Am I eligible for voluntary contributions?

Franconian

Hi All, 

I lived and worked in the UK from September 2005 until January 2009 (EU national).
Then I moved to Australia for a gap year always intending to return to the UK, but gained PR, then Covid hit and then Brexit..

Am I eligible for voluntary pension contributions? Does the requirement of 3 years NI contributions need to be payments for 3 full tax years, i. e. every month in the tax year or just a minimum contribution amount/salary per tax year? 

pinnks

You should qualify to pay at either Class 3 or the cheaper Class 2 if you worked in the UK until immediately before you left and work(ed) abroad for the UK year you want to pay.  You may therefore end up with a mix of Class 2 and 3 but either way, each year adds the same amount to your pension.

Have a look at Guidance on Social Security abroad: NI38 - GOV.UK (www.gov.uk) where you will see the criterion for Class 3 is 3 consecutive years of UK residence - "You’ve lived in the UK for a continuous 3-year period, at any time before the period for which National Insurance contributions are to be paid".

You will need to submit form CF83 to HMRC (online is best if you can get access) Apply to pay voluntary National Insurance contributions when abroad (CF83) - GOV.UK (www.gov.uk) and speak with DWP Future Pension Centre to check which years will improve your pension forecast Contact the Future Pension Centre - GOV.UK (www.gov.uk).

However, be aware that the social security agreement between the UK and Australia is slightly different to that with most other countries in that years paid in one country appear to count as actually paid in the other, rather than feeding into an aggregated total of years to get you past minimum requirements.  Also your UK pension, whatever it might end up looking like, will not receive the annual inflation increase for as long as you live in AUS.  I think a good talk with DWP Future Pensions Centre and/or International Pensions Centre would be a good first step as it may not be worth going down the CF83 route (as long as HMRC has that form before April 2025, all years that are currently available are protected, so you have a bit of time).

Franconian

Thanks for the info. 

I found the following regarding class 2 and 3:

Class 2 contributions are for those expats living and working abroad “but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.” Class 2 voluntary National Insurance contributions for 2023/24 are a mere £3.45 per week (£179.40 p.a.).

Class 3 voluntary National Insurance contributions for 2023/24 are a pricier £17.45 per week (£907.40 p.a.) and are for those expats living abroad but NOT working “but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions.”

I finished work in the UK in January 2009 then finalised my move and left the UK. I did not work immediately in Australia and had a few months gap of work (stop-over in Southeast Asia etc.) . What is the meaning of "if you worked in the UK immediately before leaving"? Does it mean for Class 2 it has to be a "seemless" move from work/live in UK to work/live overseas? If this is the case would I have to pay Class 3 contributions for the time I was not working and could then pay Class 2 contributions for the time I was working overseas? 

As far as I know the Social Security agreement between Australia and UK was terminated 10 years ago? I do qualify for an Australian Age Pension on my own grounds and do not require additional years. However, I am unsure if the Australian Age Pension would be cut by the amount received from the UK State Pension? 

Unfortunately I am unable to open a GOV.UK account as my UK drivers licence is expired and I do not have the necessary ID's to verify. I will try to contact the Future Pension Centre to get more information. 

Many Thanks!

pinnks

First, an apology.  What I wrote about the social security agreement relates to New Zealand, not AUS (must have been a senior moment).  You are course correct that the UK/AUS agreement was terminated...  I don't know whether the Australian system takes a foreign pension into account in any way.  The USA system has a nasty little piece of legislation that does that under certain circumstances.

As I understand the Class 2 position, HMRC looks for a pattern of employment before you leave the UK and periods of unemployment while seeking work can count as part of that "employed" pattern.  I also think that logistically speaking there is likely to be a short period between actually finishing work and leaving the country but submitting a paper CF83 with accompanying letter or document to provide any further information should enable them to make a correct decision in your case.

There is no condition that you must work abroad immediately, or even continuously but for weeks during which you were/are working abroad, Class would be payable if the other conditions are met.

In your position, I think I would send a CF83 and separately ask HMRC by phone or letter for a copy of my NI record to see exactly what that says plus asking DWP Future Pension Centre for a pension forecast, even though that would be zero if you don't have 10 UK years yet.  Either way, you will know where you stand and which way you might want to go when HMRC responds to your CF83.