Topping up NI Contributions
 

I'm a Green Card holding Brit and been in the USA since 2014 and have been looking at retirement stuff recently.

Realized, I haven't made the full 35 years NI contributions necessary for the full state pension. Has anyone completed NI38 and gone through the process of "back filling" their Class 3 contributions and can give some advice - especially as the form seems to assume you are completing it before you leave the UK, asks for your UK address, etc.


Thanks.

Re: Topping up NI Contributions
 

Yes I did it from Australia.

I just filled in the form at the back of the NI38 and applied to pay Class 2 contributions (only costs about GBP156 p.a. rather than 780).

In the box asking for my UK address, I just wrote "none".

When you are in a position to pay, ensure you phone Future Pensions (+44 (0)191 218 3600) to clarify which years it is worth contributing for, as it's possible to pay for some years that don't provide any uplift in the value of the pension. From memory in my case, it wasn't worth paying for more than 30 years prior to 2016 when the pension changed.

Re: Topping up NI Contributions
 

I think we did exactly this in early March - we’d already done the online forecast then called to confirm - we were extremely impressed by the person we spoke to who also stressed the point about not making payments for years prior to 2016 when the scheme changed. I don’t think we gave a UK address either.

Re: Topping up NI Contributions
 

I did it from the USA, all by regular mail.

Re: Topping up NI Contributions
 

Thanks Ian and Helena and the other folks for the good advice - interesting on the Class 2 vs 3 - I assumed class3 after I read that CF83 leaflet as I was employed not self-employed - was that your situation? Also, Wonder if UK.Gov cares I got divorced after marrying in the US, again seems to assume you were married at the time of completing the form, which i wasn't. Did you put TBA for the question "How long do you intend to stay abroad?"

Re: Topping up NI Contributions
 

I think NI38 gives 3 conditions which, if satisfied, mean you contribute at the lower rate. And think we put TBA or like for the question re how long we’ll be abroad.

Re: Topping up NI Contributions
 

A cautionary tale
My brother left it too late and as a result he has long gaps in his record and is now "out of time"

He should have taken my advice years ago.

To all of you out there. Checkout your NI Contribution Record. Be like me and not like my brother !

Re: Topping up NI Contributions
 

Thanks again and for scot47's handy addition - I checked my NI online and at 33 years I have 2 years to "back fill" to get to the 35, with April 2021 being the end date for the "oldest year". Ill be getting on with it shortly as the difference in state pension just for being 2 years behind is around 35 quid a week. Well worth the top up. Cheers all.

Re: Topping up NI Contributions
 

We put permanently for the "how long" question.
Here's a guide to which contributions to apply to pay: https://www.gov.uk/voluntary-nationa...-contributions

Re: Topping up NI Contributions
 

Each year you contribute entitles you to £175 ÷ 35 = £5 p.w. at current pension rates.

Re: Topping up NI Contributions
 

Thanks ianandhelena. So really - by that calculation just doing the 2 years would only add a fiver a week ...may not be that worth it. Unless I've misunderstood the calculation of course.

Re: Topping up NI Contributions
 

If you qualify at the lower rate of contributions this is a very good buy. Just make sutre you live to collect. I have been getting my pension now for 9 years and I hope will get it for many years to come !

Re: Topping up NI Contributions
 

2 years of contributions = £10 p.w. and at Class 2 rates that is a great deal.

Re: Topping up NI Contributions
 

Ah, I see. If I pay class 3's though - which I suspect - not so much of a dealio I guess.

Re: Topping up NI Contributions
 

Depends on when you start collecting. For example if you contribute at Class 3 one year before you start collecting it will take 2.5 years to get your money back, and the OAP goes up each year, so the contribution continues to grow throughout your lifetime. If you start contributing 10 years out then you have to calculate how much interest you will be losing each year on that ~£700 contribution.

Spreadsheet heaven :)

Re: Topping up NI Contributions
 

Thanks durham_lad - love a spreadsheet :( Im probably going to retire - no way of really knowing - in around 8 to 10 years minimum.

Re: Topping up NI Contributions
 

Include tax (if applicable) in your spreadsheet, as the gross is £5 / week but it's taxable unless your income is below the tax threshold, so you get a smaller amount "in your pocket". If you retire to a country that doesn't get the annual inflation uplift, this too is relevant for the spreadsheet (not relevant for USA).

Some people who made lower NI contributions whilst "contracted out" (generally, because they were enrolled in an employer's pension scheme) may need more than 35 years contributions to get a full pension, as an adjustment is applied to reflect the lower NI paid. You can check your situation here: https://www.gov.uk/check-national-insurance-record

Re: Topping up NI Contributions
 

Thanks all.

Re: Topping up NI Contributions
 

I couldn't resist working up a spreadsheet on this.

Currently 1 year of contributions costs £795 and will get you £260.30/year. (a 3 year payback)

Suppose you have 10 years of contributions and then start collecting, you will then get £2,603.
Instead of making the contributions suppose you invested £795/year and on average made 5% per year.
After 10 years you would have £9,999 to create or buy an income stream. Even if you were a brilliant investor and consistently made 10%/year that would still only give you £1,000/year.
The 10 years of voluntary contributions will get you £2,650/year, index linked for the rest of your life which is why I think it is a good investment.

You only really lose money if you die within 3 or 4 years of starting to collect. e.g. Start making contributions at age 57 with the aim of living over the age of 70. If you die before age 70 then you have lost, live longer and you have won.

Re: Topping up NI Contributions
 

FYI: for those back in the UK wanting to pay voluntary CLASS 2 payments for prior years abroad use form CF83, fill in the form as if you are still abroad, check mark your UK address as mailing/contact address, do not request direct debit payment (you will get a letter saying you can't pay by direct debit), check yes to wanting to know shortfall of contributions, you will get a letter with amounts payable per year, you will not get a bill with a reference number, you will not get clear instructions on how to pay, the letter you receive may have no contact info on it.
To make an actual payment go to www.gov.uk/pay-class-2-national-insurance then select Bank details for online or telephone banking then look under heading "overseas payment" for UK payment sort code, bank account and reference number. (It is like you are paying from overseas with a UK bank account).

Re: Topping up NI Contributions
 

That is great info.

Re: Topping up NI Contributions
 

Is class 2 only for the self employed? I did not contribute whilst in Aus so I had a few years "missing" when I contacted to ask about contributions when I first arrived back in the UK, the advice given was ...If I was going to work then that would make up for the years missing and by retirement age I would be on a full state pension. That might help someone who is thinking of returning back to the UK who is looking to work and live there until retirement...this is also about how many years you have already contributed to before leaving the UK and how many years you have (work wise) before retiring.

Re: Topping up NI Contributions
 

I don’t know but hopefully someone more knowledgeable will come along.

As a follow up question I would also like to know how far back you can pay voluntary contributions. Suppose you decided you didn’t need to pay voluntary contributions because you were going to be working but then something happens like losing your job, can you look back, say 15 years, and claim a few years as Class 2 because you were self employed those years?

Re: Topping up NI Contributions
 

NI eligibility is here:
http://www.gov.uk/voluntary-national...-contributions

Relevant for British expats includes:

Living AND working abroad: Class 2 - but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

Living abroad but NOT working: Class 3 - but only if at some point you’ve lived in the UK for at least 3 years in a row or paid at least 3 years of contributions

You can usually only pay for gaps in your National Insurance record from the past 6 years.

You can’t stop paying NI when you have enough years for a full pension, only when you reach retirement age. Voluntary NI contributions aren’t refundable.

Therefore, you make a decision on whether or not to pay voluntary NI contributions based on your expected circumstances. But if things change, you could regret paying them, e.g. you unexpectedly return to work in the UK, or regret not paying them, e.g. you become unemployed and have to pay class 3 not class 2.

Re: Topping up NI Contributions
 

Thanks for that, good to know.

I got blindsided by the change in full benefits years. I timed my voluntary contributions so I would have 30 years at age 66 but they changed the requirement to be 35 years. They did allow those close to retirement age to make up the years but I was a few months too young.

Re: Topping up NI Contributions
 

Not so. My online forecast states additional payments won't improve my forecast.

I have reached the 35-year max. My wife still has about 3 years left to contribute.

This year, she received a statement to pay this year's contributions. I did not.

Re: Topping up NI Contributions
 

If you making voluntary NI payments, you can stop when you have sufficient for a full pension.

But if you're paying NI because you're working in the UK, you keep paying until you reach retirement age.

Re: Topping up NI Contributions
 

Anyone found a way to use the UK Government Gateway without a UK address. I've set my ID up etc but part of the profile set up asks for a UK address. Like a lot of people here I don't have one so now cant check my NI contributions/gap using the published http://www.gov.uk/voluntary-national...-contributions link. Hmm.

Re: Topping up NI Contributions
 

I managed back when I lived in the USA prior to 2016 but can’t remember how.

Re: Topping up NI Contributions
 

My Government Gateway works fine, just checked it a few minutes ago.

Established it in one non-UK country quite a few years back, moved it to another non-UK country two and a bit years back, no probs.

Never been asked for a UK address. :confused:

https://www.access.service.gov.uk/login/signin/creds should give you the sign in page...

Gateway ID + password should move you on to the second authentication step. From there you can choose your secondary authentication method.

Have you ever had this work for you?

Re: Topping up NI Contributions
 

Yep - I can log on, enter the 12 character gov id in there then get asked NI number and DOB - all good. Then a screen that says they cant identify me and need more info like passport info or credit info. I check those boxes. next screen is to then enter a UK address - I cant get past that.

Re: Topping up NI Contributions
 

Write them an old-fashioned letter. Put it an envelope and post it. Strange to think we used to do that all the time.

It is National Insurance at Longbenton, Newcastle, that you need to contact.

Some people report success from phoning them

Re: Topping up NI Contributions
 

By coincidence I just threw away a load of NI correspondence because I am now in receipt of my OAP and 10 years I was writing to them from Texas to set up my voluntary NI contributions. Worked just fine.

Re: Topping up NI Contributions
 

Ok, thanks.

I would surmise that there is something amiss with with the Gateway identification process setup for your account.

Did you get a verification email from gov.uk after initial application?

That should have given you a link to verify that you are indeed you and to set a password for your Gateway account.

Check 'junk/spam' whatever mail folders for that mail.

Without setting the password, you're effectively "sunk". :(

When I log in I just get "Gateway ID" and "Password" fields, no NI, DOB or any other question stuff before moving on to phase two authentication, which is stored.

Re: Topping up NI Contributions
 

Have you tried entering you last UK address? Presuming you have lived there at some time.

Re: Topping up NI Contributions
 

Great Tip!!!!!!! That did it. Juts need to dig out my passport now as it gets into the other screens. Thanks so much.

Re: Topping up NI Contributions
 

:popcorn:

Re: Topping up NI Contributions
 

Well its been a couple of months or 3 and I got the letter back from HMRC with the table showing 8 years and what the Class 3 amounts that I could owe. - there lies the rub. More later.

It does state that I have 33 years and am 2 years shy of the full 35. I've called HMRC twice and got through really easily but both times they said they cannot say what I should pay and to contact the Future Pensions Service to get the exact amount. I questioned that surely with 33 years I have 2 years. It was only on the second call that, similar to some of your experiences, the helpful HMRC associate advised that it could be more as I was in an employer contracted out scheme from 1990 to1996. I need to call FPS for the exact amount - calling FPS is another story: Ive never got through. In this 2nd call the associate advised that at the moment I would get now would be GBP145 per week with the current full pension being GBP179.60 AND each additional "back" year I pay adds GBP5 per week to my pension.

So my maths/investing dilemma has come down to ones described here and in other threads. At Class 3 I would be paying GBP795 (but see below as some years I owe are less) for each year to add GBP5 per week or GBP260 per year to my pension. So to get GBP795 BACK in would take around 3 years - well a little more when you factor that pensions payments would be taxed.

The associate, in his experience, reckoned I could pay now the 3 'cheaper' years quoted in the table to gain GBP15 per week making the pension around GBP160 p/w. The 3 cheaper years on the table are GBP504.60 + 761.80 + 780 = GBP2046.40. He thought I did owe at least the 3 years but it could be more - contact the FPS etc etc etc. Put in 'investment' terms a GBP2046 investment returns me GBP260 per year and that 2046 is "paid back" in around 7.8 years - not including tax or around a 12% "return" per yer on the "investment" - so, on the face of it that sounds OK, eh?

1) I'll probably retire in 8 - 10 years at age 65 to 67
2) As I cant get through to FPS has anyone had a valid stab at calculating how may additional years you have to repay per year you were in a contracted out scheme as one idea - if its worth it - is to deliberately slightly overpay.
3) To pay the rates quoted in their letter I need to do all this by next Friday! ..Or the amounts per year go up to around GBP800 per year

As a side note I intended to pay any back years by DD so completed this section on the CF83 form. The associate said you can only pay future years by DD not years from the past you are repaying.

Look, I know this is long and winding and that, on review, there's a fair amount of me working my situation out in the post - I could have made it a lot shorter by quoting a few figures and just saying "Hey guys, whadyareckon!". So, again any help and insight as I'm in the weeds etc appreciated as I am beginning to loose feeling in my fingers tapping the numbers into my calculator. :(

Re: Topping up NI Contributions
 

Yes, you do have have to pay past years with a bank transfer or check, and yes, future years can be paid using DD.

Depending on long you live a 3 year payback is still pretty good, it’s all profit from age 70 onwards, apart from the tax calculation.

since you are 10 years away to age 67(?) and already have 33 years paid why not wait 8 years and decide on whether or not you want to pay those extra 2 years since you will have a good idea what tax band you will be in. If you are in the 40% band then that makes the payback a lot longer on your £1,600 pound investment. But what are you going to do with that £1,600? Can you invest it better, bearing in mind that any income on it will also be taxed?

Re: Topping up NI Contributions
 

You say paying £2,046 returns £260 ... but £2,046 is for 3 years, so it returns £260 x 3 = £780. It pays back in 2.6 years, or longer if the £780 is taxed.