1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.
  2. Hi Guest, welcome to the TES Community!

    Connect with like-minded education professionals and have your say on the issues that matter to you.

    Don't forget to look at the how to guide.

    Dismiss Notice

Changes to NI contributions and benefits and claiming your teachers pension (if you have one!)

Discussion in 'Teaching abroad' started by stopwatch, Feb 15, 2017.

?

How clued up are you on your pension situation?

  1. Totally clued up

    2 vote(s)
    14.3%
  2. Pretty much clued up but there are one or two things I'm not sure of

    4 vote(s)
    28.6%
  3. I have some idea of the basics but not enough to make informed decisions

    2 vote(s)
    14.3%
  4. Totally clueless

    6 vote(s)
    42.9%
  1. stopwatch

    stopwatch Lead commenter

    I have just come back to UK for a week half term break. While I have been here I have been sorting some admin type things.

    Some interesting things I have learned:

    National Insurance/State Pension
    • Although I can pay back the last 5 years NI contributions which I missed when I was in UAE, this will make no difference to the amount of state pension I will receive at 66 years old (6 years time). I think that this might be a change from a previous situation. (I did pay Class 2, but, when I reached 30 years contributions, it automatically stop taking it from my UK account - then they changed the rules to 35 years)
    • The contributions I am paying now, since April 2016 (from overseas, Class 2) will make a difference to/increase my state pension, so well worth paying.
    • In April 2018, the option of paying Class 2 will no longer apply and you will have to pay Class 3
    Teachers pension:
    • You can commute (I think that is the term) some of your monthly pension amount into a larger lump sum. You cannot do the reverse (ie forego some/all of your lump sum to increase your yearly pension.
    • If you leave claiming your teachers pension until after the due date, this makes no difference to the amount ie it will not increase and you will not get paid back any payments you missed.
    • You can claim your pension early (at a reduction of 2% for each month you claim it early).
    • If you claim it early, this means there are no restrictions on any earnings you might make after your retirement date. If you plan on contining work, as I do, this is well worth doing/knowing
    • If you claim it on your due retirement date (or after) and then go on to continue working/earning, this may have an impact on your monthly pension payments (I am currently in the process of trying to find the specifics)
    This April I will officially be a 'pensioner' HA!!
     
    stressedhead likes this.
  2. clovispoint

    clovispoint Occasional commenter

    Interesting! Do you have a link that outlines the stopping of Class 2 contributions from overseas? That is what I currently pay and I have had nothing to say that there is an impending change. Thanks.

    Roll on April- you putting your feet up? :)
     
  3. clovispoint

    clovispoint Occasional commenter

    I found this which is rather in depth- this is the most relevant part as I can see just now:

    "Group 2: Those who are not self-employed in the UK but can pay Class 2 voluntarily
    They are:
    • self-employed working abroad
    • individuals employed abroad
    • mariners on foreign vessels
    Class 4 liability follows income tax liability – when a self-employed person is working abroad there is no tax liability and therefore no Class 4 liability.

    This means these individuals could not accrue qualifying years for benefit entitlement via a profits test in Class 4. Therefore this group would need to pay Class 3 voluntary NICsinstead to protect their State Pension record following the abolition of Class 2 NICs. This would align the voluntary NICs position of NICs payers overseas with those in the UK."

    Looks like we will have to pay Class 3- not the end of the world; Class 2 was a ridiculously good deal.
     
    stressedhead likes this.
  4. Helen-Back

    Helen-Back Occasional commenter

    Perhaps it might be an idea to top up any missing years before then.
     
  5. mikemcdonald25

    mikemcdonald25 Occasional commenter

    Hi Stopwatch

    I did the same as you and stopped paying my class 2 contributions at 30 yrs, in fact they wrote to me and told me to stop!! Then as you say they changed the rules to 35 years. Are you now saying that this change is retrospective and that to get the full state pension I could/should pay the extra 5 years. Sorry to be a bit thick
     
  6. ljf1aber

    ljf1aber New commenter

    Thank you for this, Stopwatch - class 2 abolition had completely passed me by. From the link you sent, I think the following is relevant to us:

    Group 2: Those who are not self-employed in the UK but can pay Class 2 voluntarily
    They are:

    • self-employed working abroad
    • individuals employed abroad
    • mariners on foreign vessels
    Class 4 liability follows income tax liability – when a self-employed person is working abroad there is no tax liability and therefore no Class 4 liability.

    This means these individuals could not accrue qualifying years for benefit entitlement via a profits test in Class 4. Therefore this group would need to pay Class 3 voluntary NICs instead to protect their State Pension record following the abolition of Class 2 NICs. This would align the voluntary NICs position of NICs payers overseas with those in the UK.

    As you said - Class 3 moving forward!
     
  7. Fer888

    Fer888 Occasional commenter

    Thank you- I had not heard about the class 2 contributions stopping either. It's also useful information about the teacher pension. I need to get onto them and find out what my retirement date but as I am 46 I know it will still be a while yet ;)
     
  8. stopwatch

    stopwatch Lead commenter

    Hello CP, I don't have a link regarding the change to Class 3 in April '18, I was told this from the horses mouth when I called them up to enquire whether it was worth it paying for my 5 allowed 'back years'

    The only constant thing about HMRC/NI/Governement is that they are not constant. They change rules regularly, hence the need to keep up to date. My understanding is that, if I had offered to pay my back years prior to April '16 this would in fact have contributed to my pension pot. However, every time I called about it the message I received was 'Leave it a while and check if it will in fact make a difference'. I did leave it - until it was too late.
     
    clovispoint likes this.
  9. stopwatch

    stopwatch Lead commenter

    Definitely check this with HMRC as the message I received was that it won't make any difference to the amount I will receive.

    The State Pension system is supposed to have been simplified recently - you could have fooled me!
     
  10. stopwatch

    stopwatch Lead commenter

    I would suggest you start paying now from overseas at Class 2 (and then Class 3 after April '18) to make it up to 35 years. There may be people telling you not to bother/you don't need to. However, my experience is that they change the goalposts - regularly - and for the sake of relatively little money, you will hopefully get an increased pension.
     
  11. stopwatch

    stopwatch Lead commenter

    No, I am contracted in KSA until July '18 and likely to continue working somewhere after that. I couldn't stop working as it would send me doolally. I tried it for 10 months back in UK and,although I didn't go doolally, it made me realise that I have to have some kind of purpose and structured function in life.

    Definitely not ready for pipe/slippers/Zimmer frame just yet!!
     
    clovispoint likes this.
  12. stopwatch

    stopwatch Lead commenter

    Some updates on the above:
    • The reduction per month is 0.2% (point 2 percent) and not 2% so this makes hardly any difference at all
    • If you claim on your due date, or after, you can work as a Teacher and earn up to the amount you were earning when you retired. This is calculated as a combination of both your pension and salary. E.G you retire on a salary of £40,000 pa and get a pension of £20,000 pa (40/80ths or 30/60ths). You can earn up to another £20,000 pa before your pension is affected.
    • If you do as above, but get a non-teaching job (manager of Sainsburys or even an admin job in a school eg exams officer) Then you can earn as much as you want without it affecting your pension.
    I will only be on a quarter of my teachers salary with 21/40ths paid in. My additional 'pension' will be in a rental property (fingers crossed).
     

Share This Page