UK pension

Old Oct 26th 2011, 2:40 pm
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Default UK pension

Hi.
Alot of you already know me.
My husband moved here on a K1 in September 2008. He got his green card in April 2009. We filed for removal of conditions and are still waiting in Feb 2011. We got a letter yesterday from HMRC regarding his pension. It said that he has paid in for 22 years and unless he started to pay in every year for the next 8 years he would lose his pension . They said he would owe almost 700 pounds for 2009-2010. I guess they are a bit behind since it's 2011.He worked for Royal Mail and didn't have a huge salary. Has anyone else been in this predicament? Is there a way to find out what his pension would be and if it would be worth it for us to do this? I don't want to have him pay every year and find out it wasn't worth it. I realize each case is different.
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Old Oct 26th 2011, 3:20 pm
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Default Re: UK pension

Info here including how to get a forecast based on payments to date. Has telephone numbers to call.

http://www.direct.gov.uk/en/BritonsL...oad/DG_4000013
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Old Oct 26th 2011, 3:31 pm
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Default Re: UK pension

Hi penguinbar,

I moved your thread to the general US forum, since it's not really immigration-related.

Rene
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Old Oct 26th 2011, 5:12 pm
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Default Re: UK pension

Originally Posted by penguinbar View Post
Hi.
Alot of you already know me.
My husband moved here on a K1 in September 2008. He got his green card in April 2009. We filed for removal of conditions and are still waiting in Feb 2011. We got a letter yesterday from HMRC regarding his pension. It said that he has paid in for 22 years and unless he started to pay in every year for the next 8 years he would lose his pension . They said he would owe almost 700 pounds for 2009-2010. I guess they are a bit behind since it's 2011.He worked for Royal Mail and didn't have a huge salary. Has anyone else been in this predicament? Is there a way to find out what his pension would be and if it would be worth it for us to do this? I don't want to have him pay every year and find out it wasn't worth it. I realize each case is different.
I presume you are referring to his state pension, in which case:

He won't lose his pension, he simply may not get a full pension if he doesn't have a full 30 years, he'll get a proportional amount (22/30) of what he'd get if he paid a full 30 years NI contributions.

He doesn't owe any money, he simply has the opportunity to buy extra years if he chooses, at a very decent rate (better investment gthan a lot of other things). He can choose not to do this.

I'm surprised this wasn't explained more clearly in the letter he received.
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Old Oct 26th 2011, 5:27 pm
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Default Re: UK pension

Originally Posted by dunroving View Post
I presume you are referring to his state pension, in which case:

He won't lose his pension, he simply may not get a full pension if he doesn't have a full 30 years, he'll get a proportional amount (22/30) of what he'd get if he paid a full 30 years NI contributions.

He doesn't owe any money, he simply has the opportunity to buy extra years if he chooses, at a very decent rate (better investment gthan a lot of other things). He can choose not to do this.

I'm surprised this wasn't explained more clearly in the letter he received.
It is a State pension. It says a gap in his NIC's record may affect his entitlement to benefits. He needs 30 qualifying years for a full state pension. It really doesn't explain much in detail.
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Old Oct 26th 2011, 5:28 pm
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Default Re: UK pension

Originally Posted by lansbury View Post
Info here including how to get a forecast based on payments to date. Has telephone numbers to call.

http://www.direct.gov.uk/en/BritonsL...oad/DG_4000013
Thank you!
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Old Oct 26th 2011, 5:44 pm
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Default Re: UK pension

Before you make a decision, you should try to understand the social security WEP provision which could possibly affect the amount of the UK pension. The WEP provision could possibly reduce the amount of the UK benefits so paying the additional amount may or may not be justified.

http://ssa.gov/pubs/10045.pdf
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Old Oct 26th 2011, 6:21 pm
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Default Re: UK pension

Originally Posted by Michael View Post
Before you make a decision, you should try to understand the social security WEP provision which could possibly affect the amount of the UK pension. The WEP provision could possibly reduce the amount of the UK benefits so paying the additional amount may or may not be justified.

http://ssa.gov/pubs/10045.pdf
You mean reduce the amount of one's US SS. The calculation of whether voluntary UK contributions are worthwhile is still the same, of course.
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Old Oct 26th 2011, 6:40 pm
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Default Re: UK pension

Thanks everyone. He's only 40 and I'm wondering if there will even be a pension by the time he can collect!
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Old Oct 26th 2011, 6:52 pm
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Default Re: UK pension

Originally Posted by penguinbar View Post
Thanks everyone. He's only 40 and I'm wondering if there will even be a pension by the time he can collect!
If he's only 40, then not only does he not have to make up the missing 8 years NIC, he can postpone and make the decision at a later date (though paying for additional years might be more expensive at a later date).
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Old Oct 26th 2011, 8:50 pm
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Default Re: UK pension

Originally Posted by dunroving View Post
If he's only 40, then not only does he not have to make up the missing 8 years NIC, he can postpone and make the decision at a later date (though paying for additional years might be more expensive at a later date).
But don't hold off for too long, you can only make voluntary contributions for x number of years since becoming a ex-pat, can't remember off hand what it is though, something like 10 or 15 years? Might be less.
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Old Oct 26th 2011, 8:55 pm
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Default Re: UK pension

Originally Posted by Bob View Post
But don't hold off for too long, you can only make voluntary contributions for x number of years since becoming a ex-pat, can't remember off hand what it is though, something like 10 or 15 years? Might be less.
I don't believe there is any limit. I'm making voluntary contributions and left the UK a lot longer ago than that. The only limitation I know of is that you can only go back six tax years in making such contributions.
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Old Oct 26th 2011, 11:51 pm
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Default Re: UK pension

We are going to look into this and see what our best option is. I appreciate all the advice! We have to figure out the right thing to do. I thought he wouldn't get anything.
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Old Oct 28th 2011, 3:21 pm
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Default Re: UK pension

Originally Posted by penguinbar View Post
We are going to look into this and see what our best option is. I appreciate all the advice! We have to figure out the right thing to do. I thought he wouldn't get anything.
Your husband will need 10 years of FICA payments to qualify for SS. Once he qualifies and takes SS his previous years of NI contributions along with any Royal Mail pension will be used to calculate an reduction to his SS amount called the Windfall Elimination Provision. The amount of the reduction is capped at a maximum amount and you can estimate how much that is using a calculator on the SSA website, just google "WEP calculator". Right now he will get 22/30 of his UK pension when he becomes eligible.

When I looked into this I decided to pay voluntary Class II NI contributions because they are so inexpensive and the UK state pension was far more than the amount I'd be WEPed. You should make you apply to pay Class II NI if your husband is working for a US employer in the US as they are only about 120 pounds a year.
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Old Oct 28th 2011, 3:34 pm
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Default Re: UK pension

Originally Posted by penguinbar View Post
Hi.
Alot of you already know me.
My husband moved here on a K1 in September 2008. He got his green card in April 2009. We filed for removal of conditions and are still waiting in Feb 2011. We got a letter yesterday from HMRC regarding his pension. It said that he has paid in for 22 years and unless he started to pay in every year for the next 8 years he would lose his pension . They said he would owe almost 700 pounds for 2009-2010. I guess they are a bit behind since it's 2011.He worked for Royal Mail and didn't have a huge salary. Has anyone else been in this predicament? Is there a way to find out what his pension would be and if it would be worth it for us to do this? I don't want to have him pay every year and find out it wasn't worth it. I realize each case is different.
Your husband should inform HMRC that he is no longer resident in the UK and apply to pay Class II voluntary contributions from the time that he became non resident. He can pay these retroactively for up to 6 years. The point is that the 2009-2010 NIC bill may well be charging your husband for the wrong class of NI payments...Class II are only 2.40 pound a week.

I've been paying Class II NI for 25 years and as I got 3 years of free contributions in my teenage years I have 28 years of NIC which have only cost me 5k pounds in total.

Last edited by nun; Oct 28th 2011 at 3:49 pm.
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