jb82

Currently paying class 2 national insurance to build up a uk state pension. I'm not sure what is going to happen when class 2 is abolished. Anyone with any further information in the coming months/years please feel free to share! Hopefully we will have another option other than paying class 3!

See here to start http://www.ukbudget.com/2016-measure...ributions.aspx

neill

I think if you have 10 or more years of NI contributions, you should still see a return on what you've been paid in, but it might be the time to look at other non-government based retirement savings schemes.

Owen778

Google found me this, which is what I think I've heard previously here. Overseas individuals working abroad would need to pay Class 3 instead.


https://www.gov.uk/government/consul...-self-employed

Owen778

Oh, and as a further comment: despite this consultation, I have already received the letter from HMRC detailing the Class 2 NIC schedule for the 2016/17 tax year. It's a standard letter for Class 2, and written as if for self-employed individuals in the UK.

jb82

Yes that seemed to be what they are leaning towards. I doubt there will be anyone with enough voice to change the Government's proposals and I imagine this was done to save the Government money anyway and yet broadcast it as a great thing for everyone to abolish this. I guess they had to close this 'loophole' someday - just wished it wasn't when I had 20 more years to go!

Received my letter too. The budget did say today class 2 would be abolished April 2018. At least I'll get 2 more years out of it!

vikingsail

Ah the irony of life. I have resisted for years thinking why would I pay into something that I am cynical enough to believe would get changed. Finally after much reading of posts here! I plunged in this year and recently forked over 6 back years payment. And now I discover this thread!. Oh well approx 730 pounds a year going forward (assuming they don't change the Class 3 rate) is still probably good value. And your right a couple more years of Class 2 is good

kodokan

Did a quick cost-benefit analysis earlier today, and for us (20ish years until UK pensionable age) it would take around 10.5 years to see payback for our annual investment.

I assumed the $1k a year would otherwise be invested here earning a real return of 5%, and that I'd then spend down the resulting pot of $2.8k to generate the same income stream that the pension contribution would otherwise have generated.

So my decision point now is:

- whether I think hubby and I will live until we're 78 (probably)
- whether we'd prefer to have the lump sum investment rather than the UK pension income stream (pro of more flexible spending; potential lump for surviving spouse or the kids; bird-in-hand money rather than tied to future means-testing or residency whims of government; con of income tied to market vagaries rather than almost-guaranteed index linked annuity; might die young).

I think I'll probably still pay it at Class 3 rates. I've got family genes into the 90s and am currently fit and healthy, so would probably win the longevity bet. If I live a long time, I'll be grateful for its security, and it will enable me to hold a higher stock allocation than I otherwise could, which might result in a larger old age buffer/ kid inheritance. And if I die young... well, I'll be dead, won't I? So I won't be thinking 'darn, waste of money paying those voluntary contributions'. Whereas Alive Old Me would be going 'woo hoo - win!'

Steve_

Maybe they'll grandfather us in. I never got a clear answer as to whether people subject to the 30-year rule were grandfathered in, I think they are, the 35-year rule only applies if you start making contributions after April 5th this year.

Anyway I've just done the math, and under the 30-year rule, my last Class 2 NI payment would be due April 1st, 2018.

Can't make it up!

Owen778

I will do the calculation nearer the time, but I think I will probably choose not to pay Class 3 NICs.

We're thinking about retiring in our fifties. We currently have more of our savings inside retirement funds than outside, which can only be used with penalty after age 59 1/2, then each of US social security for two of us, my UK state pension and my small UK defined benefit work pension will start to pay out in our sixties. On that basis, it probably makes more sense to keep the money available and therefore out of a pension scheme.

kodokan

That can't be right; the 30 year grandfathering in thing. There was a huge document that was put out by the Pension Service when this was announced some years back, detailing the impact for pre-retirement people who'd been in the system for many years already: how their existing pension benefit would be calculated and translated into the new 35 year calculation (highest number would apply), what would happen to their old SERPS contributions, etc (I think they'd end up getting more than the standard flat rate, to allow for that; I was opted out so didn't read that bit too closely).

I retire in 22 years, and have 19 years of existing credits starting from the late 80s. I got a pension statement a year or two ago, and it was stuffed full of information about my estimated weekly benefit under the new system, and how I could voluntarily top it up another 16 years.

I'd assume your pension will almost certainly be based on 35 years, and then there's a very faint possibility of being happily surprised.

nun

What is this 30 years grandfathering? I've been paying voluntary NI for 32 years now as I was told that I would have to pay 35 years rather than 30 to get a full pension. You'll get something with 30 years of contributions, but it won't be the full pension.

https://www.gov.uk/new-state-pension/how-its-calculated

scrubbedexpat099

Can not help but think the world will be VERY different in 20 plus years.

kodokan

It'll be all Pension ISAs or whatever similar Frankenproduct they'll turn out to be, and means-tested state pension

robin1234

Salvation Army will still be around in 20 years. And/or the Death Panels will have been set up finally.

nun

FYI folks, I just sent off for a pension forecast. I got my last one 5 years ago under the old rules and as I'll now be retiring under the "New State Pension" I need a new forecast.