SussexGeezer

I'm a long time resident and Canadian citizen with 8 years eligible contributions towards a British pension. HM Revenue & Customs have written advising that I can pay back up to six years for about 3 thousand pounds then pay future years until I reach retirement age. This would give me 23 out of 30 years towards a full British pension. I make this about 73 pounds/week based on the current State Pension, or 550 dollars/week. Seems like it's worth doing provided I live at least a couple of years into retirement. Any advice or comments, particularly from those who may have already gone this route?

Steve_P

Not going to comment on the worth of buying back but your math is a little off.

73 pounds per week equates to (at the current exchange rate) $123.75 Canadian per week or $495 Canadian per month.

JonboyE

If I have got this right you have 8 years NI paid, can buy another 6, then pay up to retirement to get a total of 23 years?

If so, you are paying approximately 15 x 500 or GBP7,500. In return you get 15/23 of GBP73 a week or GBP2,475 a year.

In other words (ignoring the time value of money) you pay 7,500 and get back 2,500 a year, for every year from age 65 to death. Unless you are planning on dieing in your 60s it makes very good sense.

JonboyE

$123.75 x 52 / 12 = $536.25 per month.

We hope the exchange rate has improved a bit before we retire.

Steve_P

OK if we are going to be precise.

$123.75 x 52.176 /12 = $538.065 per month.

Rockyhill

Do you have to pay Canadian income tax on a uk pension?

Steve_P

Yes.

Due to an agreement between Canada and the UK.

If tax is taken off in the UK first then you would claim that amount as a tax credit, you can't be taxed twice on the same income.

If JonboyE comes by he can explain it better than I can.

Novocastrian

What more is there to explain?

pennyhp

If you don't pay the full entitlement to get the full pension will they give you anything at all?

jerry brewer

Hi
So the bill was eventually passed then.
Reducing qualifying period to 30 years .
Off to a brit pension meeting saturday in west van, so this info is handy.
cheers
Jerry

old link
http://news.bbc.co.uk/2/hi/business/5301710.stm

Ben W Bell

Yes, you get (Years Paid In / 30) * Pension amount. No minimum qualifying period.So if you pay in for 12 years you get 40% of the pension.

pennyhp

Thanks for that, its really useful information.

I am going to phone the NI office in the UK and the pensions dept soon to find out where I am at with my contributions and decide whether to pay into it still or not.

Almost Canadian

Unless they change the rules in the future - more people living longer, greater proportion of the population retired, I can forsee that a case strapped future government will simply do away with it or reduce it massively, particularly for those living overseas.

Why not put what you would have paid in the UK one into your RRSP?

SussexGeezer

Thanks for all the great replies to my post.

British red tape never changes. I wrote to them many months ago and a) it took half a year to get a reply, and b) the reply requires an english or gibberish degree (not sure which) to decipher. Regardless of the precision on the actual $$$$'s it will eventually generate, you have confirmed my sense that it's worthwhile doing - and I'm not going to be shy or reluctant about adding to what I'm entitled to in Canada my maxing my RRSP. SussexGeezer

woofwoof

Even if you have paid the max of 30 years into it, do you know if the amount of pension you would receive is frozen if you are an expat...or is it linked to inflation or some index so it would hopefully go up by the time you retire. ??