Viking Man

I noticed in this excellent thread on information for returnees (http://britishexpats.com/forum/showthread.php?t=313047) that at the end there is some dicussion of NI contributions and pension entitlement.

On the site for the HMRC Centre for Non-Residents there is a section for paying NI contributions while abroad (http://www.hmrc.gov.uk/cnr/osc.htm) and a good leaflet NI38 (download here - http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf) which tells you all about it. I noticed in the messages on the above thread that there is perhaps some confusion about which class of NI contributions to pay.

So if anyone is not aware of this, many British expats who are working abroad do not have to pay voluntary class 3 NI contributions, but can instead pay class 2 contributions. These give you exactly the same entitlements to benefits as class 3, including if you return to the UK, but are at a dramatically lower rate of only about 2 pounds a week.

There are some conditions applied to be eligible to pay class 2 contributions and you need to read leaflet NI38 to check.

nun

This is true, expats use to have to pay Class 3, then around 2000 they became eligible for Class2. I just paid my 2005 Class 2 NI and it cost 106 GBP for the whole year. Its cheaper than Class 3 contributions and you get more benefits

Class 2 gives you Maternity Allowance, Incapacity, Bereavement and Basic Pension.
Class 3 you only get Bereavement and Basic Pension

nun

I'm amazed that this thread isn't more popular. I'd be interested to know what
percentage of expats pay voluntary NI, so do you?

Viking Man

I can't remember where I first heard about paying Class 2 contributions instead of the vastly more expensive Class 3 ones. But I know it wasn't Inland Revenue that told me!

The way NI contributions work, with a flat fee independent of age, young people in effect subsidise the older contributors and the retired (probably by actually paying their pensions). So I would be reluctant to pay Class 3 contributions unless I was over about 45 years old. I think I could do a better job investing that money by myself. But Class 2 are a no-brainer and worth having.

NedKelly

I think it's not popular because NI is so complex and people would rather just ignore it. Especially when it will cost them money.

Elvira

The cost of a Latte per week? Bargain...

NedKelly

It does seems like a bargain but I have a sneaking suspicion that somehow Gordon Brown is going to stuff everone who lives overseas who has paid NI. I have no proof but I just feel it in my bones. I am sure he will be thinking along the lines of why should we pay pensions to these guys/gals when they have abandoned my New Labour Britain.

The UK government have stuffed up on pensions big time and they have no way to pay the future pensioners living in the UK, let alone those who have jumped ship.

neill

I too, think he would "like" to screw us, but i think the reality is he can't just throw away international arrangements. Canadian Brits are already screwed by UK plc -- their pension amount is frozen the moment they retire / leave the UK. American Brits have a better arrangements i believe.

Anyway, just one more reason for all of us to have secondary sources of income (other than the state) at retirement.

I have been paying class 2 contributions for the past 4 1/2 years.

tabby

Is everyone saying i can pay around £106.00 per year for until retirement age and be entitled to a state UKpension, even if i never return.

Sorry I need it in simple terms

kiwi_child

Does making NI contributions from Australia mean that I would satisfy Habitual Residency conditions so I could claim Income supoort if needed, while I look for work in the UK? I have British citizenship and passport but only ever spent a year there in the late 80's

nun

YES!

Just apply to pay Class II contributions.

heritagefarmer

Save your latte money, they're not going to give you a pension anyway.

nun

How come?

heritagefarmer

Anyone born after, I think 1952 will not get a state pension, even if they are still in UK.
Do you really think Gordon and his buddies are going to send yours over to wherever you've emigrated to?

Don't know your age, but the younger you are at this time, the less you can expect. There will be no pension at all in 10-15 yrs time.
In fact, will there be anybody left in Uk to pay and keep the pensioners we already have?

nun

I assume there's some sarcasm in your post. There will be modifications to the
pension, as there just were in the last budget, but its not politically feasible
to eliminate it. Class II contributions at GBP 106 per year are a no brianer.
I'm certainly expecting to get pensions from both the US and the UK, in about
20 years. I won't predict the amounts, but they will be useful.