Paying UK national insurance contributions directly from Germany

117 posts in this topic

18 hours ago, GaryC said:

I agree.  The question for those who can afford it is "What's the downside?"  If you live for just over 3 years after state pension age you fully recoup the investment (for each £800 you pay in you get £266 increase in your pension).  And as far as I am aware there are no downsides in relation to any other state pensions one might qualify for.

I am payin 148 pounds a year, to buy another year for my pension.  I calculate I get get the money back at 70,. Its a very small amount you have to pay to get a 8000 pound pension back.

 

Its a no brainer for me to buy the years back to 35 years.

 

Of course if they let you pay class 2.

 

2 hours ago, GaryC said:

How to mask a proposal for saving public funds by increasing the state pension by suggesting you are helping people to work longer and save more for retirement - what a load of tosh!  Unfortunately some people may think it is a good idea.  If people want to work for longer, then fine.  But for those who have worked hard and saved hard and who then choose to become "economically inactive", keep your political tanks of their grass... 

 

 

Yeah its a real bummer, that they put the pension age goes up, but to be fair, they normally only do it for people that are less than 60, and if you are paying Class 2, the pension is an absolute Bargen, as I said you get your money back so quickly. For me its better to pay it for a bit longer than for its real value go down

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If you qualify for Cl. 2 it is, as you say, a complete no-brainer but even at £800 per year for Cl. 3 it's still a pretty good bet.

 

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23 minutes ago, GaryC said:

If you qualify for Cl. 2 it is, as you say, a complete no-brainer but even at £800 per year for Cl. 3 it's still a pretty good bet.

 

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Thank you all dear TTers for your helpful replies. I phoned Newcastle for a massive 16 cents this morning using mytello. So thank you for that tip. (No contract, but they have your credit card number for life by the looks of it... can't see any way of removing it. A fair chunk of what you pay is not for telephone credit but VAT... not complaining however for 1 cent a minute. You always have to read everything though. I have recent experience of trying to get away from a French phone company... hard work in the extreme, and although they have finally cancelled my subscription, I am still and apparently forever a client of theirs.) I digress.

 

DWP are to send a pension forecast in the next 3 to 5 days if that very nice Geordie chap delivers...

 

Just need to establish whether it would be more beneficial to pay the missing years after 2016 rather than before. I still have time to get 15 years in by paying in the future. On the other hand, I would like to have 35 years by age 63 in order to get the early German pension... a bird in the hand being worth two in the bush as I see it. Also I do not fancy having to claim my German pension when I am a little old lady in a foreign language I will hardly have spoken for years... know what I mean?

 

 

 

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Sounds positive.  Pension forecast normally arrives pretty quickly once they say they are sending it, so a week or so with international post should do it.

 

Before or after 2016 is a good question and may be one for DWP because it would impact on your starting amount but don't ask me how!  I am just thinking that, because they give you the higher of the amount you would have got at 2016 under the old rules and the amount had the new rules always applied, paying pre-2016 could change one of those 2 calculations in your favour, meaning your starting amount is higher and you therefore need less post-2016 years to reach your max possible.  As I say, only DWP can tell you that figure but no immediate rush as nothing changes re time limits or costs before the end of the current tax year.

 

Either way,  Voluntary National Insurance: How and when to pay - GOV.UK (www.gov.uk) explains what years you can still pay voluntarily. The most important paragraph is:

    You’re a man born after 5 April 1951 or a woman born after 5 April 1953

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

 

Those years cost the rate for the year in which they are paid, so for the current year 2021/22 each year of Cl.3 would cost £800.80.  If you are lucky and can pay Cl. 2 because you are living abroad and meet the relevant criteria, then each year costs £158.60.  Booklet NI 38 tells you all about those criteria...  The rate increases annually by the CPI for September of the preceding year.  So 2021/22 increased by the CPI for September 2021, which was 0.5%.  Delaying making some of these payments won't therefore cost a fortune with current inflation rates but who knows what the future holds for inflation.

 

In terms of the German pension at 63 you need 35 years (420 months) Wartezeit.  This includes pretty much everything in the UK, other EU MS and Germany after you turned 17, so again, a question of maths and maybe sight of a Rentenauskunft, with the UK and other EU MS data included.  It may take a while longer to get that but worth the effort I think.

 

Good luck!

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More thanks due to you Gary. It is all so clear as mud...

 

Only Class 3 possible for me and I have the rates which I can pay at within 8 weeks. Just need to know which years would bring me more pension.

 

Being a married woman but with a French husband who never contributed to the UK system also raises questions. I understood the wife's pension was inextricably linked to the husband's pension. Have they in the meantime disentangled the married woman's pension from the husband's pension, i.e. is the married woman's pension now independent of her husband's ? (My aunt had a much younger husband and could not claim her pension until he was 65.) Will I be treated like a single person? If I divorce, would hubby be entitled to half my UK pension? (which would complicate his tax declaration I suppose...) He did not contribute to the German system either, but I expect he would acquire half my German pension rights.

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The New State Pension is definitely individual to the person concerned, i.e. no more married woman getting pension by reason of husband's contributions.  Not sure when that all changed but my wife is a 1956er and her State Pension forecast shows that she can get the full amount, so you should be fine on that point.  I would assume that the worst that could happen is that your starting amount under the old rules could be impacted by the old married women aspects but that would presumably just mean that the calculation under the new rules would give you the higher starting amount.  So, I would suggest nothing to worry about on that particular front but you could add it to your list of questions for DWP when next you speak with them?

 

On the divorce side, this appears to provide the comfort you are looking for  Pensions and divorce | Pension Wise

    New State Pension

    Your new State Pension can’t be shared if your marriage or civil partnership ends.

   

    If you have a ‘protected payment’, the court could order that this is shared between you. This is an additional payment you may get on top of the full State Pension.

 

I think the 'protected payment' aspect of the New Stata Pension is related to the situation where the amount calculated under the old rules at 2016 gives an amount higher than the new max - that excess is protect but as it does not impact my, or my wife's, situation, I haven't read up on it.  It seems unlikely that it would impact you either given that you are still some way off state pension age...

 

You say you have rates at which you can pay your Cl.3 "within 8 weeks".  Not sure why they have set that timeframe as the rates won't change now until next April.  Maybe it's more about the reference number and making sure they expire if not used?  Bit odd though...

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Gary has covered most things, but if you pay class 3, the year 2019/2020 will cost £780.00 and similarly the year 2020/2021 will cost £795.60 and then all previous years are charged at the current rate of £800.80 so its a few £ in your pocket. It is then just a case of doing the maths to see how many other years you need to get the 35 full years before you want for your German pension, and paying them either annually or monthly by direct debit. 

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On 06/03/2021, 12:05:24, GaryC said:

Not wishing to ask your actual age but if you have years that pre-date 2016/17 when the new state pension was introduced, do you know how many more years you need to pay NIC to get the max possible pension under the new rules? 

 

...if your stating amount at April 2016 was calculated as, say, the max under the old rules (£119.30 at that time but risen to £134.25 for 2020/21) you would need to pay "only" 8.19, i.e. 9 years to get the most possible when you claim your pension.  If you were 15 years from state pension age at 2016 and were only considering voluntary payments as not working in the UK, my understanding is that there would be no point paying more than those 9 years.  If you paid all 15 you would gain no benefit.

 

I was born in August 1964. I seem to fall into exactly this scenario, i.e. 15 years from pension age at 2016 - I will reach pensionable age in 2031.

 

If I pay 10 years shortfall up to April 2016, that would give me 30 years so a full pension under the old rules... ?

 

I just called DWP. The person I spoke to said it would benefit me to pay 15 years shortfall. But I got the impression I was "leading" the conversation. The magic 2016 did not seem to trigger her to go down a new rules, old rules route or offer any further information. I felt like I was getting nowhere fast. She gave me the HMRC number who gave me the details to make a payment, as per Susie T's info above. Reading your info again I think I was not asking the right questions. And maybe I did not get the best informed lady...?

 

I guess I could pay 10 years up to 2016, which would give me the magic 30 years... and then ask for another forecast.

 

Edit: Calling HMRC was hilarious (not). You have to answer security questions. Their voice recognition is dismal. I had to repeat my NI number 4 or 5 times. When it came back it bore no resemblance to my number. So bad it is unbelievable. Maybe they want you to hang up. After about 15 minutes I got to speak to a human bean...

 

Truly, a sense of humour is required. I don't want to do this when I am an old lady. I am dreading doing the Geman side.

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I agree that the HMRC phone system is not good.  I too end up repeating my NI number over and over and it always comes back this the last character incorrect.  Turns out this character is never actually used, so it matters not that one part of government has the correct letter but another part not.  Indeed part of HMRC has the correct one (Income Tax and tax returns etc) but the NIC folk not.  Ours not to reason why?

 

Would you mind sharing the 2 or 3 green lines of your pension forecast and any figure on the back for your COPE (on here or via PM) as that should allow us to ascertain your starting amount and shed some light on what might be the best way forward or the questions to ask DWP.  Knowing the starting amount should enable you to then work out how many years you would need to pay under the new system to get the max possible.  What it may not do is shed light on the impact of paying up pre-2016 years but my grey-cell might figure that out if I can see the numbers...

 

 

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Thanks in advance for your help Gary.

 

Forecast pension for 2031 is GBP 159.09 a week (if further contributions paid until then)

Estimate based on current record up to 5 April 2020 is GBP 102.63 a week (20 years contributions ending 2005-2006)

Possible to improve forecast by paying shortfall up to GBP 179.60 a week

 

... if their figures are correct. Last night there was a bit on the French news about the state of the French pension system. Apparently 1 in 6 pensions are miscalculated - clearly not even the employees understand the system. Why would it be different across the Channel?

 

I am unclear about COPE. I worked for the tax year 1987-1988 in UK and I know I contributed to a company pension scheme which would add a few pounds. But I dunno where that is recorded. The sort of thing that conveniently disappears into the ether I imagine. That was the only year I actually worked in UK. Previous to that I had credits for time in education. I left UK for good (so far) in 1988. So being "contracted out" (whatever that means) would not apply to me I guess.

 

 

 

 

 

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So, I think this is getting you to a good place but apologies that this post is verrrrrrrrrrry long – those less interested in the topic may chose to “mark as read”

 

Firstly, a little on COPE, though I don’t think it impacts you.  Under rules in place from the late 1970s (I think) to 5 April 2016 when the “new state pension” came in, you got a “basic” state pension and a 2nd element called the state earnings related pension (SERP) or later, the state second pension (S2P).  However, if your employer provided an occupational pension scheme, promising at least the amount you would get from the SERP/S2P, then the employer scheme could “contract-out” of the SERP/S2P meaning you paid lower rates of NIC (up to 2% lower depending on the year).  The government had to reflect this reality in the “new rules” part of the “starting amount” calculation to reflect that you had paid less NIC up until 2016.  This is called the Contracted-Out Pension Equivalent (COPE) and is used only in the starting amount calculation.  If it exists it is (or at was last time I got a paper copy) printed on the second page of your pension forecast.  My guess is that you will see either £0 or nothing at all as I do not believe you have a COPE.

 

So, where does that take us?

 

The “estimate based on current record” is the same as your “starting amount”, as you have not paid any NIC since 5 April 2016 – if you had paid some NIC since then it would be a little more complex to work back to the starting amount.  Anyway, that is 20/35 x £179.60 (max weekly new state pension in 2021/22) = £102.63.  This means that in the 2-part calculation of your “starting amount”, the “new rules” part (£102.63) is higher than the “old rules” part, which I think would be £91.73, plus, potentially, some amount related to any SERP/S2P (20/30 x £137.60 (max basic state pension under old rules in 2021/22 terms)). As you have no COPE, you would not have any SERP/S2P either.

 

Based on what you have said there is no reason to suspect that the “starting amount” is wrong.  The fact that the maths comes out at £102.63 suggests to me that there is no COPE as COPE is calculated to the penny and you have exactly 20/35 x £179.60.

 

The “forecast pension for 2031” is based on you making voluntary contributions for 11 years from “now”, i.e. 2020/21 to 2030/31. (it is from 2020/21 because the records for 2020/21 have not been updated yet – usually happens in the summer).  Note also, you stop paying NIC at 5 April before you reach state pension age.  Anyway, £102.63 plus 11 x 1/35 x £179.60 = £159.09 (well, £159.07 on my calculator!).  So, to get this amount you would have to pay last year’s voluntary NIC (£795.60 if paid by 5 April 2023), then the rate-for-the-year for 2021/22 to 2030/31. (But see later, re “which years to fill”)

 

The “possible to improve forecast” says that if you fill some other fillable years (in addition to paying those 11 future years), you can get the max £179.60 per week, which is good news.  To do that, you need to pay 4 historic years 4/35 x £179.60 = £20.53.  £159.09 plus £20.53 = £179.62 (the difference of 2p is in the roundings – you cannot exceed the max £179.60).  This part of the forecast always assumes that you will continue paying NIC, so looks only at the fewest possible historic years.

 

So, which years to fill and when?

 

Overall, you could fill a total of 25 years from 2006/07 to 2030/31.  You only need to fill 15 of those to “get over the finishing line”, but which ones to fill?

 

If you were to fill the 10 pre-2016/17 years, they would feed into the “starting amount” calculation. Having thought about this I am reasonably sure (in other words a confident “I think”) that they would only add 10 years to the basic state pension under the old rules, i.e. not impact on any SERPS/S2P, and would add 10/35 under the new rules parts of the calculation.  If that is correct it would make your "starting amount" £153.94 instead of £102.63. (You take the higher of the two calculations and the “old rules” part would give only £137.60 as you would have the max 30 years.)  This would then leave you with 5 years to pay from 2016/17 onwards to get to the max (your 15 required years in total). Alternatively, if you were to fill the 15 years from 2016/17 onwards you also get to the max, so it’s about when to fill each required year.

 

One possible benefit to filling earlier years in favour of later years comes down to your “bird in the hand” analogy.  If the system were to change again before 2030/31 to require, say, 45 qualifying years, then having those early years paid up would mean you would still have the later years to get you to the required 45.  The downside of course is that you would have to shell out £8,000+ now to do that (10 years 2006/07 to 2015/16), leaving any 5 years from 2016/17 to pay going forward, rather than paying now for 2016/17 to 2020/21 and then all years to 2030/31 going forward. 

 

It would cheaper to pay those earlier years at today’s £800.80 per year rate but you lose the minute amounts of interest on that £8k for paying now, so a loss of about £0 given current rates!  Also, the later you pay for any required years, the closer you are to claiming your pension and, the better informed you are about your expected longevity.  After all, none of us wants to pay a shedload of voluntary NIC to then peg it before the investment is recouped.

 

Given that rates only ever go in one direction, the cheapest way to get paid up is to pay 2006/07 to 2020/21 but the saving compared to paying 2016/17 to 2030/31 (assuming the Consumer Prices Index in each subsequent September of 1%) is only about £70, so hardly worth getting your calculator out for, in the grand scheme of things.

 

Is a change of qualifying years from 35 to something more in the pipeline?  Not heard of anything and presumably it would take years to consult on and implement.  My guess would be that it is not something any government would want to touch only 5 years after the last radical change and that if they go after anything in the pensions space it would be the triple lock to keep the annual increase in pensions lower (removing the minimum 2.5% element?) but not heard anything on that (yet).  Let’s see what the post pandemic government finances look like and what their appetite is to sort them out.

 

Which way would I jump?  Not sure.  If you are a bird in the hand person, don’t plan on pegging it any time soon and have that £8k burning a whole in your pocket then checking with DWP on the benefits (or lack of detriments) to paying up those earliest years might put your mind at rest.  If none of the above applies then you could “just” pay 2016/17 to 2020/21 at 3 x £800.80 + £780 + £795.60 = £3,978 now and then pay either annually, or annually up to 2 years in arrears, for 2021/22 to 2030/31, just in case the “power that is” decided on the “pegging it” option for you before August 2031 – horrible thought but don’t you just love getting older?

 

Hope this helps you get your head rounds the maths and to have an informed discussion with DWP to decide when and how to pay your 15 required years of voluntary NIC.

 

Finally, regarding the occupational pension, if you still know the company's name you should be able to use the Government Pension Tracing page (you'll need to google "tracing lost pensions" or similar as I forget the link) to try to track the scheme administrator down and to see if you qualify for your few pounds...

 

Let me know which parts of the above need unpacking as it is all a little dense!

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2 hours ago, GaryC said:

Finally, regarding the occupational pension, if you still know the company's name you should be able to use the Government Pension Tracing page (you'll need to google "tracing lost pensions" or similar as I forget the link) to try to track the scheme administrator down and to see if you qualify for your few pounds...

 

This is where you need to start the search  Find pension contact details - GOV.UK (www.gov.uk)

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Just found this link -  Your State Pension explained - GOV.UK (www.gov.uk).

 

Thankfully it confirms what I am saying above but gives more detail than me on the impact of the COPE on the calculation of the starting amount.  I hadn't realised that it also features in the calculation under the old rules.  This can only be of impact in some circumstances (I think) because my starting amount for 30+ years under the old rules is the full basic amount and I was contracted out.  I think they may do something like calculate the 2nd amount under the old rules and then deduct the COPE, essentially cancelling it out but perhaps it is best that we don't know or understand how the COPE figure is actually calculated and used...

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Well Gary, thank you so much for applying so many grey cells on my behalf to a subject I find utterly bemusing, confusing, etc.  And for the links. You seem to enjoy it!

 

Your post is reassuring. I will have to read it again several times to digest it all, but it looks like I may as well just stump up the entire last 15 years, have done with it and forget about it till I am 68. That is my first instinct. Seems like a good investment for money that is sitting in a bank evaporating in the sunshine. It will give me some peace of mind. I'm happy to take a gamble on when my last hour will be. I got a "free" education and 24 years' medical care out of the UK system (thanks Grandad), so I don't begrudge them anything if I peg it before getting even.

 

There is just one complication. I am trying to get credits in the DE system for raising my daughter. Kinderziehung. I think I will be due 14 or 15 months. I raised her in Germany for 4 years before moving to France, so I calculate 4/10ths of 36 months is 14 and a bit. I do not know what year these 14 months would be attributed to. If they backdate it to 2006, which is when my German contributions and credits for maternity stopped - she was born in 2005 - this will overlap with my UK years. Which I understand is disadvantageous for the purposes of the German calculations. If they credit it to 2022 (it may well take that long to get it sorted) it would be better I believe. Maybe a question for Panda.

 

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I must admit that I do quite enjoy this stuff (a mis-spent career in government policy-making) and to be honest want to understand it for personal reasons as both my wife and I need to pay UK voluntary contributions for differing numbers of years, have quite different starting amounts for reasons still not fully understood and have links back to the German system and the desire to take the German pension at 63, so all I am really doing is sharing what I needed to research anyway.

 

Before stumping up whichever 15 years you decided on, you will want to run it all past the nice folk in DWP to ensure whey agree with the product of our combined grey cells.  As I say, there is no imminent deadline as costs stay the same until 5 April 2022 and the deadline for making payments for those pre-2016 years is 5 April 2023.  

 

In terms of the German pension, I don't think you need to worry about overlaps with the UK or any other EU country for that matter, as they are simply ignored (verdängt).  As I understand it the Kindererziehungzeit rules give you both Wartezeit and extra Entgeltpunkte - nearly 1 point per year, so and extra 30+ € per month; the EU coordination rules give mainly Wartezeit (though in some circumstances extra points too).  So, if you have an overlap of time, one of which gives you points under the German rules, the other of which does not, my understanding is that the German time prevails. Anything else would be detrimental to the claimant and crazy, given that the whole purpose of the innerstaatliche and zwischenstaatliche Berechnung is to give you the "higher of" pension.

 

What you will want once the Kindererziehungszeiten are sorted and you have filled any UK years is a Rentenauskunft (you may need to ask them to do the zwischenstaatliche Berechnung to include UK and ? French time) so that you can see how you are getting on with your 35, or ever perhaps 45 years Wartezeit.    

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3 minutes ago, GaryC said:

... both my wife and I need to pay UK voluntary contributions for differing numbers of years, have quite different starting amounts for reasons still not fully understood...

 

Yes, that is the unreassuring bit... you have to be one step ahead of them. Which in my shoes is impossible. I think ringing Newcastle will not be more productive than your reasoning. What you say makes sense. D... was not overly pro-active or forthcoming. Maybe I should try pressing 3 next time to get a more experienced case-worker. Or just not bother at all. I will mull this over and let it ride a few nights.

 

When my father claimed his pension, my mother dug up old papers and found stuff the authorities missed... funny it is always in their favour. Sorry to be so cynical.

 

I still don't understand the "verdrängt" business. The German case-worker I had decades ago said I had paid 10 years overlapping UK contribs for nothing - from the German point of view.

 

 

 

 

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10 minutes ago, GaryC said:

...a Rentenauskunft (you may need to ask them to do the zwischenstaatliche Berechnung to include UK and ? French time) so that you can see how you are getting on with your 35, or ever perhaps 45 years Wartezeit.    

 

They always send me just the German data. I then ring up and remind them to send  the zwischenstaatliche Berechnung, which they do a while later.

Don't know why  - its just always been that in may case.

 

Many thanks to @GaryC for sharing the research. It's  a real help shining a light in these dark corners.

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10 minutes ago, HH_Sailor said:

They always send me just the German data. I then ring up and remind them to send  the zwischenstaatliche Berechnung, which they do a while later.

 

Ach so... yet another snippet of info. TT is really coming back into its own today.

 

How does the zwischenstaatliche Berechnung affect the calculations?

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Don't get me wrong, I don't think our starting amounts are wrong; it's just that I cannot reconcile hers and it is higher than expected.  I could ask for a calculation but she has plenty of extra years to fill if necessary (all of which will be in-date when she claims) and is forecast a full pension anyway if we fill one more year, I haven't bothered.  Keep thinking I should, just for peace of mind...

 

I don't think the German advice was wrong but perhaps not that well explained.  From their perspective, paying the UK for a year in which you already have German Beitragszeit is "pointless".  Those UK years will be essentially ignored for German purposes - you already have Wartezeit and actual Entgeltpunkte, so paying the UK to get overlapping Wartezeit makes no sense from their perspective.  What I think the person forgot/missed or whatever, is that the UK looks only at time and payments made to the UK system. So, while those x years in Germany would enable you to get to the minimum 10 qualifying years in the UK, they would add nothing in terms of actual pension amount - you need to have paid UK NIC to get money.  So, if you had those 10 German years and did not pay any UK NIC for those 10 years but then had 25 other paid UK years, the most you could get is 25/35 x mac pension.  Pay those 10 German years as voluntary UK NIC and you should get 35/35.

 

It should all be a little clearer once you have a Rentenauskunft as you will then see UK periods; German periods and those that are verdrägt (ignored/excluded or whatever).  It is a bit complex to interpret because the UK deals in years and weeks, whereas Germany actually looks at months and 1 day paid in a month makes that month count, so you see some strange-looking things when one UK year has 53 week (theoretically 13 months for Germany, and the next year has 52 weeks.  The German rules have to get back to 2 lots of 12 months.  Difficult to explain in a vacuum - wait for your printout...

   

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