Voluntary NI contributions/2 state pensions

[NRS]

With being able to pay the voluntary NI contributions back to 2006 closing in 2025 I was wondering if it is worth doing for myself, given I live outside the UK currently. . I guess there is 3 main possibilities, and so was wondering if there is a big risk of contributing for no reason.

I've been making contributions here in Norway during that period. Assuming I continue working here the rest of my life I'd have a full contribution for a state pension here. If I'd done 10+ years of contributions in the UK including the voluntary ones would this mean I'd get the Norwegian pension and part of the UK one, or do they not allow this (either paying 2 state pensions at once, or taking 2)?

The issue is I don't know how my future contributions will be, as I could move and either have gaps due toeing in a country without an agreement, or bouncing between countries where I have too short a qualifying period to get the minimum pension in that country.

So it might be worth contributing more now to cover the risk of unknown gaps later, but if I do have a full state pension will this mean the voluntary contributions are lost?

[eyebeebe]

Assume you’ve worked in the U.K. for three years in the past or you aren’t eligible to make voluntary contributions?

At £200 a year to buy 1/35 of the pension entitlement, to me it’s a no-brainer if you’re eligible.

I bought my missing years a few years ago and will continue to contribute until I have the full 35 years. On top of that, I’ll have however many years contributions to the Swiss pension national fund - probably half as I missed years contributing before I moved and don’t intend to work long enough to fully pay up.

If you’re going to do it, get moving. It normally takes HMRC about six months to calculate what you can pay.

[alscar]

Can’t help on the two Country potential issue but there is another thing to possibly consider in that at some point in the future it’s just possible that UK State Pension might just get means tested to some extent.
My wife is missing some years contribution but doing the sums and even allowing for no changes to it means her payback is at least 6 years from when she starts to receive it in the next decade.
As such she is not adding more now.

[jonathan_roberts]

My dad did this having lived in Switzerland for 12 years and to him it was also a no brainer.

[caziques]

To some extent...been there, done that - albeit from New Zealand.

A few years ago NZ changed the law so that you don't have to hand over any portion of a UK state that comes from voluntary contributions.

So, I paid 16 years worth (back to 2006) - most of them at the self employed rate. (150 odd quid a year)

I have three possibly three years of compulsory contributions, (26 of voluntary) which I may have to hand over 15 pounds a week.

Does Norway take your UK state pension? or part of it? What happens if you live back in the UK? or elsewhere?

Usually paying missing UK NI contributions is a good thing to do, particularly if you can pay at the self employed rate.

[Michael_B]

eyebeebe said:

Assume you’ve worked in the U.K. for three years in the past or you aren’t eligible to make voluntary contributions?

At £200 a year to buy 1/35 of the pension entitlement, to me it’s a no-brainer if you’re eligible.

I bought my missing years a few years ago and will continue to contribute until I have the full 35 years. On top of that, I’ll have however many years contributions to the Swiss pension national fund - probably half as I missed years contributing before I moved and don’t intend to work long enough to fully pay up.

If you’re going to do it, get moving. It normally takes HMRC about six months to calculate what you can pay.

All of the above!

Mrs B and I will end up with 31 out of a maximum 44 years of Swiss state pension, and a full UK one each, due to buying missing years (during the first Covid lockdown) and continuing to pay HMRC from here each year. Although I intend to retire in 18 months time at age 60, I will remain a Geneva resident/citizen and pay the minimum Swiss NI until age 65 (about £500/year) to get my full 31 years worth of state pension here.

I will have to declare the UK pension income to the Swiss tax authorities here, to be lumped in with other income. AFAIK the UK govt don't care what other pension income (state or otherwise) you may have in your country of residence, and just pay the monthly amount gross to the bank account of your choice.

[eyebeebe]

Michael_B said:

All of the above!

Mrs B and I will end up with 31 out of a maximum 44 years of Swiss state pension, and a full UK one each, due to buying missing years (during the first Covid lockdown) and continuing to pay HMRC from here each year. Although I intend to retire in 18 months time at age 60, I will remain a Geneva resident/citizen and pay the minimum Swiss NI until age 65 (about £500/year) to get my full 31 years worth of state pension here.

I will have to declare the UK pension income to the Swiss tax authorities here, to be lumped in with other income. AFAIK the UK govt don't care what other pension income (state or otherwise) you may have in your country of residence, and just pay the monthly amount gross to the bank account of your choice.

O/t but I thought that if you weren’t gainfully employed and below retirement age you had to pay AHV/AVS based on your wealth and it was quite a chunky amount? Or is that only if you are below a certain age?

[Jonathan27]

You can get a state pension from two countries, but not two EU member states. So about the only positive that I can see for Brexit is that I will get a UK and an Irish state pension. I got 20 years of UK contributions from living there and will make 15 years of voluntary contributions, plus by the time I retire I will have been paying in to the Irish system for 30 years, so will get 3/4 of the Irish state pension.

[Mr Magooagain]

I’ve lived in France since 2002 but carried on paying the ni contributions and since February this year take a full basic uk state pension next February I will take my 23 years worth of French state pension also.

[gregs656]

Perhaps I need to speak with someone but I have been living outside of the UK since 2018 and paid my first year of voluntary class 2 this year (2024).

If I look online the cost of topping up the years I have been away is a lot more than the Voluntary Class 2.

Is that correct or should I be able to voluntarily pay class 2 for 19/20, 20/21 etc?

I could be tempted if that is the case.

[Mr Magooagain]

gregs656 said:

Perhaps I need to speak with someone but I have been living outside of the UK since 2018 and paid my first year of voluntary class 2 this year (2024).

If I look online the cost of topping up the years I have been away is a lot more than the Voluntary Class 2.

Is that correct or should I be able to voluntarily pay class 2 for 19/20, 20/21 etc?

I could be tempted if that is the case.

This link may help.
https://www.gov.uk/pay-class-2-national-insurance/...

[Martin_MUC]

Jonathan27 said:

You can get a state pension from two countries, but not two EU member states. So about the only positive that I can see for Brexit ........

My wife received both a UK and German state pension before Brexit and after so this must be a new rule. Although a quick google suggests your contributions are not lost and will be paid out from all EU states where you have worked.

https://europa.eu/youreurope/citizens/work/retire-...

[Michael_B]

eyebeebe said:

O/t but I thought that if you weren’t gainfully employed and below retirement age you had to pay AHV/AVS based on your wealth and it was quite a chunky amount? Or is that only if you are below a certain age?

The minimum without lucrative activity is CHF 514/year and yes, it does go up according to net wealth (which doesn't include 2nd/3rd pillar pension funds and mortgages are deductible), but not too steeply. In our case I think it would still be worth it.

[eyebeebe]

Michael_B said:

The minimum without lucrative activity is CHF 514/year and yes, it does go up according to net wealth (which doesn't include 2nd/3rd pillar pension funds and mortgages are deductible), but not too steeply. In our case I think it would still be worth it.

Just dug into it again. I had in mind that the maximum came in at a much lower wealth level. Agreed it seems like a good deal overall. Shame the Swiss don't run the equivalent scheme as the UK to buy extra years from abroad!

[Michael_B]

eyebeebe said:

Just dug into it again. I had in mind that the maximum came in at a much lower wealth level. Agreed it seems like a good deal overall. Shame the Swiss don't run the equivalent scheme as the UK to buy extra years from abroad!

You can go back 5 years in Switzerland but no further. Reading a little more closely into the legislation, it would appear that state pension contributions are obligatory until the 'age of reference', i.e. 65, even without any employment income.

As I intend to remain resident[1] here from 60 to 65 (and afterwards), it seems I have no choice in the matter, good deal or not.

From our previous exchanges I seem to recall that your plan was to officially leave at some point and take up residence elsewhere in Europe?



[1] Though what with the property in France, and family in UK/Italy, probably the minimum physically in order to remain so fiscally

[Simpo Two]

eyebeebe said:

Assume you’ve worked in the U.K. for three years in the past or you aren’t eligible to make voluntary contributions?

At £200 a year to buy 1/35 of the pension entitlement, to me it’s a no-brainer if you’re eligible.

£200?

I've been self-employed most of my life and am 3-4 years short of a full state pension. I don't think I can fill in those years for £200 each...

[eyebeebe]

Michael_B said:

You can go back 5 years in Switzerland but no further. Reading a little more closely into the legislation, it would appear that state pension contributions are obligatory until the 'age of reference', i.e. 65, even without any employment income.

As I intend to remain resident[1] here from 60 to 65 (and afterwards), it seems I have no choice in the matter, good deal or not.

From our previous exchanges I seem to recall that your plan was to officially leave at some point and take up residence elsewhere in Europe?



[1] Though what with the property in France, and family in UK/Italy, probably the minimum physically in order to remain so fiscally

Yes, I've learnt about the 5 year rule. I was sort of aware of it when I moved here, but being 28 years old didn't really think about it and was also somewhat scared by the 6 figure sums I was given to catch up on my pillar 2, so didn't bother following up on pillar 1.

Forcing you to pay into the state scheme on a what the authorities think you can afford basis is a typically pragmatic Swiss way of doing things.

Yes the plan is to leave Switzerland towards the end of the decade, exact timing depending on whether we have jobs, how the markets perform and whether we do anything silly in the interim (currently weighing up building a villa in Spain to go with the apartment). Ultimately ending up in Spain, probably after some travelling and with a hop to the UK first, so that we can extract our Swiss pension pots and only pay the Swiss wihdrawal tax. The UK kindly zero rates that whereas a lot of the world, including Spain, treats it as an income event and would take nearly half of it in tax.

We've also considered keeping Swiss residency, but haven't been able to make the numbers work. Might be worth investigating renting a studio in Jura or Appenzell though.

On a related note the Mercer global pension index was updated for 2024. I was astounded to see the that they rate the UK and Switzerland in the same bracket. Despite all the protestations of the Swiss, I think the system is in a lot better shape for the majority of the population when compared to the UK and any deficits could easily be closed with a temporary VAT increase or solidarity measure.

Simpo Two said:

£200?

I've been self-employed most of my life and am 3-4 years short of a full state pension. I don't think I can fill in those years for £200 each...

It used to be less. I just checked my Revolut account and I paid £1,750 in 2022 to buy my missing years from 2010 to 2022. I pay a monthly direct debit which varies depending on whether it's a 4 or 5 week month, but the weekly amount is £3.45, so total of £179.4 a year at current rates.

https://www.litrg.org.uk/working/self-employment/n...

Edited by eyebeebe on Friday 18th October 16:48

[Simpo Two]

eyebeebe said:

Simpo Two said:

£200?

I've been self-employed most of my life and am 3-4 years short of a full state pension. I don't think I can fill in those years for £200 each...

It used to be less. I just checked my Revolut account and I paid £1,750 in 2022 to buy my missing years from 2010 to 2022. I pay a monthly direct debit which varies depending on whether it's a 4 or 5 week month, but the weekly amount is £3.45, so total of £179.4 a year at current rates.

https://www.litrg.org.uk/working/self-employment/n...

Useful link, thanks. So there's Class 2 which you pay as you go, and Voluntary Class 2 if you want to cathc up later. I thought that was Class 3.

I just did my pension forecast and it says:

Estimate based on your National Insurance record up to 5 April 2023: £205.16 a week
Forecast if you contribute another 3 years before 5 April 2028: £221.20 a week

That's an extra £834pa, which is worth considering.

Class 2 - ie pay as you work - is a mere £179.40pa. Is Voluntary Class 2 the same rate? Does it depend on which year you want to fill? Earlier years are cheaper to fill than later years - unless they've changed it...

Also, I note that the cut-off date is 2028; I thought it was 2025 - has it been extended again?

[eyebeebe]

Simpo Two said:

Useful link, thanks. So there's Class 2 which you pay as you go, and Voluntary Class 2 if you want to cathc up later. I thought that was Class 3.

I just did my pension forecast and it says:

Estimate based on your National Insurance record up to 5 April 2023: £205.16 a week
Forecast if you contribute another 3 years before 5 April 2028: £221.20 a week

That's an extra £834pa, which is worth considering.

Class 2 - ie pay as you work - is a mere £179.40pa. Is Voluntary Class 2 the same rate? Does it depend on which year you want to fill? Earlier years are cheaper to fill than later years - unless they've changed it...

Also, I note that the cut-off date is 2028; I thought it was 2025 - has it been extended again?

Not an expert on this, as I just pay as I go, now that I've caught up. The voluntary that I pay is £179.40, so yes, it's the same rate. I can't remember exactly how it was done when I paid up my gap. I think it was based on the current rate, not the rate during those missing years. It's not going to make a huge difference on three years either way. I guess they've extended it again, probably because they can't cope with the backlog.

Surely paying £560 as a one off (or even drip it in if you want maximum value) to gain £834 pa for life past SRA is a bet worth making, unless you have known/expected longevity issues?

[megaphone]

IIRC you may only go back 6 years to pay missed voluntary class 2 contributions. Anything older may be more difficult or less beneficial

https://www.gov.uk/voluntary-national-insurance-co...