Should I buy Extra Pension Years

Sir_Peter

I have been in the UK for just 6 years from Australia. I am 36 years old. I recently wrote to the pension department enquiring about my pension as in the next year or two I may return to Australia. The pensions department wrote back saying that I have made 6 years contributions plus they have given me and additional 2 years for free making it a total of 8 years and that should I return to Australia when I reach pension age I would be entitled to a part British Pension.

They then went on to say that I am entitled to buy an additional 6 years at an average of about £310 per year, which would increase the percentage of the full pension that I would get. The problem is that I only have until April 2009 to buy any additional years. Do you think this is a good investment? Should I buy additional years?

Thanks in Advance.

EdInvestor

Under new rules those who retire after 2010 will only need 30 years NI contributions to get the full basic pension. So they are suggesting you could accumulate 14 years by the time you leave, which would mean you got about half the BSP at retirement.

You should also be able to make further contributions after you leave the country. Voluntary class 2 contributions,which are payable by people working overseas are one of the great bargains: less than 10 quid a month.

But there is one problem: if you retire in Australia, the pension won't be index linked for inflation, as it is here (and for pensioners in other countries like the EU).Thus the benefit is less attractive.However if you feel you might return to the UK/Europe or retire in any of the other countries where it is index linked, then IMHO it's a bargain and well worth having.