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Reasons for paying your State Pension/NI payments whilst abroad

Discussion in 'Teaching abroad' started by stopwatch, Sep 24, 2018.

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What is your situation (tick all that apply)

  1. I am overseas and paying my National Insurance

    15 vote(s)
    68.2%
  2. I am overseas, but not paying my National Insurance

    4 vote(s)
    18.2%
  3. I know my State Pension forecast

    11 vote(s)
    50.0%
  4. I don't know my State Pension forecast

    4 vote(s)
    18.2%
  5. I prefer to stick my head in the sand about all of this type of thing

    4 vote(s)
    18.2%
Multiple votes are allowed.
  1. stopwatch

    stopwatch Established commenter

    The main reason for posting is to try and help people not to end up in the same situation as me. I worked overseas for 17 years from 2001. I found out quite late that I could pay my National Insurance, Class 2 from overseas and this would contribute to my State Pension.

    Because I began paying this quite late (I didn't start until 7 years into my overseas experience) and because HMRC stopped collecting once I reached 30 years contributions (which was the max needed at the time, before it was increased to 35 years). I find that I now have only 32 years contributions.

    So, here's the thing in a (rather large) nutshell:

    For those who have insufficient years NI payments, who are considering buying back previous years, I thought it might be useful hearing what I have just discovered from HMRC and the Pensions department (not, by the way, one and the same thing).

    Having worked overseas and only paying NI from there for some of the years, my NI contributions only amount to 32 years. In order to get a full State Pension, the requirement is 35 years. My assumption would have been that I need to buy back 3 of my previous unpaid years in order to get the maximum payment.

    After having spent almost an hour and a half on the phone, I have discovered that it isn't quite that simple.

    So here goes with the facts/most useful things I have gleaned from my call:
    • HMRC and The Pensions Department/Service are not one and the same thing.
    • HMRC manly deal with what class of NI payment you need to pay, either ongoing or as a 'buy back' year. In my case, this was Class 2 ongoing and would have to be decided on any 'buy back' years, but likely also to be Class 2. They cannot tell you anything about how this will affect your future pension provision.
    • The Pensions Department decide what State Pension you will receive based on the numbers of full years you have paid. They cannot tell you anything abut the class of NI payment you need to pay.
    • Although I have paid 32 years, much of this was on the 'old system'. A new system was introduced in 2016.
    • I have up to 6 previous years which I could buy back for around £750 per year (or around £200 per year if HMRC judged that I could pay Class 2 'buy back' as I was overseas at this time).
    • One would assume that, if I bought back 3 more years, I would then have the 35 years required to receive full SP.
    • I was told that I would need to pay a further 5 more years to get full SP (32 + 5 = 37 - go figure the maths??!!)
    • HOWEVER, and this is the key thing, because all of these years are prior to 2016, even if I bought them, they would make absolutely no difference to my SP years/amount.
    • So the bottom line for this is that I need to pay a further 5 years - IN THE FUTURE - to increase my SP to the full amount. Even though I am not working, (I am retired on a medium sized Teachers pension, with my State pension kicking in around 5 years time) I would have to pay Class 3 - around £70 per month - voluntary contributions (or the whole year at around £800+).
    So, from this, if you are in a similar position to me and considering buying back previous years, I would suggest getting a State Pension forecast and then contacting Pensions department first (0800 731 0175) and then HMRC (0300 200 3500), to get clarification on your position, otherwise you could be wasting a lot of money for nothing.

    And if you are currently overseas, get in touch with HMRC and arrange to pay your National Insurance as quickly as possible.

    Sorry for such a long thread........ I'm now going to lie down now in a darkened room
     
    mooneymichael99 and clovispoint like this.
  2. 576

    576 Established commenter

    Also assume nothing.
    I checked and I need 38 years because for ten years I was in TPS which is contracted out.
    My Dad was contracted out with the consequence of not getting the full state pension. It seems that has now changed so you get the full pension but you have to. Pay in more.
     
  3. Helen-Back

    Helen-Back Occasional commenter

    I have back paid NI a couple of times, as has my wife. I have always written on the check, `only cash if this top ups pension years.' I have then stated the years that are being topped up. I have sent off the cheque, waited for the next financial year and then asked for a new pension statement to make sure the years were applied. They always have been.

    That said, I found out a couple of years ago that my 1990s UK employee was in some kind of NI reduction scheme, where the employees paid reduced NI contributions. The result of this is, I need to pay 37 years instead of 35. I'm OK with this, because I can still get my full contributions in by 63.

    It definitely pays to stay on top of this.
     
  4. Helen-Back

    Helen-Back Occasional commenter

    Employer, not employee.
     
  5. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

    Would appreciate your help in this matter... Just checked the state pension forecast, it says that I have 15 years full contributions but need 34 years to contribute before 2051.... Does this mean 34 years in total, or an additional 34 years on top of the 15 that I have paid so for... I have attached a screenshot.
     

    Attached Files:

  6. stopwatch

    stopwatch Established commenter

    if it is the same as the way my forecast was worded, which it seems to be, it means you need a further 34 years to get the full pension by 2051.

    Unfortunately, based on what I was told by the pensions department yesterday, although you can buy back previous years, any years prior to 2016 which are bought back will make no difference to your pension amount.

    Also, although you need '35 years' to get full pension, due to contracted out years, the reality is that you may need to pay more than this (which seems to be a common theme on both of the threads I have put out on this)

    So, doing the maths 2051-2018 = 33 years which you could gain if you continue you working and/or paying your NI between now and 2051, totalling 48 years.

    If I have got this wrong, I am sure there are others who will clarify.....

    I would Google various options - 'how is my state pension calculated?' 'why do I need more than 35 years contributions to get a state pension?' 'teachers contracted out national insurance' etc. Money Saving Expert also has some good articles.
     
  7. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

    On the home page of the state pension forecast website it states that my current pension would be 86 quid a week, however, it also mentions that with another 17 years of contributions I will get about 168 quid which is the full state pension
     
  8. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

    Just to clarify it's The Pensions Department that I need to speak to regarding the state pension forecast?
     
  9. stopwatch

    stopwatch Established commenter

    15+17 = 32, so this doesn't tie in with your earlier figure of 34. I am sure that you need a minimum 35 years contributions.

    Having said that - 17 more years is a lot more positive than 34 more years! You don't say how old you are, but you cannot pay NI beyond your normal State Pension age - which I am guessing you are due to reach in 2051?

    Yes, you need to call the Pensions Department. I would call them with your forecast in front of you so that you can ask/answer questions properly. Also a pen and paper!

    They are very helpful and are the only ones who can answer specific questions related to your personal circumstance.
     
    Last edited: Sep 25, 2018
    576 likes this.
  10. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

     
  11. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

    I'm 35 so with the additional 34 years that would take me past the state pension age. Also, I'm scratching my head wondering why I would need to pay additional 34 years because I've never contributed to the TPS and I've only been teaching for 6 years... Probably best to give them a call.
     
  12. stopwatch

    stopwatch Established commenter

    My understanding is that you need to pay 35 years minimum. If you have paid 15 years, you would need another 20. If you did this from now, you would have paid 35 years by the time you are 55. However, you would still have to pay NI if you are employed.

    As I/you have said - this is something best answered by the professionals!
     
  13. clovispoint

    clovispoint Occasional commenter

    My understanding is you need 35 years NI payments to get the full pension. You have "x" years left to pay it. If in that "x" period you reach the magic number of 35 years of contributions, you can cease payments. If you were working in the UK, you would continue to make NI contributions but these would not add to you entitlement (i.e. you already maxed out at 35 years, np bonus money for year 36+). If you are paying from outside the UK, you could stop your contributions.
     
    Helen-Back and stopwatch like this.
  14. Jason_Bourne_

    Jason_Bourne_ Occasional commenter

    So in my example even though the forecast says I've paid 15 years contributions, I have 34 years remaining to pay the other contributions (20 years)
     
  15. stopwatch

    stopwatch Established commenter

    Yes and, as Clovispoint says, if you are still paying from overseas, you can stop paying once you reach the required 35 years.
    Unless of course, the government moves the goalposts again - which is highly likely
     
    clovispoint likes this.
  16. 576

    576 Established commenter

    The most crucial thing is - as has been pointed out - being in a contracted out pension scheme changes this
    It does not say this anywhere online unless you get your pension forecast and query with them. Then that's what they will tell them.
    It is not one size fits all and the best advice is get the forecast and if in doubt query direct with the experts.
     
  17. markedout

    markedout Occasional commenter

    Useful info, but does anyone have the phone numbers for HMRC and Pensions Dept to call from outside the UK?
     
  18. clovispoint

    clovispoint Occasional commenter

    loislane1 and 576 like this.
  19. nemo.

    nemo. Occasional commenter

    So go pay a load of money into an UNFUNDED state pension to a country about to commit financial suicide?

    My prediction state pension age will be made 80 in a post Brexit Tory government. No sliding in everyone hit. Old guarantees will be made invalid "blame europe" for being unreasonable. The pound will be devalued 20 to 30% or even more over next decade. Inflation will hit 10% while pensions stay frozen. Old people freeze or starve to death over xmas. UK government will be on the brink of financial disaster as UK government bonds become junk. The NHS will be privatised to a US system - US companies buy them up. For the rich health care is good. No money no decent care. Death rates shoot up - government is happy less pensions to pay.

    I am retiring overseas. I wont be throwing good money after bad!
     
    dumbbells66 likes this.
  20. dumbbells66

    dumbbells66 Lead commenter

    i did read somewhere once, i think it was on the TES, but the average UK teacher lives for only 7 years after retiring. for the money i would have to put into the state pension fund, i can buy myself a very nice home outright in Poland. thats where i will be retiring
     
    loislane1, claytie and nemo. like this.

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