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National Insurance

Old May 24th 2012, 4:09 pm
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Default National Insurance

Hello,

I'm emigrating to the States in a little over a week. I just need to know whether it is advisable that I continue to pay National Insurance here in the UK or to cut myself off completely?

This is a confusing issue for me so any guidance would be much appreciated.
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Old May 24th 2012, 4:50 pm
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Default Re: National Insurance

I got a Pension Forecast and then worked out whether I would be better off continuing to make voluntary contributions. Of course you have to make certain assumptions like will there even be a pension when I retire or will they change the rules in the intervening years. When I did the calculation it works out that as long as I live 2 years past current retirement age it is worth making the contributions.
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Old May 24th 2012, 5:10 pm
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Default Re: National Insurance

Originally Posted by ChocolateBabz View Post
I got a Pension Forecast and then worked out whether I would be better off continuing to make voluntary contributions. Of course you have to make certain assumptions like will there even be a pension when I retire or will they change the rules in the intervening years. When I did the calculation it works out that as long as I live 2 years past current retirement age it is worth making the contributions.
See I took the pessimistic approach that it probably won't exist or if it does I won't be able to take it until I'm 70, so I pay nothing into it. Mind you, I opted out of part of it 5 years ago, when I was in the UK still as I didn't think it would be beneficial to me when I retire.
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Old May 24th 2012, 5:25 pm
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Default Re: National Insurance

Originally Posted by Bink View Post
See I took the pessimistic approach that it probably won't exist or if it does I won't be able to take it until I'm 70, so I pay nothing into it. Mind you, I opted out of part of it 5 years ago, when I was in the UK still as I didn't think it would be beneficial to me when I retire.
Hubby leans toward your point of view too. It's a gamble...
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Old May 24th 2012, 5:36 pm
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Default Re: National Insurance

Originally Posted by ChocolateBabz View Post
Hubby leans toward your point of view too. It's a gamble...
It's true. I couldn't rely on it anyway to retire so I figure I'd rather invest my money somewhere else.
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Old May 24th 2012, 5:47 pm
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Default Re: National Insurance

20 years ago I was told not to bother... but I did and it was not expensive
and now every month I get $730 paid into my US bank account
and even better my wife who never lived in the UK also get $430 a month

tell me where you can invest to get $1160 a month back

I say go for it ...
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Old May 24th 2012, 5:52 pm
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Default Re: National Insurance

Originally Posted by Ray View Post
20 years ago I was told not to bother... but I did and it was not expensive
and now every month I get $730 paid into my US bank account
and even better my wife who never lived in the UK also get $430 a month

tell me where you can invest to get $1160 a month back

I say go for it ...
May not be worth it if you stay in the US when you retire or for any length of time...as the UK pension will be deducted from the US pension.
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Old May 24th 2012, 5:53 pm
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Default Re: National Insurance

Originally Posted by Jerseygirl View Post
May not be worth it if you stay in the US when you retire or for any length of time...as the UK pension will be deducted from the US pension.
I dont get a US pension but good point ..
the uk goverment does not ask about other income ..
the US goverment may
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Old May 24th 2012, 5:56 pm
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Default Re: National Insurance

Originally Posted by Ray View Post
I dont get a US pension but good point ..
the uk goverment does not ask about other income ..
the US goverment may
I know...but expats who work in the US pay into the US pension scheme...thus they may be entitled to a US pension. You can pay into both the UK and US pension but you don't get to take out two lots of pension.
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Old May 24th 2012, 5:59 pm
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Default Re: National Insurance

Originally Posted by Jerseygirl View Post
I know...but expats who work in the US pay into the US pension scheme...thus they may be entitled to a US pension. You can pay into both the UK and US pension but you don't get to take out two lots of pension.
I am going for a swim then ..forget what I said
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Old May 24th 2012, 5:59 pm
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Default Re: National Insurance

Originally Posted by Ray View Post
I am going for a swim then ..forget what I said
Skinny dipping?
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Old May 24th 2012, 7:21 pm
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Default Re: National Insurance

Originally Posted by Jerseygirl View Post
May not be worth it if you stay in the US when you retire or for any length of time...as the UK pension will be deducted from the US pension.

If you are coming to the US I would strongly advise you apply to pay Class 2 voluntary NI payments. That's what I did 25 years ago and I'm very glad I did. Class 2 NI only costs 130 GBP a year, so it's the best retirement value anywhere. Once you have 30 years of NI you can stop and will qualify for full UK state pension.

If you qualify for US SS and also get pensions paid out of non-SS income the SSA will only reduce your US SS if you have less than 30 years of SS payments. Then your US SS will be reduced on a sliding scale until the reduction reaches a maximum amount which is $380 a month for 2012. It can also never be reduced by more than half your non-SS pension. This is called the Windfall Elimination provision (WEP)


Here is my situation
I plan to take SS at 66

paying Class 2 NI my monthly pensions in 2028 dollars will be

WEPed SS = $2000
UK state pension = $1500 (compounding at 3% for 16 years from today)
Total = $3500

NOT paying Class 2 NI my monthly pension in 2028 dollars will be

SS = $2600

So I am $900 a month better off by paying Class 2 NI. This is a far better return than I could possibly hope for by investing the $200 (130 GBP) that the Class2 NI costs. If I assume $200 annual contributions compounded at 5% for 30 years I would have $14k to buy an annuity and at 66 that would only generate $84/month.

Last edited by nun; May 24th 2012 at 7:25 pm.
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Old May 24th 2012, 7:22 pm
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Default Re: National Insurance

Originally Posted by Jerseygirl View Post
I know...but expats who work in the US pay into the US pension scheme...thus they may be entitled to a US pension. You can pay into both the UK and US pension but you don't get to take out two lots of pension.
Yes you do! I will get both US SS and UK state pension at age 66.
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Old May 25th 2012, 11:53 pm
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Default Re: National Insurance

I think it's worth it, considering how cheap it really is.

But, if you're fresh out of school or early 20's and you reckon there won't be a pension by the time you can claim, it might not be worth it. If you're in your 40's, it's probably going to be far more beneficial for you to bother.
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Old May 26th 2012, 1:52 am
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Default Re: National Insurance

Originally Posted by nun View Post
If you are coming to the US I would strongly advise you apply to pay Class 2 voluntary NI payments. That's what I did 25 years ago and I'm very glad I did. Class 2 NI only costs 130 GBP a year, so it's the best retirement value anywhere. Once you have 30 years of NI you can stop and will qualify for full UK state pension.
Is there an expiration on being able to pay prior years Class 2 vouluntary NI payments to keep updated? I paid NI for a large part of the 30 year requirement but stopped when moving to US a few years ago. If it is only 130GBP per year & it pays out in full after 30, sounds like I should opt back in, if still open to me!
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