tdrinker

You may not need a Wise account, you might be able to send £ from your USA $ account. I can send a specified $ amount from my UK £ bank account, and the bank will deduct the appropriate £ from my account. I'm sure the exchange rate is worse than Wise would give, so it depends on how much is being transferred as to whether it makes a material difference.

USADragon

Thanks! We are currently awaiting further instructions. We gave HMRC a call this morning (got through to a representative really quickly). They confirmed they have received our forms, that the current turnaround time is about 16 weeks, and after that we should receive a letter telling us what we can pay and how much it will cost. We may need to make some future payments later, to catch up completely. At least Wise is an option if we need to pay by direct debit for future years.

tdrinker

16 weeks to answer a letter. What can you say?

USADragon

lol! The wheels of government turn very slowly indeed!

jjmb

Which form do you use to make voluntary payments? I just received my pension forecast, currently 108.79. There seem to be several forms but NI38 seems to be the correct one. We are planning on visiting the UK in June but I don't want to wait that long as I reach 66 in August. Or is it better to do it via phone? I can't create an online account as they can't verify my address even though they have sent this forecast. Just read the title of page and its leaving the UK, so this isn't the correct form.

tht

NI38 is not a form, but CF38 attached to the end is:
https://assets.publishing.service.go...NI38_12_20.pdf

No idea if you are to late or meet the criteria listed on page 9 for class 2 or maybe class 3 NIC, but if you look at item 9 of CF38 it has the question in past tense:

“On what date did or will you leave the UK? DD MM YYYY”

I would be very surprised if you could do it by phone and it is likely to take months to process so you should do it ASAP.

jjmb

Thanks, Yes, I am straight on it!

Ja5on

After seeing this thread I started looking into it myself. I have 9 years of ni contributions according to the website I have

• 9 years of full contributions
• 32 years to contribute before 5 April 2053
• 11 years when you did not contribute enough

I worked in the USA for about 4 years when I arrived but haven’t worked in the last 8 years and don’t plan on going back to work. I’m currently 37 years old.

looks like I would have to pay class 3 NI and it would be around $20k total. Am I right in thinking that would take about 3 years of retirement to break even? Around age 71? I’d like to live into my 70s but not sure about getting $20k on it.

tdrinker

You need 10 years' contributions to get a pension, so it's worth paying for at least one year to reach this milestone and become eligible for a pro rata pension.

When calculating the payback period, remember the pension is taxable so calculate using the net (after tax) pension not the gross (before tax).

You might be able to pay 4 years at class 2, which is a bargain if it's applicable and you can go back that far - generally you can only go back 6 years to fill NI gaps, but temporarily people can (could?) go back further. The best option is to explain your work record to HMRC and ask what years you can pay for and at what cost, then decide.

Glasgow Girl

If you have to pay Class 3 then the payback period is about 3 1/2 years. You are unlikely to ever find an investment opportunity that provides the return that voluntary NI’s provide, coupled with relatively low risk. They are not risk free because the government could change the rules whenever they like, but they are unlikely to change the rules enough to make it a bad investment. Perhaps it becomes just good versus great in the future. Anyway you are investing about $1,000 per year at Class 3 rates, and if you invest in anything, or simply save that amount per year, you cannot do better then voluntary NI’s. You need 26 more years to get the full pension, and plenty of time to make those contributions, so why not start them, and if the rules change in a detrimental way then you can stop whenever you want to.

tdrinker

Keeping it simple, Class 3 costs £824 a year. The full state pension is £9,628 and requires 35 years contributions, so each year's contribution buys £275 of pension.
You have 9 years' contributions and need 10 to receive a pension, so paying 1 year's Class 3 costs £824 and delivers £2,750 a year pension, paying back in under 4 months.
Thereafter, each Class 3 NI contribution pays back in 3 years (824/275).
But if you pay tax, the pay back is longer, e.g. if you pay 40% tax, the net pension is £275 - 40% = £165, and the pay back period is 5 years (824/165), still a bargain.
Things will probably change in the future, with the pension, tax, life expectancy, your circumstances, etc., some positive, some negative. But you can only make a decision based on what you know, which is that it's a good deal. In your shoes, I'd start making contributions (after checking if I could get pay the 4 years when you were working at Class 2). It also adds diversity to your retirement income, as I expect you will have other income streams (private pension, etc.) and the more eggs you have in your basket, the better you're protected if one goes bad.
As Glasgow Girl says, if circumstances change you can change you actions.

dj322

Hello all,

Very interesting topic. I’ve lived and worked in the UK from birth and moved to Canada in 2013. I have 16 years of contributions and have been told I can make voluntary payments for 3 years where I am missing payments, I’m told it’s around £800 for each year, is this a class 3 payment and how do I go about paying this?

Going forwards, I’m wondering if I should continue with voluntary payments and how do I arrange this? Can I continue to make voluntary payments and is it worth it?

I understand as I’m living and working in Canada this might allow me to combine my state pensions, is that correct?

Also, when I try and make a class 3 payment it asks for an 18 digit payment ref number, how do I get this?

Any guidance would be appreciated.