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Class 2 NI. What about us poor expats paying voluntary contributions?

Class 2 NI. What about us poor expats paying voluntary contributions?

Old Jun 27th 2023, 4:27 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

44 weeks!! OMG
I thought the date 17th July was fitting in with their timeframe of the deadline approx 23rd July for the NI contribution year cut off date.
Hope I don't miss another year due to them taking so long.
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Old Jun 27th 2023, 4:31 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by alfista1
44 weeks!! OMG
I thought the date 17th July was fitting in with their timeframe of the deadline approx 23rd July for the NI contribution year cut off date.
Hope I don't miss another year due to them taking so long.
The extended deadline to clear the backlog and collect payments for years as far back as 2006-07 has been extended to 5 April. 2025, so you won't miss a year even if it takes 44 weeks to process your application.
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Old Jul 3rd 2023, 5:07 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

This question has probably been answered, but here goes. We are applying to see how much my husband must pay for any State pension shortfall. He had paid up to 30 yrs, but they changed it to 35 years just after that. I also qualify for a small pension based on my work record and child benefit. I have only worked 6 yrs and a few months while living here. I would have been eligible for child benefits until my youngest was 18, 8 yrs after we left. Can I apply to make up for the shortfall, and if so, do I list my years of employment on a separate sheet with the form?
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Old Jul 3rd 2023, 5:20 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

I'm very impressed with the efficiency with which my State Pension application was dealt with. Three weeks after sending off my application the supporting documents I'd sent arrived by mail back here. And a few days later my first pension payment appeared in my US bank account.

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Old Jul 3rd 2023, 5:43 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by jjmb
This question has probably been answered, but here goes. We are applying to see how much my husband must pay for any State pension shortfall. He had paid up to 30 yrs, but they changed it to 35 years just after that.
Your husband should apply to pay Class 2 contributions, assuming he was working before and after leaving the UK, and has not yet reached retirement age. The current cost for Class 2 is just over £160/yr, so about £815 total. His pension will increase sufficient to repay that amount after about 7½ months of retirement.
I also qualify for a small pension based on my work record and child benefit. I have only worked 6 yrs and a few months while living here. I would have been eligible for child benefits until my youngest was 18, 8 yrs after we left. Can I apply to make up for the shortfall, and if so, do I list my years of employment on a separate sheet with the form?
Firstly, child benefit paid by the British government is conditional on you being resident in the UK, so you ceased to be eligible at the time you left the UK, however it sounds like you are probably eligible for Class 3 contributions, (and maybe some Class 2 for times when you were working) to boost your pension entitlement, which are much higher (now over £900/yr) than Class 2, but are still an extremely good investment, expecially if you are close to retirement age. You are likely eligible to pay for years as far back as 2006-07, and depending on your abilty to obtain a personal loan, it may be beneficial (profitable to you) to borrow money to pay for the NI contributions to boost your pension. Please note I am not recommending borrowing, you would have to do your own calculations and/or get advice to reach your own conclusion, but I suspect that if you are close, or even not-so-close to retirement, that borrowing to fund Class 3 contributions would be financially beneficial for you.

I posted this a few weeks ago:
While much more than Class 2, Class 3 contributions are still a very good investment.

For every year of Class 3 contributions, which currently costs £907.40, after retirement you will receive, based on today's full state pension, an additional £5.82 per week of pension. So it will take 155.8 weeks (almost exactly 3 years) of retirement to collect increased pension payments equivalent to the amount you pay in Class 3 contributions. This calculation is true whether you pay one year of additional contributions at the Class 3 rate, or thirty two years. This is like buying an annuity that pays 33%, .... though to be objective you would need to discount your investment by the number of years until you retire* .... so the closer you are to retirement, the better a Class 3 investment looks.

* While there are many possible illustrative calculations that could be performed to estimate the value of future investment returns, if we assume that the UK state pension will increase at 3% per annum, in ten years the £5.82 per week (302.64/yr) will have increased to £7.82 per week (406.72/yr). Now if we assume you would have invested the money used to pay for Class 3 contributions to earn a return of 8% per annum, the £907.40 invested today would be worth £1,959.01 in 10 years. So using those estimates, the increased pension of £406 will have cost you £1,959 (£907 at 8% compound growth), which is a life annuity of 20.76% .... and there is no way to get an annuity anywhere near that for a 67 year old.

FWIW using those estimates, your investment will be paid back in just under 4 years and 10 months of retirement.

I just checked, the best annuity rates today [May 2023] for a 67 year old man in NC are in the 7%-7½% range, so my projection of 20.76% ten years in the future completely blows todays annuity rates out of the water. So while Class 3 seems expensive, it is still an extraordinarily good deal that you are unlikely to get close to with any other investment. Even extending those calculations forward to the twenty year point, the return would still be equivalent to an annuity paying 12.9%.

Last edited by Pulaski; Jul 3rd 2023 at 5:45 am.
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Old Jul 3rd 2023, 8:17 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by jjmb
This question has probably been answered, but here goes. We are applying to see how much my husband must pay for any State pension shortfall. He had paid up to 30 yrs, but they changed it to 35 years just after that. I also qualify for a small pension based on my work record and child benefit. I have only worked 6 yrs and a few months while living here. I would have been eligible for child benefits until my youngest was 18, 8 yrs after we left. Can I apply to make up for the shortfall, and if so, do I list my years of employment on a separate sheet with the form?
Adding to the above response, you need a minimum of 10 years' NI contributions to get a partial pension, i.e. no pension if 9 or fewer years, 10/35 x full pension amount for 10 years' NI contributions, and so on. So if you have (say) 6 years' payments, paying for an extra 4 years will get you 10 years pension.

The first thing you should do is check your record and find out how many years contributions you currently have.
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Old Jul 3rd 2023, 8:36 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Giantaxe
I'm very impressed with the efficiency with which my State Pension application was dealt with. Three weeks after sending off my application the supporting documents I'd sent arrived by mail back here. And a few days later my first pension payment appeared in my US bank account.
That is amazing! Simple letters sent to me by HMRC seem to take over a month to arrive, based on the date included on the letter.

What 'supporting documents' did you have to provide? I guess I need to start gathering info ...
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Old Jul 3rd 2023, 8:55 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Pulaski
Your husband should apply to pay Class 2 contributions, assuming he was working before and after leaving the UK, and has not yet reached retirement age. The current cost for Class 2 is just over £160/yr, so about £815 total. His pension will increase sufficient to repay that amount after about 7½ months of retirement.

Firstly, child benefit paid by the British government is conditional on you being resident in the UK, so you ceased to be eligible at the time you left the UK, however it sounds like you are probably eligible for Class 3 contributions, (and maybe some Class 2 for times when you were working) to boost your pension entitlement, which are much higher (now over £900/yr) than Class 2, but are still an extremely good investment, expecially if you are close to retirement age. You are likely eligible to pay for years as far back as 2006-07, and depending on your abilty to obtain a personal loan, it may be beneficial (profitable to you) to borrow money to pay for the NI contributions to boost your pension. Please note I am not recommending borrowing, you would have to do your own calculations and/or get advice to reach your own conclusion, but I suspect that if you are close, or even not-so-close to retirement, that borrowing to fund Class 3 contributions would be financially beneficial for you.

I posted this a few weeks ago:
Thanks for that reply. I am going to apply and see what I can get. I think I might be too late to pay any more, especially with all the delays. I will get £520 a month once I claim it, which is more than I expected, but disappointed that a married couple's pension doesn't still exist.
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Old Jul 3rd 2023, 9:25 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by jjmb
Thanks for that reply. I am going to apply and see what I can get. I think I might be too late to pay any more, especially with all the delays. ....
You now have until April 2025 to get your request in, get whatever answers you need, and arrange payment. That should be ample time, though you should get started ASAP to secure your place in the queue.
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Old Jul 3rd 2023, 9:30 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

I wish there was a like button on these posts. Thanks, Pulaski, The form is going in the post tomorrow.
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Old Jul 3rd 2023, 1:01 pm
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by jjmb
I wish there was a like button on these posts. Thanks, Pulaski, The form is going in the post tomorrow.
Over to the bottom left of each post <--- are three small icons - a round button, a set of scales, and a red warning triangle. If you click on the scales (or hold your finger on it if you're posting on a phone or tablet) you can give "karma", and attach a message to it if you choose.

If you receive karma it shows up on your profile page with activity on threads you're subscribed to, and threads where your posts have been quoted.

Last edited by Pulaski; Jul 3rd 2023 at 1:03 pm.
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Old Jul 3rd 2023, 4:17 pm
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Steerpike
That is amazing! Simple letters sent to me by HMRC seem to take over a month to arrive, based on the date included on the letter.

What 'supporting documents' did you have to provide? I guess I need to start gathering info ...
Birth and marriage certificates.
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Old Jul 3rd 2023, 5:22 pm
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Giantaxe
Birth and marriage certificates.
OK, I have my Birth Certificate somewhere - a hand-written document quaintly filled out in cursive that is barely legible! I presume they want originals, not a copy. And I presume a British Passport is not a substitute? I was briefly married/divorced to a US citizen (early 90s), I presume they wouldn't want any paperwork regarding that? I have no idea where that might be!

I haven't looked at my Birth Cert for a long time; it's so quaint! It states the 'occupation of father' (but not mother). I'm guessing this says 'Wire Coiler' (Radio Valve Works) ... how's that for a job!


I wonder if Donald Trump would accept this !

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Old Jul 4th 2023, 1:07 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by jjmb
This question has probably been answered, but here goes. We are applying to see how much my husband must pay for any State pension shortfall. He had paid up to 30 yrs, but they changed it to 35 years just after that. I also qualify for a small pension based on my work record and child benefit. I have only worked 6 yrs and a few months while living here. I would have been eligible for child benefits until my youngest was 18, 8 yrs after we left. Can I apply to make up for the shortfall, and if so, do I list my years of employment on a separate sheet with the form?
I originally had less than 10 years, but then paid for missing years and brought up to 25, was well worth it from standpoint of return on investment from what I had to pay.

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Old Jul 4th 2023, 4:01 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Steerpike
OK, I have my Birth Certificate somewhere - a hand-written document quaintly filled out in cursive that is barely legible! I presume they want originals, not a copy. And I presume a British Passport is not a substitute? I was briefly married/divorced to a US citizen (early 90s), I presume they wouldn't want any paperwork regarding that?
The way I read the instructions they wanted a marriage certificate if you were currently married, not from a past marriage.
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