Steve_

I'm not saying there aren't any downsides to putting money into a state pension, you can sit there and come up with reasons, but they are mostly speculation. Okay, so you can transfer your RRSP to your spouse, but an RRSP is an investment, if the investment goes bad, it's worth nothing. (And your spouse might qualify for a pension anyway, if your spouse came with you from the UK).

Just the general point I'm making is that making Class 2 contributions is a pittance, really, so any risks have to be looked at in that context.

The lack of cost of living adjustments isn't just because of the UK, it's because of Canada not wanting to reciprocate for Canadians living in the UK. Which is why the OAS rules are so strict.

I know there are endless calls for cuts to pension benefits and so on but at the end of the day baby boomers are voters and the more there are retired the more likely there will be a similar agreement between the UK and Canada as there is between the UK and the US.

Maybe there won't be, but you're only paying out two or three thousand quid (in today's money) over many years, can't think of any private sector investment that would be less risky.

Becker12

Interesting thread. I'm in a similiar situation and had been approved by HMRC to pay NIC class II contributions since I'm currently employed.

My question is, if I become unemployed for a period of time, do I lose the right to pay NIC Class II and can only pay NIC Class III and if so do I regain the right to pay NIC class II in the period(s) when I'm (hopefully) employed again?

Does anyone know and/or went through this?

RKS_in_Calgary

I also have a related question (but will post a seperate thread if thats more appropriate so please let me know!) - if you are not working because you are a full time home-maker, do you have to pay the more expensive class 3 contributions - in the UK there was the Home Responsibility Protection but I guess that doesnt apply when you live overseas

Steve_

If you're unemployed you have to pay Class 3, in a nutshell, but there are exemptions.

Read the HMRC NI38 pamphlet, it's all covered in there: http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf It does explain how the HRP works.

RKS_in_Calgary

Thanks for that - sadly we arent eligable (as suspected) for HRP but will read in detail and see what else it says

getoutofbritainquick

I wouldnt bother after today. The state retirement age up to 67 years of age for most of us - probably be 80 in the next 10 years. The good news from the UK just keeps on coming.

How long

Sorry to be morbid but am I right in thinking that contributions to the State Pension are wasted if you die but contributions to a personal pension will be returned to your spouse?

RKS_in_Calgary

that;s a really good question (thanks for asking)

JonboyE

UK

State pension - stops when you die. Nothing if you die before retirement. Your spouse may be able to claim a reduced pension based on your contributions if they don't qualify because of their own contributions.

Personal pensions - if you die before retirement the value of the fund forms part of your estate unless you have nominated a beneficiary. After retirement it depends on the terms of the annuity you buy.

Canada

State pension - stops when you die. Nothing if you die before retirement.

RRSP/RIFF - when you die the value of the of the fund forms part of your estate unless you have nominated a beneficiary. If you have a surviving spouse they can receive the funds tax-free (they are taxed when they draw on the funds). If you have no surviving spouse the value of the fund is taxed as income in your final year. Whatever is left goes to your beneficiaries.

Steve_

Already was 67 for most people, they're talking about public sector pensions at the moment.

You find out when you qualify for a pension by visiting the DWP website.

getoutofbritainquick

Not really they brought the 67 age of retirement in 10 years earlier than planned (my was at 66 a couple of weeks ago for my age group) or to put it another way took 14k from from future pensioners since they raised it from 65. Blame it on the boomer generation they seem to had everything now the rest of us will pay for their excesses. I think they will keep on raising the age until it becomes worthless for most people. I was thinking about topping up but wont bother now. I am sure the politicians wont care with their platinum schemes which the rest of us will pay for. Just glad I got out of Britain when we did thank God - what a financial mess that place has become. With the cost of living continually out pacing salary increase for many years its going to be interesting to see how long it takes to go back to the dark ages. Even annuities are at record low levels so if you have been prudent and saved you are stuffed.Just as well I have a protected company pension thanks to Maggies privatisations

dgagitw

Am I right in thinking that, due to the Canada/UK agreement on social security payments, that you can't claim both OAS and a UK state pension for the same contribution year? E.g. if you paid NI for 2010 and Canadian taxes in the same year, when it came to retirment you'd have to choose 1/30th of the UK scheme or 1/40th of the Canadian one? That is, you can't get the full UK payout without also reducing your Canadian one in some way?

JonboyE

Article 8 states:

For the purpose of calculating the amount of benefits under the Old Age Security Act:-

if a person is insured under the Canada Pension Plan, or under the comprehensive pension plan of a province of Canada, during any period of residence in the territory of the United Kingdom, that period shall be considered as a period of residence in Canada for that person as well as for that person's spouse and dependants who reside with him or her and who are not compulsorily insured under the legislation of the United Kingdom; and

if a person is insured under the legislation of the United Kingdom during any period of residence in the territory of Canada, that period shall not be considered as a period of residence in Canada for that person and for that person's spouse and dependants who reside with him or her and who are not insured under the Canada Pension Plan or the comprehensive pension plan of a province of Canada.


My first reading of this is that any years you are making NI contributions and are not making CPP contributions will not count as years of residence for OAS. However, any years you are making CPP contributions are counted for OAS, regardless of whether or not you you make NI contributions.

However, you could be right. Anyone know for sure?

[Edited to add] On third reading I think you are right. It looks as though the and who are not insured under the Canada Pension Plan only applies to the person's spouse and dependents.

JonboyE

If this is correct the case for paying voluntary NI contributions is far less compelling. At current rates each year of NI contributions buys £180 a year additional pension but costs $168 in lost OAS. I.e. each £130 of voluntary NI contributions buys £75 a year extra pension. Payback in 1.73 years but OAS is index linked and UK pension isn't. OAS starts at age 65 so for me, whose UK state pension age is 66, the fist year costs me $168 x number of years voluntary contributions.

Hmmm... I might need a re-think.

JGK

If you were born in the UK you don't actually have to pay a full 30 years. Apparently you get credited for 3 years when you (initially) start work. I thought I had at least 3 years of contribution to go to make the full 30 however they stopped taking contributions from me about 6 months ago.

When I checked I was told I was fully paid up.