Lucybell33

I know there have been lots of questions about NI floating around recently, and there's lots on info online, but it would be great if I could get confirmation of how I think it applies to mine and my husband's situation please.

I requested our NI statements and these arrived yesterday. Up to April 2013, I have 23 years of qualifying contributions and my husband has 19. The only gaps are in the early years when we were at uni, so it's too late to pay these.

We are both contributing normal class 1 contributions at the moment, so will get another year to 2014, taking us up to 24 and 20 years respectively.

We'll be moving to the US in August, so not sure what happens about the 2014-15 part year - any ideas on this?

Assuming we can sort out the year to 2015, that would take us up to 25 years and 21 years respectively.

I'm not planning to work in the US, so am I right in thinking that I just need to pay 5 years of class 3 contributions to qualifying for the full state pension (based on current legislation)?

Hubby will be working, so am I right in thinking that he will need to pay 9 years of class 2 contributions to qualify?

dunroving

From my understanding:

Not sure about the part-year, but I guess there isn't much you can do at this point anyway - if you find you didn't pay enough to get a year credit, you could make up for that with voluntary NI (i.e., pay an additional year to the numbers you posted).

Re: your situation, yes Class III because you will be unemployed, but no, you'll need to pay 10 additional years b/c the number of qualifying years is going up to 35 in 2016 (but the flat-rate pension is going up by a lot more, proportionally, so that's fine).

Re: Your husband, yes Class II (b/c he is working overseas - presuming he is not self-employed), but no, he'll need 15 years for the same reason (35 years total needed from 2016).

Lucybell33

Thanks very much for getting back to me - I thought I'd seen that the 30 was increasing somewhere (probably on here), but it's still down as 30 on all the government sites!

dunroving

Yes, I don't think the final, final, final, final, final approval has happened yet (these things seems to be almost urban myth until the final legislation is passed). However, this link will take you to a government fact sheet about the "proposed" changes. This link takes you to a government Web page about the same thing.

Lucybell33

Thank you again - so we will have to pay for longer if the proposals go through, but for a worthwhile return. We have plenty of time, thankfully!

nun

Whether you will be better off under the new state pension depends on how much you earn and the level of any earnings related "second state pension". Many high earners will see a decrease in their pension payment. Low earners and those with lots of voluntary NICs will probably be better off.

Lucybell33

Ah well - I guess there's no point worrying about it at this stage. We've both gone from being median earning graduates up to high earners, although we both contracted out of Serps... The main thing is we know what we have to do to build up to the maximum that will be available at retirement after we move.

dunroving

Exactly - at the moment there is little indication of the extent to which being contracted out of SERPS will reduce the new flat rate pension.

Focus on the things you can control (number of years contributions), not the ones you can't!

nun

I agree. If the OP was not in SERPS and would only qualify for basic state pension then they will be better off under the new pension. But I congratulate them for planning so well as so few expats even consider voluntary NICs.

Of course, if you think you'll be returning to work in the UK early enough to get your NICs up to qualify for full pension you might be better off not paying NICs. Also, depending on you terms of employment in the US, you might be able to keep paying Class I NICs and be exempted from SS taxes under the Totalization Agreement.

Lucybell33

Yep - I'll do that, thank you!

Lucybell33

Thank you - being an Actuary makes one more aware of the importance of planning for the future!

We're not planning to return to the UK in the foreseeable future, although of course nothing's a certainty. However, I think we're best off just investing what is a fairly small sum to be on the safe side. Will keep a look out for the NIC/SS terms in hubby's US contract, and then do some sums, because I know we'll face the wep issue (unless I make hubby work into his 70s, of course)!!

dunroving

As you know, I often gripe about "missing out" on these opportunities (too late now to do anything), and I usually attribute it to the fact the current ubiquitous information overload wasn't there in the 1980s when I first left the UK. I had no idea about the existence of Class II NICs until it was too late.

My take on the "Should I/shouldn't I?" question for people currently looking at voluntary NI contributions is this:

The number of years qualifying has changed three times in less than about 5 years. What was it, 45 years, then 30 years, and soon to be 35 years?

Every new government seems to want to change stuff so who knows what the next government will do to qualifying years in the future?

It wouldn't surprise me if future governments do any of the following: a) change the required number of qualifying years; b) remove the entitlement to pay past years (currently the most recent 6 years); c) remove the overseas entitlement to pay piddly Class II's; and/or d) all sorts of other crap we aren't even thinking about! I don't see any government changing the status of current/past NICs (so they wouldn't for example devalue past-paid overseas Class II NICs - so anything paid now is definitely "in the bank", so to speak).

Class II NICs are so cheap (£100 per year) that, unless someone is fully paid up on NICs and has many years left in their career, it's worth paying them "Just in case". I can't change my situation and have now stopped banging my head against the wall but it's some consolation to be able to advise others to take care of their NICs, especially if they are entitled to pay Class II's.

nun

I agree, its a "no brainer" for the Class 2 NICs. The Class 3 NICs are a lot more expensive, but still a good deal. Trying to plan ahead for the most efficient use of your money is impossible, so it's best to be conservative and emphasis the INSURANCE bit of NICs.

Lucybell33

Thank you both for your help and advice. That's one less thing to worry about (out of my huge list of financial and non-financial things to deal with)!!