Voluntary national insurance contributions- Abroad. Class 3 or 2

Ritzola

I'm panicking a bit here, as I have until April 5th to get the voluntary National Insurance contributions in. I'm a resident in the USA.

My issue is this: I've been told by HMRC that I qualify to buy 18 years' worth of contributions, and I was given the cost based on the Class 3 rate—great! But then they added that, as I was living abroad and working full-time until I left the UK, I may qualify for Class 2 payments (even though I've never been self-employed in the UK or USA) if I send confirmation of full employment for the time spent in the US until I retired. I sent all the appropriate documents (W-2s) in December 2024. I'll be 67 on April 26th, 2025, and would like to start collecting my state pension then.

I haven't heard anything and have called multiple times without getting through.

My question is: should I just pay the Class 3 amount and try to get a refund if they qualify me for Class 2 payments? Or should I hang on for a reply to my email request (with the proof of employment) and hope it comes prior to April 5th, so I can get the money in?

 
Thank you.

pinnks

You would normally send a form CF83 to HMRC but as you are past pension age, the case is dealt with by DWP.  That is probably why you were only asked for documents.  As long as DWP had that before 5 April 2025 you are protected from the deadline and you will have time to pay after they give you their decision on Class 2/3.  I think I would call DWP International Pension Centre and ask them to confirm that you are protected from the April deadline.

The requirements for Class 2 are that you were employed, or self-employed, in the UK until immediately before you left and then, for any week you were employed or self-employed abroad you can then pay Class 2.  If you are unemployed for periods, you revert to Class 3 until you are again (self) employed, so you can end up with a mix of both Classes.

At the moment you have deferred your pension as you could have claimed it at 66.  You get nothing for the period of deferral but an extra 5.8% extra pension going forward for a year of deferral (break even about 17 years, so not a great choice for most people).  However, you can backdate your claim by up to 12 months, so if you make that now, you would get the arrears paid back to your 66th birthday.

But then you need to consider that if you ask to pay voluntary NI after you claim your pension, any increase is only backdated to the date the NI is paid, not to your birthday.  That said, with the current delays in HMRC and DWP, who knows what date they use to re-calculate your pension.

Bostonerimus1

pinnks said:

You would normally send a form CF83 to HMRC but as you are past pension age, the case is dealt with by DWP.  That is probably why you were only asked for documents.  As long as DWP had that before 5 April 2025 you are protected from the deadline and you will have time to pay after they give you their decision on Class 2/3.  I think I would call DWP International Pension Centre and ask them to confirm that you are protected from the April deadline.

The requirements for Class 2 are that you were employed, or self-employed, in the UK until immediately before you left and then, for any week you were employed or self-employed abroad you can then pay Class 2.  If you are unemployed for periods, you revert to Class 3 until you are again (self) employed, so you can end up with a mix of both Classes.

At the moment you have deferred your pension as you could have claimed it at 66.  You get nothing for the period of deferral but an extra 5.8% extra pension going forward for a year of deferral (break even about 17 years, so not a great choice for most people).  However, you can backdate your claim by up to 12 months, so if you make that now, you would get the arrears paid back to your 66th birthday.

But then you need to consider that if you ask to pay voluntary NI after you claim your pension, any increase is only backdated to the date the NI is paid, not to your birthday.  That said, with the current delays in HMRC and DWP, who knows what date they use to re-calculate your pension.

Interesting! When I applied in 1987 it was slightly different as to pay Class 2 abroad the rules were

either
you have lived in the UK for 3 consecutive years at any time before the period for which the contributions are paid
or
you had paid 3 years of NI
and
you are working abroad
and 
you were employed or self employed immediately before going abroad
or
you would normally be employed or self employed, but were unemployed immediately before going overseas.

To the OP I would call DWP international Pensions Centre, email them and also send them a registered letter (so you have a receipt for the date sent) explaining your situation. Keep a copy and then you can always refer back to it if there are any questions. Here is the email page

https://secure.dwp.gov.uk/contact-the-international-pension-centre/contact-form

pinnks

Well the first 2 conditions are required to pay voluntary NI at all, so no point in reiterating those as Class 3 had already been offered.  The next two are what I said and the final one is how HMRC have confirmed that they interpret the meaning of "immediately before" but the law if silent on that point, requiring only that the person was employed or self-employed immediately before they last left the UK.

So, nothing has changed in that context.

Ritzola

Thank you again for your input.  I have all the documentation into DWP and they put in writing that I can buy the voluntary contributions back to 2006 even if they get back to me after April 5, 2025.  
Also, are you suggesting that I would be better of claiming my pension now rather than waiting for the DWP authorize the class 2 payments? Can you clarify please.   FYI if they stay class 3 I will still buy back the prior years.  

Thank you.