only full years are counted for our pension. Let's say you also buy 1 UK year (to keep it simpler!) at some point in the future, while contributing in Germany, thus generating an overlap with your German contributions.
Your German record would of course start from that July when you arrived and continue until you claim your pension. Germany uses months, not days or weeks, but a single day in a month makes that month count - yeah, I know, it's complicated!
When Germany does its aggregation in part 2, it will literally list your UK weeks (converted ultimately to months based on the days of those weeks falling in various months), then your German months and then that future NI year you buy (52 or 53 weeks) and then more German months and so on. Where a UK week overlaps with a German month, they identify it and exclude it. You then end up with a contiguous, gapless, record from when your UK record started until you reach pension age in Germany and that contiguous record feeds into calculation 2. The German system is earnings-related, so they take your months and your earnings factors and deemed earnings for periods of credits and crunch out a pension. This number if then pro-rated back to your actual German months and compared with the number falling out of the part 1 calculation.
So, you get full credit in the UK for all of your UK NI years on your record, irrespective of how they were accrued. You also get full credit for all of your German years on your German record but in addition, the UK applies the EU rules if you have less than 10 UK years and Germany applies those rules come what may (our system is not earnings-related, so there is no point aggregating if you have more than 10 UK years) and another number pops out of part 2. You get the higher amount, so it's a win/win situation.
Is this making any sense???0 -
pinnks said:Suhusa said:SwiftSuzie said:Just chiming in as I had a notification that my name was mentioned. Doubt was cast by an enquirer a couple of pages back as to whether pension entitlement could be built up in two countries for the same contribution year. I faced exactly this question, and I was told by the authorities in my country of residence that there was no point in applying to pay UK voluntary NICs because I couldn't pay contributions in two countries for the same year. This seemed quite reasonable to me at the time and I accepted it at face value, even thinking it was just common sense. However, it wasn't quite right. For some reason, you can buy years of voluntary contributions in one country, provided you pay compulsory contributions in the other. With Class 2 available to overseas workers who previously worked in the UK, it is a very useful way to maximise your UK pension in addition to your foreign one.As far as I'm aware you can't pay mandatory contributions in two countries at once - there are rules to decide which country they have to be paid in, at least if there's a social security agreement.May I ask where you live(d)? Possibly it's a case that officials in a country that doesn't offer the option to pay voluntary contributions while living abroad aren't aware that you can do just that in other countries.
What you can't do is have 2 different countries being your competent authority. That generally goes by residence status as far as can tell, at least until you claim your pension when the S1 procedure can kick in if you live in one country but another country is your competent authority for healthcare and pensions.That's exactly what I mean - voluntary contributions seem to be fair game. The only type of contribution you couldn't pay in two countries at the same time is mandatory contributions because you can only have one competent authority.@SwiftSuzie Sadly, half truths abound when it comes to moving abroad. When I called my German health insurance to find out how to cancel it because I was gonna move out of the country I was told that I wouldn't need to bother - I could keep it and get treatment when I visit and they were going to put me on the minimum contribution etc etc. A bit later I was contacted by the person who handles immigration and emigration and it turns out you can only keep your insurance if you do an Erasmus year (so at least they logged that someone called about emigrating and checked it afterwards). People will give you advice in enough detail that it sounds plausible even when they're wrong.1 -
Apologies - I somewhat mis-read your comment. I must put my glass on the right way round in future, lol0
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