Glasgow Girl

You are correct, there is no benefit in contributing than 30 pre 2016 years as you max out that part of the benefit at 30 years. If it were me I would get as many of the required years in the system sooner than later because they could very well change the rules any time they feel like it. I think you are still only allowed to backfill 6 years total and it is normally the prior 6 years but as the other poster stated they made an exception fo hold 2006 - 2016 open for anyone who qualified for a pension under the old and the new system. I think the cost is the current rate regardless of what years you are backfilling so I don't think it makes any difference to the cost as to which years you pick but HRMC would confirm that.

Frugal_Squirrel

Ah, so you are saying he can't backfill more than 6 of the years that are available to him. I'm glad to understand that, as when I saw all those years available in his record, I was thinking he could fill 5 of the pre-2016 years plus the 4 post-2016 years that are currently available, the current year, and 2 more years in the future, making 12 total. But it sounds like he can only pay for 6 gaps now (any 6, it doesn't matter), the current year, and then 5 more years in the future. I'm catching on; thanks for your patience!

tdrinker

In your shoes, I’d make the extra 5 years pre-2016 contributions. There’s no benefit in having >30 years pre-2016 contributions in your situation. HMRC should be able to confirm the 2016 pension before you make the voluntary contributions, to be 100% certain.

I’d then make 5 years voluntary contributions for years 2016/17 – 2020-21 (not ended yet, but soon on 5 April 2021), and make voluntary contributions for the next 2 years to achieve the maximum pension available at retirement age.

This reduces the risk of being impacted by a future rule change. As background, 3 years ago it was planned to abolish class 2 NI, although this was abandoned following objections. Recently, it was suggested self-employed NI contributions (which included class 2) should be increased, but no changes have occurred to date. Nothing may change, we don’t know, but it’s prudent to achieve the maximum pension as quickly as possible just in case

tdrinker

Usually you can fill only the most recent 6 backlog years, but if HMRC are allowing more as a concession, I'd take advantage.

Glasgow Girl

It is possible that they are now allowing the years from 2006 thru 2016 in addition to the normal 6 years that are allowed.. I would call and ask them and if so fill in the 5 years you need before 2016 to get to to 30 years, and also add 2017 through to the current year, and make however many more years you need to get to the full 35. Then stop as soon you hit the 35!

Frugal_Squirrel

Thanks for the advice, tdrinker -- yes I read through the whole mega-thread about class 2 contributions being abolished. It was funny because I was reading the posts chronologically, and at some point it became apparent that class 2 contributions would not be abolished after all -- that thread was a real rollercoaster ride

I do plan on having my husband phone Future Pensions at +44 (0)191 218 3600 and also HMRC at + 44 191 203 7010to verify our thinking before submitting the payments. We are much better prepared now thanks to everyone here and all of your help.

adele

I recently backfilled 11 years by making class 2 voluntary NICs to cover 2009-10 up to present, so your husband should be able to do the 12 years. They have extended the window due to the change to the new pension, but only for a limited time, so don't delay!

tdrinker

The pre-2016 / post-2016 transitional rules mean someone who was contracted out pre-2016 and therefore has a COPE adjustment may need > 35 years contributions for a full pension.

The old full pension is £134.25 and the full pension is £175.20. As an example, if someone has 30 years' contributions at 2016, they get the higher of the old pension (£134.25) and the new pension (£175.20 x 30/35 = £150.17 less any contracted out COPE adjustment). It's likely the COPE adjustment will mean the old pension is higher, i.e. £134.25. The shortfall to the new pension is £175.20 - £134.25 = £40.95, and they need to contribute 8 extra years to fill the gap (£175.20 / 35 years = £5 per year, so 8 years contributions). They contribute 38 years in total.

The thing to do is keep contributing and checking your pension forecast, and stop contributing when you reach maximum pension.

Frugal_Squirrel

Thanks adele! I think you are right about the limited time remaining. I found this information which appears helpful: https://www.pensionsadvisoryservice....tributions.pdf

Right now we have sent the application to pay Class 2 NICs and it will be a little while before we get the approval, but if we have until 5 April 2023 I think we'll make it.

vespucci

They apply WEP only when you actually start getting your pension.

dvalentine

I was also oblivious to the UK pension, thinking at best enough for a pint at the pub, boy was I wrong. Definitely check with HMRC re paying for missing years, I was able to pay for 10 years pre 2016 ie back to 2006. I think this was a special rule introduced when everything changed in 2016, since normally you can only go back 6 years. This allowed me to go from 17 to 31 qualifying years which changed my pension (based on actual contributions so far) from £75 to £140 per week. I'm now on direct debit paying £3.05 per week (£12.20 or £15.25 per month), each year that I pay will get me an extra £5 a week on my pension. This seems like a really good deal to me. Of course nothing is guaranteed but I feel it might be more rewarding than savings interest rates! So as part of a 'balanced' retirement I really like having a pension. The process is not quick, especially with Covid, but well worth exploring.

durham_lad

you may be right about the 2016 timeframe because I did my catchup before then, February one year and I was able to catch up the current year plus 6 previous ones making 7 altogether. My wife didn’t do her catchup contributions until after we got back to England in 2017 and she was allowed current year plus 10 so paid for 11 back years. This month I received my first full payment of 4 weeks at a time and at £145/week it is certainly nice to get. (I had 31 years of contributions, my wife has 32 and will start collecting hers in December)

The “triple lock” is still in effect so we got a raise of 2.5% this year.

Frugal_Squirrel

Hi all, I'm popping in with an update in case it helps anyone in the same situation.

In late March my husband filed form CF83 by mail, requesting to pay voluntary NICs at the class 2 rate. About 2 months later he received a letter stating that the request was approved and that he could pay for years going back to 2006-07. Normally it is only possible to backfill up to 6 years, but for people with gaps predating the introduction of the new 2016 pension, years 2006-07 to 2016-17 are all treated as 2016-17 for the purpose of the 6 year back payment rule. The final time limit for filling these gaps is 5 April 2023.



We opted to pay for 5 pre-2016 years and the most recent 5 (post-2016) years. This will bring his total pre-2016 years up to 30. There was no point in paying for the additional pre-2016 years that are available, because they would not increase his pension. Because he was previously contracted out, he will still need to pay 2 more future years in order to receive a full pension (i.e. a total of 37 years). He has 9 years left before pension age, but we wanted to pay as many historical years as possible now, in case the rules change.

Before making the payment, we phoned HMRC on the +44 (0)191 203 7010 number and told them the amount of the payment and which years it was for. The representative said he would add a note to the account so that the payment will be applied to the correct years. He said that if payments do get applied to the wrong years, this can be corrected with another phone call. He said to check online after 6-8 weeks to see if the record has been updated.

We made the payment using Wise (formerly Transferwise) and using the payment details listed under "Overseas Payments" on the HMRC website here: https://www.gov.uk/pay-class-2-natio...e/bank-details. We used the instructions for paying from abroad using a UK account (the Wise transfer was done using the UK sort code rather than IBAN/BIC). The reference number we used was "National Insurance number followed by ‘IC’, surname then initial."

I'll come back and post another update in a couple of months after the payments are correctly credited (fingers crossed!).

Once again I want to thank all the people who provide information on this forum. Expat retirement issues can be very complicated, and this has been such a valuable resource for us.

tdrinker

Double check you need 37 years for a full pension .... think it will be 38.

Frugal_Squirrel

Thank you! Will definitely check the pension forecast after this and each subsequent contribution, and not stop before the full amount is reached.