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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 Jul 11th 2023, 4:05 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Thanks very much to everyone who contributed to this thread. I'd given up on NI as probably not worth the voluntary contributions years ago and was pleasantly surprised to find out how wrong I was! For background, I've been living and working in the US since 1995 and have NI credits starting in 1977 (schoolboy job on the meat and cheese counter at Tescos!). I have gaps that I can't fill any more (pre-2006) but my record at gov.uk says I can make voluntary contributions to make up the gap for the years since then.

I'm getting my CF83 prepped and posted as fast as possible. I think I got all the info I need from reading all the helpful posts up thread but there are a few that weren't clear to me.
  1. For those who sent in the form did you include a summary of your work history in the US as a separate inclusion? Or was this something you talked over on the phone?
  2. On my NI record for 2006 and later it says: You can make up the shortfall - Pay a voluntary contribution of £824.20 by 31 July 2023. This shortfall may increase after 31 July 2023. This looks like a class 3 rate but I'm going to apply for class 2 and see what happens. The only worrying bit is that they say 'pay the voluntary contribution' by that date. The vibe I'm picking up from the thread is that as long as I have my application in by then I should be OK. Has that been what people have heard when phoning? I'll be giving them a call once I have all my ducks in a row but thought I'd ask here.
Cheers for any help,

Andy

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Old Jul 11th 2023, 4:51 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

1. I included my US work history as a separate attachment to form CF83. That was about 10 years ago now, and I never had to talk to anyone on the phone to get things going. They will need that to approve Class 2 rates so there is no downside whatsoever to including it, and there is a good chance it will speed things up.

2. Until very recently, they always used to charge the current NI rates to backfill for any year prior to the previous two, and for the immediately preceding two years charged the prevailing rate for that year. However currently they are charging the 2022/2023 rate to backfill all years (versus the current 2023/2024 rates) regardless of how old they are. You may have caught a minor break there getting last years rates rather than this years to backfill because the rates went up by about 10% last year to this year.

The comment about rates changing after July 31, is possibly because this very recent change to the rules will stop on Jul 31, and they will revert to the long standing old rules on that date. Or, perhaps they will extend the new rules until April 2025, or perhaps this is the new normal. I honestly don’t think they know for sure yet. They have been totally overwhelmed recently and are unable to process applications in anything close to a reasonable timeframe and this may be the temporary solution.

Either way it won’t make a whole lot of difference in the overall scheme of things, and in any case it is what it is. I think the worst that can happen is that by the time they process your application you will have to pay under the old rules which will require you paying all but the prior two years at current rates. If so, and they process your application before April 2024, that would be roughly a 10% increase in total cost, and if they process after April 2024 add to that whatever the NI rate increase is for that year (which is usually well below the 10% increase this year and probably related to unusually high increase in benefits). Absolute worst case is that all back years are charged at current year rates, which again won’t make a huge difference because it will only further increase cost for the prior 2 years.

Still an outstanding deal whatever happens. Best just to get on with it asap as processing times are crazy long.

Last edited by Glasgow Girl; Jul 11th 2023 at 5:18 am.
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Old Jul 11th 2023, 6:47 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Thanks for the advice, Glasgow Girl , very helpful. Yes, those processing times look horrendous so best to get everything in the hopper as fast as possible.

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Old Jul 11th 2023, 7:05 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Ravenscroft
Thanks very much to everyone who contributed to this thread. I'd given up on NI as probably not worth the voluntary contributions years ago and was pleasantly surprised to find out how wrong I was! For background, I've been living and working in the US since 1995 and have NI credits starting in 1977 (schoolboy job on the meat and cheese counter at Tescos!). I have gaps that I can't fill any more (pre-2006) but my record at gov.uk says I can make voluntary contributions to make up the gap for the years since then.

I'm getting my CF83 prepped and posted as fast as possible. I think I got all the info I need from reading all the helpful posts up thread but there are a few that weren't clear to me.
  1. For those who sent in the form did you include a summary of your work history in the US as a separate inclusion? Or was this something you talked over on the phone?
  2. On my NI record for 2006 and later it says: You can make up the shortfall - Pay a voluntary contribution of £824.20 by 31 July 2023. This shortfall may increase after 31 July 2023. This looks like a class 3 rate but I'm going to apply for class 2 and see what happens. The only worrying bit is that they say 'pay the voluntary contribution' by that date. The vibe I'm picking up from the thread is that as long as I have my application in by then I should be OK. Has that been what people have heard when phoning? I'll be giving them a call once I have all my ducks in a row but thought I'd ask here.
...
My experience was almost identical to yours; I was pretty convinced I wasn't eligible for a UK pension, but thanks to summer jobs (sales assistant at Debenhams, etc), and staying on at school in the 70s, I had credits I knew nothing about and now I'm looking forward to a decent (not full) UK pension. This thread was a gold-mine of information.

My work history was lengthy (I've been here since 1983). On the form, question 18, for question 'if yes, what is their UK address?' I answered 'N/A', and for question ' 'what is their address abroad?', I said 'see attached list - 7 companies' and included a separate sheet listing the name, address, and date-range worked for each company. No discussions on the phone.

I don't recall now if they ever quoted me a Class 3 rate, but my application for Class 2 was successful. I would pay Class 3 if necessary as it's still a good deal.

I see Glasgow Girl has responded with much more information, so consider my response here just a reinforcement of what she said!


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Old Jul 11th 2023, 8:03 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Thanks for the extra detail on how you filled out the form Steerpike. This form was clearly designed for people about to leave the UK or who had just left the UK so there's some ambiguity in there for those of us who left a while ago.
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Old Jul 12th 2023, 5:01 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

In the spirit of giving back for all the helpful advice on this thread I thought I'd add a few things from my experience the last 24 hours, having just got off the phone with questions re: submitting the CF83.

I called the 011441912187777 number but after a 20 minute wait was directed to the Futures Pension Center at 011441912183600.

After another 35 mins I spoke to a representative who informed me after a brief conversation that no, that's not the right number for CF83 questions, those should go to the HMRC at 011443002003500. It's too late to call them now, but I think I have my answers anyway from that quick chat, the thread, and checking the NI38 guidance document.

The important things I confirmed are:
  1. Confirmation that although my NI online record says that payments for tax years 2006 - 2016 are due by July 31 of this year, the deadline for making payments has been extended to 5 April 2025. This is on the introductory voice message when you call any of the numbers above, and the person I spoke to at the Futures Pension Centre confirmed that yes this is accurate but the website hasn't been updated yet.
  2. At the bottom of the NI38 guidance document it spells out what Glasgow Girl and Steerpike said about Question 18 Employment, to whit:

    If you’ve had more than one employer since leaving the UK, supply a list in date order on a separate sheet of paper showing:
  • names and addresses of your employers overseas
  • the date each employment started and ended
  • the country you were working in
  • names and addresses of any UK employers between overseas employment
  • the date each UK employment started and ended
  • the dates of paid or unpaid leave in the UK or overseas
  • the names and dates of any benefit you claimed in the UK between overseas employment
So, bottom line is get that CF83 in asap.

One other thing I asked about was whether my wife, a US national who worked 7 years in the UK was eligible to pay voluntary contributions to top up her NI status. The answer I was given was that if she has an NI number, yes she is. Now we just have to find her NI number...
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Old Jul 12th 2023, 6:06 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Ravenscroft
.... One other thing I asked about was whether my wife, a US national who worked 7 years in the UK was eligible to pay voluntary contributions to top up her NI status. The answer I was given was that if she has an NI number, yes she is. Now we just have to find her NI number...
And, for anyone else reading this, you have to have three years of actual (not deemed) contributions to be eligible to make additional voluntary contributions. In other words, the "free" deemed years for remaining in full time education from age 16 don't count, and if you went to university and had no employment until you graduated (at age 21), you would have had to have remained in the UK until age 23-and-a-bit, assuming some part-years are involved*.

Of you had a summer job paying NI contributions each summer while a student, including between high school and uni, you may have already reached three years of actual contributions by the time you started your third year at uni.

Similarly, if you arrived in the UK as an adult, and started work near the end of the calendar year, say December, you may have achieved three years of contributions by the summer time 2½ years later. (NI contributions are based on UK tax years April 6 - April 5 thr following year.)


* E.g. if you reach age 21 in December 2000, graduated in May 2001, and started employment in September 2001, you would pay 7 months' NI contributions for 2001-02 (reaching age 22), and contribute for 2002-03, and for 2003-04, but could reach sufficient contributions to be credited with a full year of NI contributions for 2003-04 perhaps as early as July, 2003, five months before your 24th birthday.

Last edited by Pulaski; Jul 12th 2023 at 6:50 am.
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Old Jul 12th 2023, 6:46 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Ravenscroft
... the deadline for making payments has been extended to 5 April 2025. This is on the introductory voice message when you call any of the numbers above, and the person I spoke to at the Futures Pension Centre confirmed that yes this is accurate but the website hasn't been updated yet.
...
This part boggles my mind. How many hours of wasted effort does the HMRC spend answering this question over and over, when a simple update to a website would nip it in the bud and take almost no time at all! I appreciate that they do have the updated info on the 'introductory voice message', but if I read one thing on the web, and hear another thing on the voice message, I'm inclined to want to get live confirmation 'which one is correct'. Why oh why can't they update the website?!
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Old Jul 13th 2023, 2:26 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

They did...some time in the last few weeks from my perspective...




The change became effective on June 12th according to Martin Lewis


Last edited by 00derek; Jul 13th 2023 at 3:53 am.
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Old Jul 13th 2023, 4:33 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

I'm jumping around the forum looking for information before I post a question that I have, and I came across the subject of WEP - windfall elimination provision. It may have been mentioned on this thread already ( I haven't got through it all just yet) but I thought it might be useful to mention it again for people like me; nearing retirement, expecting both UK pension and US Social Security, and only just recently taking steps to ensure I'm ready.

SSA.gov WEP

In a nutshell, the UK pension might reduce your SS benefit if you don't have 30 years of taxable US income, so be sure to check your SS statement.
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Old Jul 13th 2023, 4:59 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

WEP will reduce your SS by 50 cents on the dollar for each dollar of overseas pension based upon earnings upon which social security was not paid. That encompasses all overseas pensions based upon overseas earnings, which includes the UK state pension, as well as most defined benefit schemes and most defined contribution schemes unless the company did not contribute at all. The WEP reduction is eliminated if you have 30 years of SS contributions, is fully applied if you have less than 20 years SS contributions, and is reduced on a sliding scale if you have between 20 and 30 years SS contributions (about 10% for each additional year). It applies up to a maximum of $557.50 each month or 50% of your SS check, whichever is lower. The WEP reduction, and the WEP maximum, is adjusted upwards each year in line with COLA adjustments to SS (cost of living adjustment); and both are adjusted if you take SS early/late in the same proportions that your SS is adjusted for early or late retirement.

The good news is that the amount of your UK state pension based upon voluntary contributions is not subject to WEP calculations and is therefore WEP free. Therefore do not let WEP impact the decision to proceed with voluntary contributions.

There is a ton of information on WEP on this forum on other threads. I think it is excellent to make people aware of WEP here but best to discuss further in the many other threads discussing WEP rather than complicating this already huge thread.

Last edited by Glasgow Girl; Jul 13th 2023 at 5:28 am. Reason: Clarification
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Old Jul 13th 2023, 5:35 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Glasgow Girl
WEP will reduce your SS by 50 cents on the dollar for each dollar of overseas pension based upon earnings upon which social security was not paid. That encompasses all overseas pensions based upon overseas earnings, which includes the UK state pension, as well as most defined benefit schemes and most defined contribution schemes unless the company did not contribute at all. The WEP reduction is eliminated if you have 30 years of SS contributions, is fully applied if you have less than 20 years SS contributions, and is reduced on a sliding scale if you have between 20 and 30 years SS contributions (about 10% for each additional year). It applies up to a maximum of $557.50 each month or 50% of your SS check, whichever is lower. The WEP reduction, and the WEP maximum, is adjusted upwards each year in line with COLA adjustments to SS (cost of living adjustment); and both are adjusted if you take SS early/late in the same proportions that your SS is adjusted for early or late retirement.

The good news is that the amount of your UK state pension based upon voluntary contributions is not subject to WEP calculations and is therefore WEP free. Therefore do not let WEP impact the decision to proceed with voluntary contributions.

There is a ton of information on WEP on this forum on other threads. I think it is excellent to make people aware of WEP here but best to discuss further in the many other threads discussing WEP rather than complicating this already huge thread.
That's a great summary!

I am not sure why, but most people seem to fixate (only) on the impact of a UK state pension on the WEP calculation and ignore the fact that almost all other non-US pensions will also feed into the WEP calculation.
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Old Jul 13th 2023, 5:50 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

They did...some time in the last few weeks from my perspective...
I typed in haste and should have been clearer. It says that at the top of your NI summary but when you click on the detail of what you can pay for each year to make up your contributions it still says payment by July 31 (on my summary, at least).
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Old Jul 13th 2023, 6:06 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Pulaski
That's a great summary!

I am not sure why, but most people seem to fixate (only) on the impact of a UK state pension on the WEP calculation and ignore the fact that almost all other non-US pensions will also feed into the WEP calculation.
I agree, an excellent summary. My OAP will have no impact on my SS for the simple fact that my 2 UK private pensions will WEP me to the max allowed on 27 years of “meaningful” SS contributions.
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Old Jul 13th 2023, 6:31 am
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Default Re: Class 2 NI. What about us poor expats paying voluntary contributions?

Originally Posted by Pulaski
That's a great summary!

I am not sure why, but most people seem to fixate (only) on the impact of a UK state pension on the WEP calculation and ignore the fact that almost all other non-US pensions will also feed into the WEP calculation.
It is not even limited to "other non-US" pensions. Federal law allows certain state and local government employers to exclude employees from social security coverage if they provide an alternative pension scheme. Some school districts that I am aware of do this. These people also have WEP applied to them. Most people taking jobs with such employers are totally unaware of this. Now it may just be that the end result, with a good pension scheme, is a better deal.

Last edited by MidAtlantic; Jul 13th 2023 at 6:35 am.
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