Voluntary Class 2 NI while living abroad

pecunianonolet

Hi,

doesn't seem to be covered in most headline bulletins of changes but can somebody explain in more detail please?


Page 50


Page 108


Am I reading this right that the general class 2 eligibility will be removed (subject to final approval) from 6th April 2026. What I don't understand is the second bit about the 10 year residency.

Does that mean that if you've had 10+ years of residency and/or contributions in the UK and move abroad you are still able to pay class 2 contributions? 

https://assets.publishing.service.gov.uk/media/6926eb102a37784b16ecf525/E03444720_Budget_2025_Web_Accessible.pdf

QrizB

pecunianonolet said:

Does that mean that if you've had 10+ years of residency and/or contributions in the UK and move abroad you are still able to pay class 2 contributions? 

No, it means you'll need 10+ years of residency and/or contributions to be eligible to pay voluntary Class 3 NICs from overseas.

Fewer than 10 years and you won't be able to pay voluntary years from overseas at all.

pecunianonolet

QrizB said:

pecunianonolet said:

Does that mean that if you've had 10+ years of residency and/or contributions in the UK and move abroad you are still able to pay class 2 contributions? 

No, it means you'll need 10+ years of residency and/or contributions to be eligible to pay voluntary Class 3 NICs from overseas.

Fewer than 10 years and you won't be able to pay voluntary years from overseas at all.

Thanks for clarification. I guess a lot of people bought many years of class 2 before the recent April deadline and that must have raised a lot of questions. 

I am sure this will not go down well for people living and working abroad, whether long term or temporarily. 

Bostonerimus1

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

pecunianonolet

Bostonerimus1 said:

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

I made use of it as well last tax year for a short period abroad in the past and filled up some gaps. Would have never known about it if Martin Lewis would not have shouted from the roof tops for ages about it. It seemed to good to be true. My partner and I were planning to make use of it again but in hindsight of future generations having to pay for it, most likely not even born yet, it is only fair that it has been abolished. 

Bostonerimus1

pecunianonolet said:

Bostonerimus1 said:

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

I made use of it as well last tax year for a short period abroad in the past and filled up some gaps. Would have never known about it if Martin Lewis would not have shouted from the roof tops for ages about it. It seemed to good to be true. My partner and I were planning to make use of it again but in hindsight of future generations having to pay for it, most likely not even born yet, it is only fair that it has been abolished. 

My first couple of expat contributions were under the old rules when you had to pay Class 3. Then in the early 1990s it became possible to pay Class 2 so I switched. When the new state pension came in I was told I'd need 35 years of contributions to get the full benefit rather than 30 and so I kept contributing and I haven't stopped even though I'm well past 35 years now, just in case they up the qualifying years again. It's a trivial amount so why not? 

It will be interesting to see what my 2025/2026 contribution letter from HMRC says.

pecunianonolet

Bostonerimus1 said:

pecunianonolet said:

Bostonerimus1 said:

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

I made use of it as well last tax year for a short period abroad in the past and filled up some gaps. Would have never known about it if Martin Lewis would not have shouted from the roof tops for ages about it. It seemed to good to be true. My partner and I were planning to make use of it again but in hindsight of future generations having to pay for it, most likely not even born yet, it is only fair that it has been abolished. 

My first couple of expat contributions were under the old rules when you had to pay Class 3. Then in the early 1990s it became possible to pay Class 2 so I switched. When the new state pension came in I was told I'd need 35 years of contributions to get the full benefit rather than 30 and so I kept contributing and I haven't stopped even though I'm well past 35 years now, just in case they up the qualifying years again. It's a trivial amount so why not? 

It will be interesting to see what my 2025/2026 contribution letter from HMRC says.

I am some time away from any pension and by that point it might even be means tested. If I look around collapsing pension systems in other countries there is not much hope that state pension will do much in the future, if you even et it. 

Bostonerimus1

pecunianonolet said:

Bostonerimus1 said:

pecunianonolet said:

Bostonerimus1 said:

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

I made use of it as well last tax year for a short period abroad in the past and filled up some gaps. Would have never known about it if Martin Lewis would not have shouted from the roof tops for ages about it. It seemed to good to be true. My partner and I were planning to make use of it again but in hindsight of future generations having to pay for it, most likely not even born yet, it is only fair that it has been abolished. 

My first couple of expat contributions were under the old rules when you had to pay Class 3. Then in the early 1990s it became possible to pay Class 2 so I switched. When the new state pension came in I was told I'd need 35 years of contributions to get the full benefit rather than 30 and so I kept contributing and I haven't stopped even though I'm well past 35 years now, just in case they up the qualifying years again. It's a trivial amount so why not? 

It will be interesting to see what my 2025/2026 contribution letter from HMRC says.

I am some time away from any pension and by that point it might even be means tested. If I look around collapsing pension systems in other countries there is not much hope that state pension will do much in the future, if you even et it. 

I think you are being overly pessimistic about state pensions in general. The UK's state pension is certainly one of the lowest and usually worst value for money in the OECD, but it will be tweaked rather than abandoned. For me my UK SP will be the best "investment" I've ever made and I estimate that I would have had to average 14% annual gain on my contributions over 40 years to have an pot large enough to buy an similar RPI annuity at today's rates. That's 4% more than I've averaged on my other money. My US social security will be about 2x my UK SP amount, but I've paid a lot more for that.

pecunianonolet

Bostonerimus1 said:

pecunianonolet said:

Bostonerimus1 said:

pecunianonolet said:

Bostonerimus1 said:

It's about time they closed this loop hole. It's a ridiculously generous benefit. UK expats should still be able to pay NI, but at a more sensible rate than Class 2. In fact Class 2 NI for the self-employed should also come under scrutiny.

Of course I've been taking advantage of it since 1987 and I still make my annual contribution just in case the Government move the qualifying goal posts again and also out of some guilt. My 2024/25 payment was £179.40 and I estimate my lifetime contributions are about £6000 and my current pension forecast is for £12014.12 a year. 

I made use of it as well last tax year for a short period abroad in the past and filled up some gaps. Would have never known about it if Martin Lewis would not have shouted from the roof tops for ages about it. It seemed to good to be true. My partner and I were planning to make use of it again but in hindsight of future generations having to pay for it, most likely not even born yet, it is only fair that it has been abolished. 

My first couple of expat contributions were under the old rules when you had to pay Class 3. Then in the early 1990s it became possible to pay Class 2 so I switched. When the new state pension came in I was told I'd need 35 years of contributions to get the full benefit rather than 30 and so I kept contributing and I haven't stopped even though I'm well past 35 years now, just in case they up the qualifying years again. It's a trivial amount so why not? 

It will be interesting to see what my 2025/2026 contribution letter from HMRC says.

I am some time away from any pension and by that point it might even be means tested. If I look around collapsing pension systems in other countries there is not much hope that state pension will do much in the future, if you even et it. 

I think you are being overly pessimistic about state pensions in general. The UK's state pension is certainly one of the lowest and usually worst value for money in the OECD, but it will be tweaked rather than abandoned. For me my UK SP will be the best "investment" I've ever made and I estimate that I would have had to average 14% annual gain on my contributions over 40 years to have an pot large enough to buy an similar RPI annuity at today's rates. That's 4% more than I've averaged on my other money. My US social security will be about 2x my UK SP amount, but I've paid a lot more for that.

In your case for sure, your return is unbeatable and for sure the best investment you could ever make and security that you will get it paid is also rather high. However, as a Millenial it's not so easy anymore. 

When you're young your focus is on housing, family and living life so a higher need for disposable money vs. putting it away into a private pension. With everything getting proportionally more expensive and salaries not keeping up it also is getting more and more difficult. 

For example, I started a job in 2021 and received a 3% salary increase each year. Not unhappy about it but getting 3% when inflation is 10% and average salary increase is nearer 5-6% isn't a great deal. In essence, I now earn in real terms less as I did in 2021. Taxes have gone up, groceries, enery, etc. so obviously less disposable income to put in a private pension pot. 

Now, Millenials wanting a state pension in 30 years the money needs to come from somewhere. So what are the options, increase working age, reduce payments, make pensions grow less e.g. not in line with wage growth, inflation, etc. We also all get older so in the long run people will start to take more out as they ever put in. S you also need to increase the base of where payments are coming from but the demographics are not working that way either so you may need qualified immigration. However, to attract high skilled immigrants you need to provide an offer and not a high tax environment with crumbling infrastructure. 

So, it may all becomes means tested and won't provide the growth rates seen in the past. Maybe I am too pessimistic but the outlook overall isn't that rosy. 

Bostonerimus1

Yes I know it's difficult for the younger generation, but it's also hard for many people my age as rates of older age poverty are quite high. The replacement of DB pensions with DC pensions has been a disaster for some people and the main thing many people have is the State Pension and so I think any Government will try to keep it relevant. That might mean some changes, but it will exist in some form.

The old rules of budgeting, thrift and putting some money away as a priority are probably even more important today, but probably harder to do. I just hope that some sensible approach can be found to wealth redistribution, economic investment incentives and immigration. As an immigrant myself who spent my career working with other immigrants I think the current atmosphere is counter productive.

pecunianonolet

Bostonerimus1 said:

Yes I know it's difficult for the younger generation, but it's also hard for many people my age as rates of older age poverty are quite high. The replacement of DB pensions with DC pensions has been a disaster for some people and the main thing many people have is the State Pension and so I think any Government will try to keep it relevant. That might mean some changes, but it will exist in some form.

The old rules of budgeting, thrift and putting some money away as a priority are probably even more important today, but probably harder to do. I just hope that some sensible approach can be found to wealth redistribution, economic investment incentives and immigration. As an immigrant myself who spent my career working with other immigrants I think the current atmosphere is counter productive.

Nothing for me to add to your post and in full agreement.