TreasureMemories

Ello ello,

Brief background: I'm pretty clueless about everything but learning as i go along, so please bear with me. Studied (all the way to postgrad), worked part-time during studies, took a few years out, then landed a job in KSA - public sector. Theres two issues on my mind:

After all the news about pensions, i was curious, so earlier today i had a convo with HMRC and the lady advised me to not pay voluntary NI contributions (as its "too expensive" and i'm "still young"). I should have around 8 years so far. Although, i'm well over 30 years away from pension age i am concerned about the state pension especially given i intend to stay in KSA a while. Should i be worried about the state pension and/or should i consider private schemes? I thought you had to contribute at least 10 years to be eligible for state pensions. Is this true? I'm not familiar if KSA offer a private pension scheme but i would prefer something back home.

Secondly, by default my wage goes into an NCB account. Recently, whilst in the UK, i made a transfer to myself via a MoneyGram service that NCB offer. Problem is, it doesnt go directly into my UK bank account, had to go to the PO to pick it up. The fee is 300SAR per transaction too. I've never transferred money before and am not familiar on the most effective way or on who to trust.

Any suggestions and advice would be most appreciated.

Meow

Posting as a finance professional. (An actual one, not a barely qualified sales shark.)

I am not especially worried about the UK State Pension although the age from which people can claim will continue increasing, simply due to demographics and the costs. It's still A Good Thing and if you are likely to retire in the UK, or EEA, or anywhere with a reciprocal arrangement it is likely to be worth aiming for the full UK State Pension as it will be indexed in payment and thus retain its value in real terms. You will only require 35 years of contributions for the maximum so most expats can take a break of a few years and still qualify but a minimum of 10 years of contributions is required.

The UK State Pension alone is not sufficient provision for retirement so you need to have other assets (a mix of cash, property and investments) to provide for your later years. As you are not a UK resident you cannot take out a new UK pension plan but there are other options. Just avoid 20-25 year saving plans!

Transferring currencies between two retail bank accounts is rarely cost effective and you should get better exchange rates by using a regulated currency exchange house.

(My contact info is in my signature below if you have any queries.)

nottmbantam

I pay voluntary NI contributions and pay by Direct Debit, but as I'm a bit more advanced in years than you, I guess my contributions are lower.

AS for currency exchange, as Meow points out, using banks is convenient as you can transfer from your KSA account in SR and receive the money in Sterling in your UK account. However, the exchange rate is not the best. In recent months, I have used a UK based currency exchange house. If you're interested, let me know and I will provide you the details.

Basically - contact them and agree an exchange rate based on the amount of SR you will be transferring. They will then send you the bank details. You transfer money in SR to their SR account. This will take around 1 working day to leave your account. Once they receive it, they will deposit the agreed Sterling amount in your UK Bank, usually the same day they receive your SR payment.

sicklyman

don't think NI contributions have anything to do with age nottmbantam.

Ideally, you transfer out in SAR to a UK based SAR account and then convert. This is what most currency exchange houses do but check to make sure they are doing this and not shifting it through US dollars on the way (although this might get you a better deal when all the planets align every so often).

Meow

Correct, it is a flat payment.

scot47

Class 2 NI is being phased out. That wa s cheap option. You can pay for some years retrospectively. I think up to 7 from memory. Worth checking out before it is too late.


You seem to have found a very expensive way of transferring money. Normally there is a fee at the Saudi end. Your bank at this end may make a SMALL charge but not as much as you mention.


You could do it the Third World way and convert into a chunk of cash. Remember that if it is above US$10,000 in cash you have to declare on leaving and on arrival in the EU/UK.

cognizant

Hi, as a UK qualified financial adviser DipPFS,I would advise do not rely on the state pension to fund your retirement, you have to pay in for 35 yrs to qualify for full state pension and a minimum of 10 yrs payments required before you can draw a UK state pension, besides by the time you reach state pension age the UK pension coffers will most likely have run dry long before then,with the current increasing demand on state benefits, the coffers are under great strain.
The morale of this story is that you should focus on providing yourself with a personal pension either onshore or offshore, dependent on how long you intend living and working outside the UK,also consider a tax free savings plans offshore min 5yrs to help pay for short term goals like property deposit.
When I was an expat in Dubai I could transfer my Emirati funds online through my local bank in Dubai to my offshore Sterling account, which is maybe possible for you to arrange in KSA.
Does this make sense? if you would like any more advice,let me know.

TreasureMemories

Thanks a lot guys. Can not send PM's yet as i suppose i havent reached the post limit, will do once its made available. Interesting enough i hear there will be a remittance charge of 6% per transaction, the Kingdoms not making it easy ey.

TreasureMemories

Scot, Class 2 was/is only for self-employed folks, according to the website and the HMRC adviser, or is that a change thats just taken place?

Pulaski

Anyone working overseas can (could) potentially pay Class 2 contributions. There are rules around working - that you must have been working in the UK immediately before you left, and working again while overseas. You have to apply to be allowed to pay Class 2, (the default is Class 3, at about £715/yr), but I was approved for Class 2 about 12 years after moving to the US, and after a gap of a few years paid "six years arrears, plus current year", being the seven years that Scot47 alluded to above, for just about £1,000 total. I believe the payment next spring, 2017, will be the last one at the roughly £143/yr Class 2, thereafter I am assuming £715/yr Class 3, but I haven't seen any official word yet.

nottmbantam

I contacted DWP directly and explained the situation, filled out all the forms and what not and part of that was stating how many years I had already paid NI contributions. I just assumed that it was based on how far away I was from retirement age and hence the lower contributions.

As far as I know, its a Class 2 contribution.

Meow

Class 2 are available to most expats currently (conditions apply) but that will change.

Article explaining the changes and new rules for NI and UK State Pension here:
https://financialuae.me/2016/09/19/u...-need-to-know/

TreasureMemories

Meow, please could you check your DM.

Johnnyboy11

Coincidentally I've just applied to pay 6 years (plus current year) Class 2 NI Contributions. Sent the form off to HMRC last week, we'll see what happens. Bit concerned about the "working in the UK immediately before you left" criteria, since most folk would have a break between one employer and the next.

Funny thing is, I similarly applied 6 plus years ago when I left the UK, but got a letter from HMRC saying not to bother, since I'd already paid 27 of the 30 years required for a full state pension. Then the goalposts were moved to 35 years!!!

martinbkk

Reading the last post above I take it then that once you've paid 35 years NI contributions, in my case 33 plus 2 free, then no further contributions are necessary, though would be paid if you were in UK and still working presumably since NI covers more than just pension.

At 66 2/3, my current projected retirement age I could then expect to receiver a ful basic state pension.

Cool