Is it worth paying UK voluntary National Insurance contributions?

119 posts in this topic

2 minutes ago, apel said:

But eventually everything was sorted out, and I received the arrears.

 

Same here...

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My experience of NIC in general is that the online picture is updated annually, though after much nagging my wife's voluntary contributions did show up mid-year.  The yearly update to your records is normally visible by about June or July.

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Will all my voluntary contributions be counted?

I worked in the UK for 19 years and am still paying class 2 voluntary NI contributions in order to reach 35 years in total of NI contributions (giving me a full UK pension), I have also worked and contributed in Germany for 20 years so far and will probably reach 25 years of contributions. So together I should finish up with about 60 years of contributions.

What pension will I receive? I understand that I should apply in Germany and they will join the two pensions under the German system.

Do I also have the option to apply for and receive both pensions separately? I will retire in about five years.

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15 minutes ago, Markit said:

Will all my voluntary contributions be counted?

 

I worked in the UK for 19 years and am still paying class 2 voluntary NI contributions in order to reach 35 years in total of NI contributions (giving me a full UK pension), I have also worked and contributed in Germany for 20 years so far and will probably reach 25 years of contributions. So together I should finish up with about 60 years of contributions.

 

What pension will I receive? I understand that I should apply in Germany and they will join the two pensions under the German system.

 

Do I also have the option to apply for and receive both pensions separately? I will retire in about five years.

 

 

 

 

If you have worked for more than 10 years in the UK, your UK pension will stay in the UK.  You will have to apply for both pensions separately.

 

 

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25 minutes ago, Markit said:

Will all my voluntary contributions be counted?

 

I worked in the UK for 19 years and am still paying class 2 voluntary NI contributions in order to reach 35 years in total of NI contributions (giving me a full UK pension), I have also worked and contributed in Germany for 20 years so far and will probably reach 25 years of contributions. So together I should finish up with about 60 years of contributions.

 

What pension will I receive?

 

Ask the UK Pensions folk.  Back in 2016 I wrote to the "Newcastle Pension Centre, Futures Group" but go no response.
So I phoned them (+44 191 218 3600 - verify the number!) and they first said they would write & then same afternoon an "expert" phoned who was very helpful & gave details of pension & what extra payments would bring.  At least back then it was very well worth adding voluntary NI contributions (10 years +1)  - I'm grateful to @PandaMunich for making me aware of this possibility (only wished I had known a few years earlier).

You should be able to see your NI contributions online.

 

8 minutes ago, RenegadeFurther said:

 You will have to apply for both pensions separately.

 

That is correct - in my case (3 years ago) the UK was part of the EU & one had to apply for the UK state pension via the local DE Rentenversicherung office who then forwarded it to Berlin (who then did nothing for 3 months).  You would have to determine the position post-EU for the UK pension.

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Also, just because you have contributed 35 years in the UK does not mean you get a full pension, unless all of those 35 years are post 5 April 2016 when the rules changed,

 

As you worked in the UK for 19 years, I suggest that is not the case, so you will have a "starting value" calculated at 5 April 2016 to move you to the new system.  A calculation is done of what you would have received at that date under the old system and what you would have got under the new.  Your starting value is the higher amount.  But, if you were contracted out of the second or additional state pension (most people who had rights to some sort of final salary pension from their employment are likely to have been contracted out) an adjustment called "COPE" is made to the second calculation to reflect that yo paid reduced NIC under the old system.  This is deducted from the second calculated amount. The COPE amount is shown on your state pension forecast.

 

So, someone who had 40 years under the old system (more that they 30 years max that counted under those rules) and was contracted out, may find that they do not get a max pension.

 

You should look at your state pension forecast on GOV UK.  It will show the max pension you can get if you continue paying NIC until you are at state pension age.  However, in your case (as in my wife's) you may find that you don't need to make voluntary contributions for all of those years.  E.g. if under the new rules your SV was (to keep it simple) equal to 30 years of contributions (30/35 * today's max pension), then you need to pay NIC for another 5 years to reach the max.  If you are 50 and paying voluntary NIC, that would mean only 5 more years, not 17.

 

Once you have digested your forecast, I suggest you speak with DWP to make sure you make the right decision and then with HMRC in terms of paying the NIC.  HMRC will not allow you to pay unless you confirm you have spoken to DWP.

 

As HEM says, you will need to apply for both.  The UK years may also count towards the German system to allow you to take that at 63 (subject to what Brexit does to mess things up for us)

 

 

HTH

 

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7 minutes ago, GaryC said:

UK years may also count towards the German system to allow you to take that at 63 (subject to what Brexit does to mess things up for us)

Was there anything in the W.A. about pensions? I would expect things to remain similar to the arrangements in place up until now by way of at least bilateral agreements. Other non-EU countries (Iceland, Switzerland, Norway) have them (specifically for pensions) with the EU. And the UK has further agreements with other non-EU countries.

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5 hours ago, lunaCH said:

Was there anything in the W.A. about pensions? I would expect things to remain similar to the arrangements in place up until now by way of at least bilateral agreements. Other non-EU countries (Iceland, Switzerland, Norway) have them (specifically for pensions) with the EU. And the UK has further agreements with other non-EU countries.

My reading of, from memory, Articles 30 and 31 in the WA are that there should be no change for already accrued right and I think that that should be unaffected by whatever happens on 31 December.  However, I am not 100% certain that that is how it will pan out and have asked my MP to get the low-down from DWP.  Normally that would take about 30 days but 60 days in we wait with baited breathe...

 

For post 31 December contributions all bets seem to be off as the future relationship on social security issues will form part of whatever deal is hammered out by the end of this year, or not as the case may be.

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6 hours ago, lunaCH said:

Was there anything in the W.A. about pensions? I would expect things to remain similar to the arrangements in place up until now by way of at least bilateral agreements. Other non-EU countries (Iceland, Switzerland, Norway) have them (specifically for pensions) with the EU. And the UK has further agreements with other non-EU countries.

 

UK pensions paid to recipients living in non EU states have always been frozen at the level where they started.

EU residents receiving a UK pension had them increase over time along with the UK levels.

 

The WA specified that this increase over time was to continue.  

 

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7 hours ago, Markit said:

Do I also have the option to apply for and receive both pensions separately? I will retire in about five years.

 

Get yourself an appointment at your Deutscherentenversicherung office for a "Kontenklärung".

 

They're very helpful - and you can see if there are any "gaps" you can fill in.

(On the DRV website you may find the waiting time to be in months instead of weeks.

Check if another slightly more inconvenient location gives you the chance for next week ;) )

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7 minutes ago, HH_Sailor said:

UK pensio

ns paid to recipients living in non EU states have always been frozen at the level where they started.

Not all.    USA it is index linked, and quite a few others.  Full list in

 

https://www.gov.uk/government/publications/state-pensions-annual-increases-if-you-live-abroad/countries-where-we-pay-an-annual-increase-in-the-state-pension

 

And the WA seems to guarantee this also for UK residents living in EU and EEA  before end 2020.

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14 minutes ago, HH_Sailor said:

 

Get yourself an appointment at your Deutscherentenversicherung office for a "Kontenklärung".

 

They're very helpful - and you can see if there are any "gaps" you can fill in.

(On the DRV website you may find the waiting time to be in months instead of weeks.

Check if another slightly more inconvenient location gives you the chance for next week ;) )

They are indeed very helpful but are currently very vague about "what next" with Brexit.  The latest seems to be:

 

Brexit
Wie in der Fachlichen Information 01/2020 berichtet, hat Großbritannien Ende Januar formal die Europäische Union verlassen. Seitdem befindet sich das Land bis zum 31. Dezember 2020 in einem Übergangszeitraum, in dem Großbritannien sowohl Teil der Zollunion als auch des Binnenmarkts bleibt. Bis zum 30. Juni 2020 hatte Großbritannien die Option, das Ende des Übergangszeitraums um bis zu zwei Jahre zu verlängern. Dies sah das am 24. Januar 2020 unterzeichnete Austrittsabkommen vor.

Großbritannien hat die Frist zur Verlängerung der Übergangsphase verstreichen lassen. Dies hatte Kabinettsminister Michael Gove bereits Mitte Juni angekündigt.

Während der Übergangsphase gelten das Europarecht und damit die koordinierenden europarechtlichen Regelungen über soziale Sicherheit im Verhältnis zum Vereinigten Königreich weiter. Änderungen für versicherte Personen oder für Personen mit einem erstmaligen oder erneuten Rentenanspruch bis zum 31. Dezember 2020 sowie für Personen, die bereits eine Rente beziehen, ergeben sich daher zunächst nicht.

Für die Zeit nach dem Ende des Übergangszeitraums sieht das Austrittsabkommen darüber hinaus im Bereich der sozialen Sicherung einen vorläufigen Bestandsschutz sowie einen Vertrauensschutz für Personen vor, die zuvor bereits einen grenzüberschreitenden Bezug zum Vereinigten Königreich und den Mitgliedstaaten der EU hatten. Sofern ein Abkommen zu den zukünftigen Beziehungen auf dem Gebiet der sozialen Sicherheit geschlossen wird, würde dieses die Regelungen des Austrittsabkommens ersetzen.

 

I still read this as "watch this space"

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Hi,

 

Firstly, thanks to everyone who's been sharing their knowledge in this and other threads. I'm a new member here, but I've often found these forums a helpful reference. :)

I'd be grateful for any thoughts on my conclusions so far.

 

My situation: I have four years of NI  contributions because I left the UK in 2001, shortly after finishing my studies. I have another 23 years to contribute, and I can still pay voluntary contributions for 13 of the missing years. (Not clear yet whether I might be eligible for class 2 -- I was a pupil barrister for the year before I left the UK).

Six of the years abroad were in Poland and Slovakia, the others in various further-flung countries.

 

I'm now working as a freelance teacher in Germany, earning peanuts. The future's very unclear, but I'm assuming for now that I'll continue to live in Germany. I'm also an Irish citizen, but have never lived or worked there.

 

My provisional understanding is:

 

-- I have to pay into the German system, because I'm a teacher.

 

-- I'll get very little back from the German system.

 

-- The Poland/Slovakia years should make me eligible for a UK pension already, but they won't contribute to its value.

 

I think my main question at the moment is: can I (should I?) essentially forget the German pension, think of my contributions to it as a tax rather than something to keep me in my old age, pay the 13 years voluntary contributions, and continue to make voluntary contributions in the UK?

 

Thanks for any advice people can give!

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11 minutes ago, maputan said:

I can still pay voluntary contributions for 13 of the missing years.

Have you already checked with the UK system that this is actually possible? Do they now let you go pay back that far?

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5 minutes ago, lunaCH said:

Have you already checked with the UK system that this is actually possible? Do they now let you go pay back that far?

 

According to my online NI record, yes; I can still pay from the year 2006-7, and I have until 5 April 2023 to do that.

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1 hour ago, maputan said:

According to my online NI record, yes; I can still pay from the year 2006-7, and I have until 5 April 2023 to do that.

When I looked into it a couple of years ago, you could go back a maximum of 6 years, the rest they said were closed. And I was also on the online record you're referring to. 

Either this has changed or varies depending on one's situation and/or contributions. 

I'm now exempt from these payments but I do know that is generally considered a good deal - it's a better system than some other countries and worth paying into. People are encouraged to keep up with these payments and many do. 

Also I'm not sure how the fact you are a teacher obliges you to pay into the German system. Are you employed or you do you teach privately?

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4 minutes ago, lunaCH said:

When I looked into it a couple of years ago, you could go back a maximum of 6 years, the rest they said were closed. Either this has changed or varies depending on one's situation and/or contributions.

 

Yes, there's an exception to the usual 6 year rule: https://www.gov.uk/voluntary-national-insurance-contributions/deadlines says 

 

Quote

You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016.

 

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I think a chat with DWP would be a first step re UK pension.  HMRC will require you to do that anyway before accepting payment.

 

My guess is that it would be worth paying all available years (normally you can only look back 6 years but there are special rules that allow some people to go back further in certain circumstance) but with the changes to the system in 2016 paying pre-2016 years may not have a direct impact you might think.  For instance, if you already had 30 years paid before 2016, paying any more would not help, at least not in terms of the first leg of computing the start value.  That said, if you are talking only of voluntary NIC (Class 2 or 3) then I assume you would have no COPE to deduct in the second part, or at least a very small amount relating to your 4 paid years. 

 

Given the wording in the WA, I think it would be worth getting those years done (or not done) before 31 December.

 

You say the German pension is essentially worthless.  Unless self-employed folk are different, I am not sure that is true, well, not in my experience. But others will have views on that.  Either way, some or all of the years paid in the UK will count towards qualifying years in Germany (overlaps are ignored) and again, in my experience, can have an impact on the amount of the pension.  In our case, one of us gets a significant uplift in amount as well as being able to take early at 63 by using the UK years to make up the required 35 years.  Indeed, when my other half claimed her German pension she had only paid up UK voluntary NIC years to the April before the claim was made.  DRV have said that if and when we pay any further UK amounts they will be happy to recalculate the German pension retroactively, though it is likely only to make a few cents difference.  On this, I would have a chat with DRV and also try to get the past years sorted before the final Brexit portcullis falls.

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8 hours ago, GaryC said:

I think a chat with DWP would be a first step re UK pension.  HMRC will require you to do that anyway before accepting payment. 

 

Thanks, that sounds like wise counsel! I'll get on to them next week.

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