Guys,
I worked in UK for 6 years (Not a citizen) and paid NI for full six years. Is it worth paying voluntary contribution to receive eligible state pension ? Is is better or even possible to transfer it to an my super account if paying voluntary contribution is not the best outcome ?
I understand that I need to pay 4 more years worth of voluntary contribution as minimum 10 years of NI contribution is needed for state pension. Please correct me if I'm wrong.
Thanks
T
I think I paid National insurance only and not and private pension, so I guess my option is to get state pension only (May be a % of as I am only looking to pay for 10 years ?
I checked on the website and it's showing voluntary contribution is £880.80 per year . I guess this is class 3 NI.
How to know if you are eligible for Class 2 as I think that's cheaper ?
Donald is right in that you can't move state pension contributions (NI) over to your Super. I left with 8 full years contributed and also need to voluntarily contribute £880.80 for each additional year. I'm not familiar with the different classes you mentioned, but I'm a British citizen if that helps.
Fortunately I have a few part-contributed years, so only actually need to contribute a few hundred ££ more to get my 10. I still haven't gotten around to it though, and 10 years is only forecast to pay out ~£50/week in 30 years time.
Hmm, this prompted me to check mine. https://i.imgur.com/egQdojt.png
It says I have 10 years of full contributions yet only lists 9 full years in the breakdown starting 2004. Odd.
Moved here in 2018 so that part onwards makes sense. If we were to retire here, would we be eligible for both NI and Super?
Mine says I have 8 years of full contributions, and I can see the 8 years listed. Is it possible you have some partial years that add up to make a single year? Not sure if it works that way. Worth checking your 06-11 'view details' in case you have only a small amount to contribute in order to fulfill that year.
Something prompted me to check into this only a few weeks ago for the first time ever. Had to sign up for all that my.Gov stuff.
Interestingly it seems we both started our working age in 2004, but my pension year is 2056 and yours 2055.
If the pension forecast for 10 years of NI paid is only £50 per week (£2600 per year) in 30 years time, Is it worth paying ?
@Chriise do you plan to pay it and where did you find out about the £50 per week ? Is there a calculator available ?
Is it worth paying ?
Up to you, really… For me personally I'm not sure, as if I decide to move back to the UK at all it'll happen anyway, so holding back on making voluntary contributions (although I may as well fill up the years with only £100-200 to contribute).
I believe the payments are pro-rata on contributions. A full set of 35 yearly contributions forecasts £179.60 (at least that's what it says for me - scroll down the page on Gov.UK). I just calculated £179 x 10/35.
So if you have to pay £3,523 to lock in 10 years.. you'd get £2,600 a year at retirement. A random inflation calculator on the web tells me in 25 years this will be worth about £1,000 in today's value. So 4 years into retirement to break even…. But then you need to consider the hassle of claiming, tax on the payments, and opportunity cost of £3,500 spent today.
It really depends on the individual and their age.
If you have the money lying around, it would be a good idea as the UK pension is for life. So if you live a long time it will keep paying.
But it is a pittance, so nothing to get excited about.
Mind you, I know a few old age pensioners who would be very grateful for 50quid a week!
This would likely be tax free in AU, unless you have a lot of super, so I wouldn’t be too worried about that.
It is also a good idea to have diversity of assets, and there have certainly been times in the last few decades when being paid in pounds would have been a good thing.
FWIW, I have a small balance in a UK private pension from when I worked there for a couple of years. My plan is to just leave it until I retire and take it as a pension then, likely peanuts, but better than nothing.
UK full pension not a pittance. Far from it. $17,600 per year is a very useful boost to super.
Bare in mind that AU super is also tax free when drawn down so you could potentially have a very decent tax free income if you set it all up well.
See more below
Agreed, but the OP here is talking about the possibility of a fractional pension, about a third of that.
EDIT: I didn’t realise you meant paying the full 29 years of contributions. If they can be done at the concessional rate that would be a very good deal.
Even if OP only contributes enough to get 10/35 of the UK pension, it’s still a good deal. The contribution levels for Class 2 are minimal compared to the payout at pension age. Although not enough to live on, the cost versus return is extremely good value
Best thing to do is check your current pension status. if you are not registered you can when you click on 'Start Now'.
https://www.gov.uk/check-state-pension
If you have to pay class 3 contributions, then probably not worth it. if you can pay class 2 (which is only £158.60 a year), then i would pay for as long as you can. I think you can backdate upto six years (need to confirm).If you have contributed enough years then you will be entitled to a full basic pension for life which is currently £9400 per year ($17-18,000). If you can pay class 2, then it will be one of the best investments you ever make………as long as you live long enough!
YMMV.
Will it show on the link if I am eligible for class 2 ? I checked and its showing 880.80 GBP so it is showing class 3 I guess
From memory no. By default it shows class 3. You have to submit the following form by post
https://assets.publishing.service.gov.uk/government/uploads/…
Then they will write back and let you know what class you are eligible for.
Excellent ! Thank you !!
Let me submit NI38 and see what they say
Tip! On question 11 - "How long do you intend to stay abroad" - Just write "Undecided".
If you want to pay another 4 years of NI contributions then I recommend paying Class 2 NI which is currently £158/annum. You are qualified for Class 2 (oddly enough) provided you are working in Australia. If you do not work you pay the more expensive Class 3, which may not be worth it. If you pay another 29 years, which at today’s rates (£158 x29) is £4582* total, you will be entitled to a full UK state pension for life from the age of 67.
Someone above said the UK state pension is “a pittance”. That could not be more wrong, it’s actually very good value.
Currently the Full UK pension is £9339/year or $17,600 pa. A lot more than you might think.
Notably that is just under the threshold for paying income tax ($18,600), so if your sole income was from AU super and Full UK pension it would all be tax free.
The main drawback for UK state pensions is that for people in Australia (also NZ, Canada) it is frozen from the day you first claim it here. This is one of the great injustices that remains for UK expats and there is a strong lobby seeking to end that for more than 500,000 UK pensioners living here.
All the same, paying Class 2 NI represents very good value for most and it provides an extremely useful supplemental income when added to your super.
I’ve been paying it for 21 years and have now accumulated 32 qualifying years. Looking forward to reaping the benefits in future.
*It will be more as NI contributions get inflationary increases each year
Trust me. Growing up in NI and working there the first 10 yrs of my life, living wage in NI is no were close to the mainland uk so your pension will be nothing really. The one good thing about this country is that they force you to have a super.
Think your getting state pension and private pension mixed up
You could contribute voluntary to the state pension to reach 10 years and get 10/35s of the pension, but you cant transfer it to your super. You can only transfer any private pension (the super of uk) if you have one, and even then only to an smsf and I didn’t bother.
I also did 6 years, and when I looked into the extra vol contributions it seemed a rip. What are the figures you have.
This is what I believe I am no expert in this field just what I remember.
O often thought of going over and doing two 3 month stints either side of April 5th to get the 10 years.