British Expats

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-   -   Pension Options (https://britishexpats.com/forum/canada-56/pension-options-935330/)

Tangram Nov 10th 2020 4:49 pm

Re: Pension Options
 
All figures in pounds.

Ok so I think I worked this out correctly.

P has 26 years
D has 28 years
Topping up P to full 35 years would make a difference of 42 per week = 2184 per year
Topping up D to full 35 years would make a difference of 32 per week = 1664 per year

If it was Class 3 at 795 per year top up it would still make a difference as/if we get basic state pension but obviously a hell of a lot cheaper if it was classed as Class 2. The difference being the hit in the wallet now.

Also how do you calculate if the company scheme you were in whilst in the UK contracted out of SERPS ?

Tangram Nov 10th 2020 4:59 pm

Re: Pension Options
 
All figures in pounds.

OK the way I've read the site is because the bank I worked for contracted out for most of my working life with them, I would only be eligible for basic state pension at 134.25 per week, not 164.35.

Working on the basic state pension figure instead, that would make a difference for P to be 936 pa and D as 468 pa. So not worth it if it is Class 3 for D and barely worth it for P.

Trying to find the number of years you were contracted out though is a nightmare.

Will see what the correspondence says when I get it from NI when that arrives.

These two posts are also ignoring the fact that you could plonk the money into a few TFSAs over here in Canada with immediate access and unknown growth and retirement age going up to 67 between 2026 and 2028 before we reach it.

Probably a non starter for us I think. We shall see.

Tangram Dec 8th 2020 6:51 pm

Re: Pension Options
 
How long is it normally for them to respond .... months ?

dvalentine Dec 8th 2020 10:54 pm

Re: Pension Options
 
I'm just going through this as well. I think it took over 4 weeks for UK to respond to my original cf83 form and then I frustratingly had to submit a separate 'form' that they sent me requesting more date info. I submitted that second form and it took another 5 weeks to get a response. Thankfully they calculated that I can pay Class 2 for most of the years I am allowed, with some Class 3 mixed in. Basically I had to submit employment start and end dates and since I had 2 unemployment periods in the middle those weeks counted for Class 3, while the majority of weeks are Class 2. I've submitted the payment for catchup and am waiting on that to be processed. I also have confirmation of the setup of Direct Debit for the future. My goal is to get to the 35 years and stop (hopefully the rules won't change again!). In my case I had 17 years from before I moved to the USA, and am able to go back to 2006 for catchup. It all seems very worthwhile to me, especially at the Class 2 level.

adele Dec 9th 2020 4:42 pm

Re: Pension Options
 
I mailed my CF83 in late June which they received in early August according to the online progress tracker. I received a letter back in September confirming that I was eligible for class 2. I enclosed all my supporting evidence with the form at the outset so there was no request for additional information. I sent the full payment in early October via Transferwise and just got off the phone with them right now as it's been two months and nothing has been updated online to reflect the payment. They confirmed receipt of the correct payment for the 11 years and the person on the phone has now transferred my file to the international caseworkers for them to allocate the payments to each of the tax years. She said that is currently taking about 3 weeks and I should receive a mailed receipt when it has been done. Not a quick or straightforward process! Hopefully going forward it should be easier as I will be paying one year at a time and there will only be one year it can be applied to.

This payment brings me from 8 years of contributions to 19. I turn 40 next week so still plenty of years left to get up to the full 35 (or however many it may be by then!)

Hope that helps!
Adele

Tangram Dec 10th 2020 2:46 pm

Re: Pension Options
 
Thanks Adele. So a bit of time yet before I chase or anything. Retiring next year but plenty of time before I'm 67 ( if there is even a state pension in its present form then after the country goes bankrupt )

eversmannx Dec 11th 2020 10:20 am

Re: Pension Options
 
Hi guys,

just the subject i've been researching...
I have another 30 years to contribute - what are the best options for me if i am migrating now?

This link says, i can claim the 25% if I've been working for 11 years - which is already covered.
What Happens to My NI Payments When I Emigrate? (goworkabroad.co.uk)

but my NI record page is a bit confusing it says - how do they work out 19 years when i've only worked full time for 15 years or so.
19 years of full contributions
30 years to contribute before 5 April 2050
1 year when you did not contribute enough
19 years of full contributions30 years to contribute before 5 April 20501 year when you did not contribute enough

dvalentine Dec 11th 2020 11:05 am

Re: Pension Options
 
Hi eversmannx, sounds similar to me, I had 17 years, but only worked 14, I think my extra 3 years came from staying on at school, they used to add credit years for that, gave me 3 extra years! Not sure if they still do that - my 6th Form school days were way back in the early 80s. Seems you have plenty of time to accumulate the years to get you to 35 so you can get full pension, and the rules at the moment allow us to contribute NI from abroad at Class 2 level as long as you are working, Class 3 if not working. Class 2 is about £160 a year, well worth it for that bit of extra guaranteed income at retirement (in my opinion). However all the rules/amounts can change between now and then. I decided to invest/gamble and pay top-up for past years. Normally you can only go back 6 years but law changes in 2016? gave us an opportunity to top-up 10 extra years, 2006-2015. I think there is a time limit on this top-up period so you might want to lock it in and pay the top-up now - depends on how you feel about future rules/payments. I'm waiting on my revised pension calc to include the top-up years, but have set up direct debit which I'll use to pay for the next 3/4 years then stop when I reach 35 years. Who knows if the Class 2 will go away, or even the right to pay from abroad may go away, or I might have another unemployment period meaning Class 3 rates, so I'd rather lock in years at Class 2 while I can. Of course everything could change making the 'investment' also a bit of a gamble eg they could change the 35 year requirement to 40, or stop handling pensions abroad completely, but in my judgement a relatively small amount is worth the gamble.

Tangram Dec 18th 2020 1:57 pm

Re: Pension Options
 
Missed off my current employers from the form so got advised Class 3. redoing the form having spoken to them on the phone and resubmitting.

dvalentine Dec 20th 2020 2:25 pm

Re: Pension Options
 
After a couple weeks of no updates I caved and called to check that HMRC received my top-up payment which I made by electronic transfer from my UK bank. As before they were very helpful, they had received my payment (relief) but needed to know which years to apply it to. Also the top-up payment caused the Direct Debit I had set up for this and future years, to be ignored i.e. the system saw my top-up payment and interpreted it as a payment stopping the DD for this year. Over the phone I told them which years I wanted to allocate, read the year-by-year amounts over the phone. I didn't ask for it but they put an 'urgent' note on my record, and surprisingly the next day I got a call back! They were apologetic about the DD, apparently a known issue with the system blocks DD if there is also a manual payment. I checked online after a day and some of the years are now credited and the remainder are 'being checked'. I'll keep checking over the next few days, but promisingly my pension estimate has already started to shift upwards! I'll post when I get it all confirmed.

dvalentine Dec 22nd 2020 1:25 pm

Re: Pension Options
 
It took a few days but my pension estimate has been updated on the HMRC site. My payment for missing years has been included, so I have gone from 17 years to 31 years. I paid the vast majority of the catchup at Class 2 rates (£160), just 2 partial years at Class 3 due to unemployment. This took my pension 'guarantee' (assuming no further payments) from £75 to £140. I know this is not really guaranteed but it is based on my 31 years and excludes any further payments I might make, so it is pretty likely to be the minimum I will get at 67. If I continue to pay for another 7 years I would get the full pension of £175. So I will need to have a total of 38 years to get the full pension rather than 35, I presume this is because 14 years of NI before 2016 were paid at contracted-out rates, so I need to pay more years to get up to full pension. But it is comforting to know that even if I stop paying NI now I will likely get £140 a week, and for each extra year I pay from now on I could add approx. £5 to my weekly pension. If the Class 2 rates stay around £160 per year then it seems worth while to keep paying to get an extra £260 a year in pension.
I view this whole exercise as part of a diversification strategy, giving me another income source at retirement. I know there is risk that the rules/amounts/exchange rates will change, but given practically 0% interest rates and market uncertainty, the gamble of putting some money in the UK pension seems pretty mild!

adele Dec 30th 2020 3:43 am

Re: Pension Options
 
My online account has now been updated too :-)

https://cimg9.ibsrv.net/gimg/british...7129fe1dbf.jpg

freerskier Jan 21st 2021 5:42 pm

Re: Pension Options
 
Coming in really late here and thanks for all the great posts - a lot of my answers are covered. I'll still be sending a comprehensive letter with my completed (as best as I can as its not a GREAT form) CF83.

Basically, though I am not sure if I qualify for Class 2 or 3. I think 3 as I was fully employed in the UK before I left for the USA, then went straight to my US job (on a visa at that time), had a gap in US employment from April 2014 to June 2014 and then been fully employed since.

Id also want to pay any back NICs in one lump from my UK bank so would I tick the Annual Payment box AND complete the direct debit, or, in my accompanying letter, just ask HMRC the best way to do this and wait for their advice?


dvalentine Jan 27th 2021 11:11 am

Re: Pension Options
 
Hi freerskier, I completed the cf83 form to setup direct debit and once I received the acceptance letter with info on how much catchup I could pay I immediately paid. Unfortunately their system can't cope with both things happening at the same time - it saw the catchup payment and decided it didn't need to take the direct debit. I got it all sorted after a phone call, but you might want to wait on paying the catchup until the direct debit is up and running or vice-versa. Re class 2 or class 3, my catchup letter calculated it by the week, based on my unemployment dates i.e. when I was employed it was Class 2, when unemployed Class 3, and going forward my direct debit is taking class 2, presumably as long as I am employed it will stay class 2.

Tangram Apr 3rd 2021 4:23 pm

Re: Pension Options
 
Finally we both got back our acceptances to pay Class 2 voluntary contributions.

1. I have 26 years paid up and my wife has 28 years paid up. What i don't understand is they sent a schedule showing catch up years up until this year, 12 years in total. But we only need to catch up to 35 years ( 9 and 7 years respectively ) ?

2. Also it is unclear ( we set up a monthly DD ) as to what they claim each month - is it the whole years worth of NI or on a monthly basis - if it's monthly we would be still paying the shortfall by the time we get to the State retirement date ?!?!?

3. Is there a way to pay them all the shortfall in one go and get it over with ?



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