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Pay off National insurance ??

Pay off National insurance ??

Old Nov 17th 2019, 7:02 am
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Unhappy Pay off National insurance ??

Basically, the thing I don't understand about pensions and supers is....EVERYTHING !!.
I just don't get it and I'm not sure how to plan for the future. My wife and I are separating and I need to sort this out.
She's fine as she has a good job and come her retirement will probably be helped by the bank of mum and dad anyway.
She stopped me topping up my pension numerous times over the years as "we'll be ok with 2 wages and my inheritence " being the reason.
How I wished I hadn't listened.

so, I had about 3 small pensions which an advisor combined them into one shortly before we came to Oz 12 yrs ago.
That was the last thing he did before he retired.
I think it's got about GBP85,000 in it last time I looked, no further contributions have been made since it was combined. so, Not much. But I can get this pension aged 60. I'm 52 now.
My National Insurance has 12 yrs missing payments to get the full UK pension, Currently I'll get GBP111.27 wk, or GBP168.60 wk if I pay all 12 yrs at a cost of GBP9283.00.
and I also have a Anz Smart choice super paid by the comany I work for with my own additional contributions of $40 wk. Not sure what's in those.

Question is:
Is it really worth paying the 9 grand off to get full uk state pension? (Edit: I have until April 2023 to pay it off,
after then will I not be able to pay it off ?)
Would I get a Aus pension ? worked here 12 yrs so far.
Does the 12 yrs working in Oz make up for the 12 yrs missing in the uk state pension ?
Do I claim the uk state pension and let the Aus one make up the difference or vice versa ?
Should I use the uk private pension and pay off the state contributions to get full entitlement ?
Should I take the Private uk pension and put it in my uk bank account ?

Please feel free to add more questions I should be asking as I have no idea what I'm doing.

I appreciate any advice given.

Last edited by robowen; Nov 17th 2019 at 7:09 am.
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Old Nov 22nd 2019, 1:53 am
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Default Re: Pay off National insurance ??

Apply to HMRC to pay class 2 contributions at £156 pa instead of £780pa or whatever class 3 contributions are.

https://www.gov.uk/government/public...ty-abroad-ni38

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Old Nov 22nd 2019, 9:08 am
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Default Re: Pay off National insurance ??

Originally Posted by ianandhelena View Post
Apply to HMRC to pay class 2 contributions at £156 pa instead of £780pa or whatever class 3 contributions are.

https://www.gov.uk/government/public...ty-abroad-ni38
Only if you are employed or self-employed in Oz (yes, I appreciate that he is, but whenever this is mentioned, that bit is not usually highlighted).
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Old Nov 23rd 2019, 5:12 am
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Default Re: Pay off National insurance ??

Originally Posted by robowen View Post
Is it really worth paying the 9 grand off to get full uk state pension? (Edit: I have until April 2023 to pay it off,
after then will I not be able to pay it off ?)
I'm wondering this too as I'm missing a similar number of years.

If you qualify for Class 2 it's much less as stated above however, but for 9 grand:

- You'll get an extra 57 pounds per week based on your figures above
- So after 9000/57 = 157 weeks you'll be in profit, basically make it to 70 and you're ahead (ignoring interest, inflation etc)

But...

- If you also qualify for an Aus state pension your UK income will be counted in the means test (Aus state pension is means tested, UK one is not). See below for Aus state pension eligibility.
- UK state pension is not index linked if you live in Australia, it is index linked if you live in the UK

https://www.finder.com.au/australian...y-requirements

BTW, you can bring your english pension over once you turn 55, if you want to, but its a bit complicated and you should get advice, on all of the above.

This is only what I've discovered, please do your own research and consider financial advice.
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Old Nov 24th 2019, 3:37 am
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Default Re: Pay off National insurance ??

Only pay it off if you considering retiring back to the UK. You do qualify for the full Australian State Pension as you have been in the workforce over 10 years here. Anything you pay off to the UK state pension will come off of your Australian Pension. The Australian base pension is at least 160 Dollars per fortnight higher than the UK pension, so in Australian terms you are already topped up.

The Australian means test is where you have to really take notice and start to study. Basically, as a single person, you are able to own your own home and get the full Australian Aged Pension if you have less than 258,000 AUD in assets, this is usually in superannuation. The cut-off figure where you receive no Aus Pension as a sin(gle person as long as you own your own home is AUD 574,000.... these figures increase every 6 months. (by the time you reach the Aus Gov Pension age at 67 that cut off figure will likely be in the mid 600'S AUD) If you do have extra money to pay into pension funds and are not considering retiring in the UK then your best bet is to put the money into an Industry Superfund....hopefully you are already in one.... if not change to one immediately.

It all depends on where you see your future. Do not increase payments to the UK if you are not certain you will retire there. The main reason being the UK pension is frozen at the same level from the day you first take it, second reason is it will just come off dollar for dollar of of your Australian pension which is already paid at a higher rate even after only 10 years in the workforce here..

So where do you see your future retirement, here or the UK?

Bottom line is you can be taking from the Australian Pension system (including your own super) circa 2200 AUD per fortnight as a single homeowner and still get some Australian pension..... the big issue with this is the Pension card, where you receive extra benefits like subsidized public transport, utilities and free medical and cheaper prescriptions etc.

It is complicated, but personally I find the UK system far more complicated than the Australian.


Final caviet, if you are certain you will always have liquid assets as a "Single person" on top of your own house of over 600,000 AUD then it could be an idea to look at paying into the UK system. That would apply to less than 5pct of the Australian workforce currently though..... Or consider upsizing your own Australian home before retirement. Upsizing equates to buying a more expensive property so as to cause your liquid assets (super and other assets like cars, furniture, caravans etc) to full back under the assets test limit. The big benefit with Upsizing is that if you start to eat into your own super and full back under the assets test you can downsize again and with todays rules you can top your super back up with a one off downsizing grant of 300K AUD back into your super. Thus increasing your weekly income again... aim to to do that when your travelling/holidaying days are over


BTW I retired from full time work just two weeks ago, So I'm really getting into the nitty gritty of the Pension stuff and how to maximise my payments from the Aus Government, when I reach the Aus Pension age in 15 months time. So stay tuned.

Last edited by ozzieeagle; Nov 24th 2019 at 5:15 am.
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Old Nov 24th 2019, 8:23 am
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Default Re: Pay off National insurance ??

Currently, the cut-off point for income for the Aus Government pension for a single homeowner is 2046.80 per fortnight. Not 2200 AUD as stated above. For a couple who own their own home, that figure is 3122 AUD..... That figure goes up upon review every 6 months. So even with the means test in place, the figure you can earn and still get a part pension is quite high. As your Super Balance declines the amount the Government pays you increases. The real trick is to get as close to that asset cut off point as possible for as long as possible. That way you will be living a very comfortable lifestyle.

That 3122 AUD figure equates to 1650 GBP for a couple, per fortnight....not sure how many UK pensioners have that kind of income. That is the figure when a couple loses the Aus Government pension.

IMO the Aus Assets test, is not the big hurdle that a lot of UK migrants seem to think it is, as the income and asset figures are quite high before they lose the right for that very important Pension Card.
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Old Dec 20th 2019, 12:46 pm
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Default Re: Pay off National insurance ??

Ozzie,

You seem gened up on this topic.

Can I ask, I tried to read up but the figures don't work for me.

Single person reaches retirement age in Australia. No super.

To receive maximum state pension, pension card and full benefits. Australian citizen, worked for over ten years in Australia.

1) What is the maximum amount of cash savings you are allowed to have, if you are renting, i.e. own no home.

2) What is the maximum amount of cash savings plus the maximum value of your house if you own outright.

Before they cut off any State pension benefits.

I comparing to the UK you see.

Thanks
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Old Dec 20th 2019, 8:13 pm
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Default Re: Pay off National insurance ??

Originally Posted by sign View Post
Ozzie,

You seem gened up on this topic.

Can I ask, I tried to read up but the figures don't work for me.

Single person reaches retirement age in Australia. No super.

To receive maximum state pension, pension card and full benefits. Australian citizen, worked for over ten years in Australia.

1) What is the maximum amount of cash savings you are allowed to have, if you are renting, i.e. own no home.

2) What is the maximum amount of cash savings plus the maximum value of your house if you own outright.

Before they cut off any State pension benefits.

I comparing to the UK you see.

Thanks
Really good question, as I'm interested in how much assets you would need in to receive the same amount weekly in the UK as the base Australian Pension which seems at least 30 pct higher than the UK pension.


The maximum in assets for a single homeowner, this includes everything you own including cash, savings, Jewellery, Vehicles, furnishings and any other items to receive 933.50 AUD (495 GBP) per fortnight is 263,500 AUD (139,500 GBP)

The Maximum assets as above for a non-home owner to receive that 933.50 AUD Per fortnight is 473,500 AUD (251,500 GBP)


There is also a calculator, which tells one how much you receive from the government depending on your Superannuation/Savings and Income once you start to receive the Government pension here.

Remember if you do have superannuation here, then your total income is generally higher than the above Aus Pension Minimum. As those figures are the minimum you would be deemed to live on, which you can work out from the link below.

BTW being on the maximum government pension in Australia is actually seen as a worst-case scenario for a pensioner, as the national mandatory superannuation scheme has been going for over 35 years now. So those figures quoted as the Australian Government pension are considered the minimum a Pensioner would get. It's a completely different mindset to the UK model, Where being on the maximum government pension here is seen to be avoided at all costs if possible. Very difficult for UK migrants to get their head around this issue.









Assets / Pension calculator.

Last edited by ozzieeagle; Dec 20th 2019 at 8:29 pm.
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Old Dec 20th 2019, 8:39 pm
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Default Re: Pay off National insurance ??

Originally Posted by ozzieeagle View Post
Really good question, as I'm interested in how much assets you would need in to receive the same amount weekly in the UK as the base Australian Pension which seems at least 30 pct higher than the UK pension.


The maximum in assets for a single homeowner, this includes everything you own including cash, savings, Jewellery, Vehicles, furnishings and any other items to receive 933.50 AUD (495 GBP) per fortnight is 263,500 AUD (139,500 GBP)

The Maximum assets as above for a non-home owner to receive that 933.50 AUD Per fortnight is 473,500 AUD (251,500 GBP)


There is also a calculator, which tells one how much you receive from the government depending on your Superannuation/Savings and Income once you start to receive the Government pension here.

Remember if you do have superannuation here, then your total income is generally higher than the above Aus Pension Minimum. As those figures are the minimum you would be deemed to live on, which you can work out from the link below.



Assets / Pension calculator.
Thank-you very much Ozzie.

The Australian state pension ain't half bad.

If you retire at 67. Had in today's money circa 473,500 AUD. Say live 15 years post retirement.

$473,500 divided by fifteen years, with an annual lift of say 3.3% to keep in line with inflation.

You could draw $520 a week for 15 years rising by 3.3% per year. On top of the $466.75 per week state pension, so on draw down. $986.75 per week combined. You would have to pay rent out of this, and be totally broke at 82. But a very workable amount. I can live on that now at my young age.

$297 for a homeowner, so $763.75 in total paying no rent just utilities still good.

Thanks again.

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Old Dec 20th 2019, 8:46 pm
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Default Re: Pay off National insurance ??

Originally Posted by sign View Post
Thank-you very much Ozzie.

The Australian state pension ain't half bad.

If you retire at 67. Had in today's money circa 473,500 AUD. Say live 15 years post retirement.

$473,500 divided by fifteen years, with an annual lift of say 3.3% to keep in line with inflation.

You could draw $520 a week for 15 years rising by 3.3% per year. On top of the $466.75 per week state pension, so on draw down. $986.75 per week combined. You would have to pay rent out of this, and be totally broke at 82. But a very workable amount. I can live on that now at my young age.

$297 for a homeowner, so $763.75 in total paying no rent just utilities still good.

Thanks again.

Super returns are generally around the 5 pct mark and thats the balanced returns generally speaking, so if you had that 473,500 AUD in Super and drew down that 520 AUD per week, you could actually end up with a much longer term for your money to run out than 82.


So if you can get anything at all into superannuation try and put in as much as possible.

Last edited by ozzieeagle; Dec 20th 2019 at 8:50 pm.
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Old Dec 21st 2019, 12:38 am
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Default Re: Pay off National insurance ??

Originally Posted by sign View Post
Thank-you very much Ozzie.

The Australian state pension ain't half bad.

If you retire at 67. Had in today's money circa 473,500 AUD. Say live 15 years post retirement.

$473,500 divided by fifteen years, with an annual lift of say 3.3% to keep in line with inflation.

You could draw $520 a week for 15 years rising by 3.3% per year. On top of the $466.75 per week state pension, so on draw down. $986.75 per week combined. You would have to pay rent out of this, and be totally broke at 82. But a very workable amount. I can live on that now at my young age.

$297 for a homeowner, so $763.75 in total paying no rent just utilities still good.

Thanks again.

Just realised that the interest on the 473,500 would have to go into the calculations as income. Not sure what figure you would use to calculate the interest. However, anything you earn as interest over 87 dollars per week would come out of your government pension at the rate of 50 cents for every dollar earned.


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Old Dec 21st 2019, 12:43 am
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Default Re: Pay off National insurance ??

Originally Posted by sign View Post

You could draw $520 a week for 15 years rising by 3.3% per year. On top of the $466.75 per week state pension, so on draw down. $986.75 per week combined.

.
The Australian pension might be generous but it's not quite that generous.

If you're getting $520 a week income from your super, you will not be getting $466.75 state pension.
The income test will affect your pension amount and you'll only get $250 a week pension - making a total of $770 weekly.
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Old Dec 21st 2019, 3:27 am
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Default Re: Pay off National insurance ??

Originally Posted by NickyC View Post
The Australian pension might be generous but it's not quite that generous.

If you're getting $520 a week income from your super, you will not be getting $466.75 state pension.
The income test will affect your pension amount and you'll only get $250 a week pension - making a total of $770 weekly.

Unless it's not in Super, then it comes under deeming rate rules, which is caluclated at 1 pct interest for the first 51,800 AUD of assets and 3 pct interest for anything above that. Which I think counts as around 13,200 K for that amount per annum income earned on that cut of figure of 473,500.... or thereabouts. You can drawn down on your assets as and when you like AFAIK.

Last edited by ozzieeagle; Dec 21st 2019 at 3:41 am.
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