nun

Class 2 NI contributions are payable by the self-employed AND in certain circumstances on a voluntary basis if you live abroad. To qualify to pay voluntary NI

"you must have lived in the UK for a continuous three-year period at any time before making your payments
or

before you went abroad, you paid National Insurance contributions for three years or more"

In order to pay voluntary Class 2 contributions you must be employed or self employed abroad and either have been:

"'ordinarily' employed or self-employed immediately before you went abroad

or

'ordinarily' employed or self-employed but became unemployed immediately before you went abroad to work ('unemployed' means registered as unemployed with the Department for Work and Pensions and looking for work)"

nun

Here is a link with the benefits that come with Class 1, 2 and 3 NI contributions

http://www.hmrc.gov.uk/ni/intro/benefits.htm

you'll notice that Class 2 contributions qualify you for more benefits than Class 3 and they are also less expensive....... go figure, but it's true. Most people who grew up in the UK and are employed abroad will qualify to pay Class 2 NI.

If you pay Class 2 but your husband does not under current rules you will get the basic state pension for married persons based on your contributions. If you have 30 years that would be 160% of the single persons pension under current rules. If your husband also paid you could qualify for two basic state pensions......so only one of you contribution is a pretty good deal, as long as you stay together. but at 130GBP per year for Class 2 NI it's stupid not to build up your contributions if you think you might not get 30 year's of NI from working in the UK.

nun

Basically yes. If you qualify for Class 2 it is the way to go. I started paying Class 3, but in the early 1990s the rules changed and allowed Class 2 contributions for people employed abroad.

MattySD

Thank you for your post - If you are correct then I and others here have wasted a lot of money.

Giantaxe

When I applied to make Class 2 contributions, I had to supply a list of employment I have and had in the US, the latter presumably because I was also paying six years of back contributions. Whether they actually did any kind of check on the information I gave them, I have no clue.

MattySD

In my correspondence with HM Revenue and Customs I have always been given the impression that I had to pay Class 3 contributions until year 30 in order to get a full pension on my retirement - this is very depressing to this heavily-in-debt guy!

nun

WEP is not really targeted at foreign pensions which are a small proportion of what gets WEPed. It's in place mostly for the people that work in state government who don't pay into SS, but have worked in SS paying jobs previously and stops them getting a proportionally bigger SS pension due to an incomplete contributions record. In my case I will get an MA state pension and that will reduce my SS by the maximum WEP amount which I estimate will be $600/month by the time I reach 66.

Just to emphasis any UK pension you get that was paid for by voluntary NI contributions is not included in WEP calculations. The pension must be from non-SS wages. So any UK private pension you have from UK employment and the state pension due to Class 1 compulsory NI will be included in WEP.

nun

Yes I had to give them my original employer in the US. I've since changed employer a few times, but haven't bothered to let them know, HMRC just sends me the annual bill and I pay it.

Here is all the information you need to determine what NIC you should pay and how to do it.

http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf

Giantaxe

So for all they know you could have been unemployed for years

mattlmt

From what I can see it's not what the Brits think, it's what the Americans think!

If you paid Class 2 self-employed contributions to the UK scheme, and you do not have enough US Sustained Earnings over thirty years sliding as a % to 20 years and under, you'll pay WEP.

If you were self-employed (working) and resident in the States (and paying FICA which you need to do by law if you legally reside here) and paying Class 2 SE contributions to the UK scheme, then you are paying twice and subject to WEP.

From what I understand, WEP can only be avoided by Class 3 Voluntary Contributions, reaching the US Sustainable Earnings requirement, or using the Totalization Agreement where you can take both systems and make one benefit. The Totalization Agreement doesn't come in to play if you are qualified in either system.

There are assumed "administrative" costs related to a Class 3 because of non-residency, or as it's termed in the UK 'not ordinary resident', that are not in class 2.

I hope I'm wrong, but you can avoid it all by helping us repeal WEP through Senate Bill S2010 Social Security Fairness Act! A lot of Senators and Reps know nothing about WEP, but we're getting the word out. As it affects over two million people, we need your help by signing the petition:

http://signon.org/sign/social-securi...mt&r_by=695993

Any problems with the link, please let me know.

Matt

nun

Yes, but then I would have paid Class 3 contributions.

nun

Class 2 NICs are voluntary if you are abroad and are therefore not considered in WEP. If you paid Class 2 self-employed NICs while in the UK they would be included in a WEP calculation because they are paid form non-SS wages. You must make this known to SSA when you apply for SS.

Many people in the US don't pay FICA....or at least all of it. Many states opt out of the SS portion and their employees only pay medicare. if you are coming to WEP repeal form a foreign pension angle I don't think you'll get much notice from the US Senate and House. If it's general WEP opposition how will you deal with the inequitable amount of SS people will receive if they have less than 30 years of SS contributions? I read your petition......I don't agree with it.

Giantaxe

Sure, if you were honest. But the UK NI would have been none the wiser if you'd carried on paying the (cheaper) class 2 contributions.

nun

That is correct, and yes I am honest. It's the curse of being a scientist and raised methodist.

I actually had a very nice phone call from HMRC the other day. I paid my 30th NIC recently and emailed HMRC to confirm that i was done and that I have 30 years of NICs. They actually called my cell phone and confirmed that I had 29 years and that the one I had just sent would make 30 and I didn't need to pay anymore.......all done in a great Geordie accent too that made me want to move back to the North East sooner rather than later.

MattySD

Yes, all the ladies at HMRC I've spoken to have delightful accents!