UK state pension reform

Old Jan 18th 2013, 4:52 pm
  #61  
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Default Re: UK state pension reform

Originally Posted by nun
Check if you qualify for Class 2, they are a lot less expensive. If you do qualify apply to have them changed. I changed over from Class 3 to Class 2 in the early 1990s when the law changed.
I understand the difference between Class 2 and 3 as they have outlined it, but the booklet included with my pension statement ONLY referred to paying Class 3, and nowhere does it mention Class 2. Hence my confusion. I think a phone call is my only recourse at this point as I am muddling through filling out the form with some fuzzy recollection of dates in any case
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Old Jan 18th 2013, 4:57 pm
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Default Re: UK state pension reform

Originally Posted by lf1
I think the form you are looking for is CF83 on the HMRC site. I tried to link it for you, but my PC is acting up today.
Got it, thank you!
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Old Jan 18th 2013, 5:33 pm
  #63  
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Default Re: UK state pension reform

Originally Posted by nun
Here is DPW's response to my email asking about how the reforms affect those paying voluntary NICs. It seems very reasonable. We won't be any worse off, and we'll get a longer time to make catch up payments. I have no complaints as Class 2 NICs are a great value at 30 or 35 years. If you are at 30 years of NICs the thing to do is to wait until the legislation is passed and then decide whether to make catch up payments based on a new pension forcast.
...assuming you have time to do so before reaching your retirement age. In my case, I'll have exactly 30 years by that point so will be "stuck" there. But as you've pointed out, using Class 2 NICs to get to 30 years is a great value regardless of these reforms.
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Old Jan 18th 2013, 6:08 pm
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Default Re: UK state pension reform

Originally Posted by Giantaxe
...assuming you have time to do so before reaching your retirement age. In my case, I'll have exactly 30 years by that point so will be "stuck" there. But as you've pointed out, using Class 2 NICs to get to 30 years is a great value regardless of these reforms.
BTW, it's my understanding - I guess for obvious reasons - that contributions in the last tax/contribution year for that contribution year during which you actually reach pensionable age (a partial year) do not count towards a pension and are therefore not made.

Last edited by Pistolpete2; Jan 18th 2013 at 6:13 pm. Reason: for that contribution year
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Old Jan 18th 2013, 7:08 pm
  #65  
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Default Re: UK state pension reform

Originally Posted by Giantaxe
...assuming you have time to do so before reaching your retirement age. In my case, I'll have exactly 30 years by that point so will be "stuck" there. But as you've pointed out, using Class 2 NICs to get to 30 years is a great value regardless of these reforms.
Yes, I think anyone who at least has the option to upgade in the new system by paying 5 additional years should consider themselves fortunate. You won't have to pay an extra 5 years to get "full" pension, but your "full" pension will be a lot less than the likes of me will at least have the chance to get.

All of these radical changes really do lead to some annoying inequities. Get born on a Monday and you retire on just over £100, get born a few days later and you can retire on almost £150 a week, doesn't seem right.
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Old Jan 18th 2013, 7:33 pm
  #66  
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Default Re: UK state pension reform

Originally Posted by vikingsail
Call me confused? I looked at the links above. What is the distinction between C2 and C3 contributions? At one point it seems class 3 apply then the form reverts to class 2?

The the web link: www.dwp.gov.uk/international in the form essentially says nothing.

So at the risk of frustrating people, in the asked and answered mode.

As a person who paid UK contributions while employed in the UK 20 years ago. And has since paid into US SS. Whats my best way forward? Does the US SS payments have some reciprocity. It seems to indicate yes but no infor on the link? Should I be paying now if I am returning?
Class 3 are the voluntary contributions you generally pay. If you are unemployed abroad you can pay Class 3. You can pay Class 2 NICs if you are self-employeed in the UK and have low earnings or if you are employed or self-employed abroad.
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Old Jan 18th 2013, 9:42 pm
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Default Re: UK state pension reform

Originally Posted by dunroving
I find it difficult sometimes to figure out why Maggie is singled out for so much more flak
I think her extremes were more extreme than other politician's extremes.
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Old Jan 18th 2013, 10:05 pm
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Default Re: UK state pension reform

Originally Posted by nun
You can pay Class 2 NICs if you are self-employeed in the UK and have low earnings or if you are employed or self-employed abroad.
That sounds like Class 2, as long as you're living abroad, is effectively the same as Class 3 in the UK.

Not sure I'll be bothered about 4 years when the time comes. But what would count as self employment abroad?

I have a rental property and while some might consider that a form of self employment, the Canadian Tax department doesn't.
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Old Jan 18th 2013, 11:29 pm
  #69  
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Default Re: UK state pension reform

Originally Posted by BristolUK
That sounds like Class 2, as long as you're living abroad, is effectively the same as Class 3 in the UK.
No, Class 2 NICs are far less expensive than Class 3 and have slightly better benefits too. You only get to pay Class 2 in the UK if your self employment income is really low.....you can pay them while working abroad whatever your income.
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Old Jan 19th 2013, 2:45 am
  #70  
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Default Re: UK state pension reform

Originally Posted by nun
No, Class 2 NICs are far less expensive than Class 3
That wasn't what I meant.

Class 3 is voluntary.

If Class 2 can be paid if one is employed or self employed abroad (as suggested in your post at 4.33) what I meant was that for this subject it's as effective as paying class 3 - but cheaper as you say - if you really can do it as working abroad.

I hope I'm more clear this time.

So - in my case - having a rental income in Canada, would that be accepted as self/emp abroad, meaning I could pay class 2?
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Old Jan 19th 2013, 1:12 pm
  #71  
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Default Re: UK state pension reform

Originally Posted by BristolUK

So - in my case - having a rental income in Canada, would that be accepted as self/emp abroad, meaning I could pay class 2?
Your ability to pay Class 2 depends on whether you are employed or self employed. if all you are getting is rental income then you would only qualify to pay Class 3 NICs. But if your work was to manage the rental properties and you paid yourself a wage to do that you'd probably qualify for Class 2. Of course you's have all the hassle associated with earned income over and above simple income tax, like pay roll tax etc. In the US there's a test to determine whether you put in enough hours managing your properties to be classed as a real estate professional rather rathan just a landlord

Last edited by nun; Jan 19th 2013 at 2:38 pm.
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Old Jan 19th 2013, 7:53 pm
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Default Re: UK state pension reform

@nun

Well, I do "manage" the rental property myself. There's no property management company, I do all the letting stuff and pay for necessary repairs and things.

The income doesn't involve Canadian taxation as it's less than the tax allowances. We're mortgage free so getting by on a lower than usual income is possible.

So, it might be possible to be classed as self/emp in Canada and qualify for the lower NIC as a result. Perhaps even the exempted rate.

I'll have to hunt for other info on it. Thanks for the food for thought.
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Old Jan 20th 2013, 11:12 am
  #73  
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Default Re: UK state pension reform

Originally Posted by Giantaxe
...assuming you have time to do so before reaching your retirement age. In my case, I'll have exactly 30 years by that point so will be "stuck" there. But as you've pointed out, using Class 2 NICs to get to 30 years is a great value regardless of these reforms.
I will never make up to the (now) 35 years. I only have 7 years in the UK, will add whatever they let me - thought it was 6 years but I have also seen 5 years mentioned? - and then work in the UK until my pension age, which is 66. (I'm almost 55 now). Seems Class 2 will work for me, so happy about that
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Old Jan 20th 2013, 11:26 am
  #74  
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Default Re: UK state pension reform

I have my lazy hat on - anyone have an easy link explaining how many years (and which years) you an make up NI contributions? I am in a similar situation to others on here - I will have just about 30 years when I retire, but not the (new) 35 years required. However, I am assuming that years I could potentially buy to make up (i.e., years I didn't pay NI, prior to returning in summer 2006) are no longer open to me to pay additional NIC's?

There has been a lot in the press and TV about these new regulations. The Sunday Times had a special feature on it today. You can download a free app to get a one-month trial of the mobile version of the Times if you wanted to look it up.

In today's feature it highlighted that although you can defer when you start receiving state pension (postpone when you elect to start receiving state pension in order to obtain a higher pension), this does not mean people due to retire before the deadline for the new pension will get the new pension if they wait to retire until after the deadline.
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Old Jan 20th 2013, 1:38 pm
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Default Re: UK state pension reform

Originally Posted by dunroving
I have my lazy hat on - anyone have an easy link explaining how many years (and which years) you an make up NI contributions? I am in a similar situation to others on here - I will have just about 30 years when I retire, but not the (new) 35 years required. However, I am assuming that years I could potentially buy to make up (i.e., years I didn't pay NI, prior to returning in summer 2006) are no longer open to me to pay additional NIC's?

There has been a lot in the press and TV about these new regulations. The Sunday Times had a special feature on it today. You can download a free app to get a one-month trial of the mobile version of the Times if you wanted to look it up.

In today's feature it highlighted that although you can defer when you start receiving state pension (postpone when you elect to start receiving state pension in order to obtain a higher pension), this does not mean people due to retire before the deadline for the new pension will get the new pension if they wait to retire until after the deadline.
OK, I found out there is a 6-year limit, but there's also a statement that there are exceptions to the 6-year limit rule - but it's not clear what these are.

It seems that if the rules change (so 35 years are needed instead of 30), and if at the time of being eligible to pay additional voluntary NIC's you would have done if you'd known the rules would change, that should be an exception. But I'm not holding my breath.

£689 (the cost of the additional 5 years' NICs) does seem like a great deal to get the additional £1,000+ per year pension you'd get ... seems almost too good to be true. In fact any voluntary NICs payments seem that way - £137.80 for each year, that brings you an additional £223 a year pension.

"Reform" sounds such a positive word, whereas all it means, literally, is change the shape of something.
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