101 basic UK pension questions
#1
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Joined: Mar 2023
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101 basic UK pension questions
Worked in UK for 17 years and lived in USA for 17, dual citizen.
1. I can take now take my UK private pensions as lump sums. How do I tell HMRC or Pension provider, not to tax me? Or do I let them take tax me at emergency code (pension company said they would), and claim back from HMRC later? I know I then need to declare this in to IRS in USA (living in lower-tax Florida).
2. I paid a lot NI contributions for first 17 years of my life but am I entitled even to a UK state pension? (Current Age 61). How to claim? I don't have any NI paperwork!!!
Thanks all.
1. I can take now take my UK private pensions as lump sums. How do I tell HMRC or Pension provider, not to tax me? Or do I let them take tax me at emergency code (pension company said they would), and claim back from HMRC later? I know I then need to declare this in to IRS in USA (living in lower-tax Florida).
2. I paid a lot NI contributions for first 17 years of my life but am I entitled even to a UK state pension? (Current Age 61). How to claim? I don't have any NI paperwork!!!
Thanks all.
#2
Re: 101 basic UK pension questions
*** Your pension will typically be years of actual and deemed contributions/35. The good news is that you can buy additional years of contributions typically (you have to apply, but it sounds to me like you should qualify) at a cost of approximately £160/yr, and you can pay for six years in arrears, plus the current year, and then future years upto reaching retirement age, so for you that could be (6+1+6) years, which would be 30 years, or possibly upto 33 years if you have some deemed years you're not aware of.
*** You should contact the DWP International Desk, or find them on line, and apply to make Class 2 contributions, and at the moment until the end of the current tax year in about 4 weeks (but is rumored to be about to be extended), you can pay for additional years all the way back to 2006-2007, which means you would be able to get the full 35 years for a full state pension.
*** In terms of the economics of paying for extra years, for every year you pay for at the Class 2 rate (c£160), your pension will increase by enough to pay back that contribution in around the first 7 months after retirement. ... This is true no matter how many extra years you pay for, the cost comes back to you as an increased pension in the first roughly 7 months of retirement, and in case you hadn't noticed, this is a ridiculously good deal for you.
*** If for some reason you aren't eligible for Class 2 contribution rate, then the fall back alternative is Class 3, at about £720/yr, which is obviously quite a bit more, but is still a good deal and will lead to an increase in your pension that will be paid back to you within about 3 years of your retirement.
Last edited by Pulaski; Mar 3rd 2023 at 5:47 pm.