Missed out on NI payments

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Missed out on NI payments

Post by Angela Fuller on Sun May 03, 2015 5:13 am

Missed out on NI payments? You might want to plug the gap

New rules, which mean you must pay National Insurance for more years to get a full state pension, could affect expats

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If you're retiring after April 6 2016 you'll need 35 years of NI contributions rather than 30 to qualify for a full pension Photo: Alamy

By Alison Steed
5:25PM GMT 20 Nov 2014
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New rules increasing the amount of National Insurance payment years needed to be eligible for a UK state pension may prompt expats to top up their contributions.
The changes come into effect on April 6, 2016, and affect anyone retiring after that date.
Rather than needing 30 years of National Insurance (NI) payments to qualify for a full state pension, as is currently the case, retirees under the new regime will need 35.
This means that anyone who has missed out on paying NI due to being abroad may wish to consider paying top up contributions.
The idea of the new pension arrangements is to offer a flat-rate pension – expected to be worth around £155 a week – and do away with the other elements that currently make up the state pension, such as the additional state pension and savings credit. The current full state pension provides £113.10 a week.

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Fewer qualifying years of National Insurance contributions reduce the weekly amount accordingly.
To qualify for any amount of the new pension in future, you will need to have at least 10 years of qualifying National Insurance (NI) contributions. The current rules require just one year’s payment to be eligible for some state pension payments.
Experts have recommended that expats and former expats seek advice on whether they should make voluntary contributions to plug any gaps in their NI contributions. The decision will depend on personal circumstances and it may be more prudent to put the money into a separate investment.
Dawn Register, partner at BDO Tax Dispute Resolution, said: “Financial advice considerations need to be taken into account as it largely depends on life expectancy and future intentions on where you are going to live. It may be worth checking whether or not you are entitled to a full state pension, and you can check by asking the National Insurance office. Then you can make a decision on whether you want to plug the gap.”
Expats who have moved overseas permanently are not able to get a refund on their NI contributions, even if they have no plans to retire in the UK in the future.
Adam Cole, specialist in advice policy at independent financial adviser Towry said: "The UK’s NI system is ‘pay as you go’ so you cannot get a refund as such. But if you have paid in to qualify for the state pension, then you are entitled to some amount of state pension.
“Certainly within the EU, if you have paid in [to the UK scheme] and met the minimum thresholds you would be able to claim the state pension.”
If you are working abroad, you may still be eligible to pay NI contributions in the UK depending on where you are working, who for, and for how long, added Patrick Connolly, certified financial planner at Chase de Vere.
“If your UK employer sends you abroad to work, for up to two years, you might simply need to carry on paying UK National Insurance as usual," he explained.
"If you leave the UK you may need to decide whether you wish to pay voluntary National Insurance contributions while you are away. This is likely to depend on whether you plan to claim the UK state pension in the future, whether you’re likely to be returning to the UK and on the state pension entitlements you’ve already built up.
“Either way, you should make sure that you understand the rules which govern your entitlement to the UK state pension.”
More information on the state pension and paying voluntary top-up contributions can be found on the HMRC website.
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Last edited by Angela Fuller on Sun May 03, 2015 7:04 am; edited 1 time in total
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Re: Missed out on NI payments

Post by modicasa on Sun May 03, 2015 6:40 am

I thought this would happen.  Ahme   
Does anyone know if you can pay NI in UK and INPS here concurrently and therefor by paying 1 years 'double' contributions gain 2 qualifying years?

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Re: Missed out on NI payments

Post by stevegwmonkseaton on Sun May 03, 2015 8:22 am

modicasa wrote:I thought this would happen.  Ahme   Does anyone know if you can pay NI in UK and INPS here concurrently and therefor by paying 1 years 'double' contributions gain 2 qualifying years?

Afraid not Modi. What happens is that your state pension is calculated on an individual country basis, then on your combined (UK & Italy) insurance and a pro-rata  amount calculated if this is higher than the individual amount, then that is paid. Both countries do this and have done so for as long as I remember, originally under a reciprocal agreement with the UK and Italy, then under the EEC agreement when the UK joined. Rarely have I known the joint calculation to benefit anyone, but it can in cases where there are minimum amount/year/contribution conditions mean people do get a pension under this calculation, whereas they would not do so on the individual calculation. A bit complex, but basically all you have to do is tell each of the pension authorities when you claim your pension that you worked and paid insurance in another country, they should then automatically initiate contact with the country(s) involved. If it's anything like it used to be, then you may have a slight problem where you are living. Basically with most of the Southern INPS offices the DWP used to issue forms to them and if it was summer not bother to chase them  for at least 3 months! In the Palermo office many years ago they found out some guy at the airport was selling the bags of mail to a waste paper company... Hence a lack of replies...
Getting back to rip-off Britain, you basically are looking at a gamble on how long you are going to live to see if it is worth paying voluntary contributions. With the changes they have made already and likely still to make, it is a very difficult choice. However at least now there is (currently) no minimum payable amount as there was in the past whereby for up to around 10 years paid you got nothing.... This is good as even one year gets you some pension in payment these days and that qualifies you for other things, such as an S1...

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Re: Missed out on NI payments

Post by modicasa on Mon May 04, 2015 5:27 am

Thought as much, as you now cant buy backin for years long gone, it becomes an academic point - now I have to work till I drop whether Im in Italy or the UK ,so makes even less sense to think about going back......

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Re: Missed out on NI payments

Post by Admin on Mon May 04, 2015 11:36 am

You can pay in I think 6 years back. We have just started paying voluntary contributions. We've both got 26 years already so we might as well pay as we go. They don't count my husband's years in the army (nice eh?) otherwise he'd have more, being older. The very helpful lady at the Pensions overseas office said they fully expect it to rise to 40 years to match other European countries.
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Re: Missed out on NI payments

Post by stevegwmonkseaton on Mon May 04, 2015 1:05 pm

Admin wrote:You can pay in I think 6 years back. We have just started paying voluntary contributions. We've both got 26 years already so we might as well pay as we go. They don't count my husband's years in the army (nice eh?) otherwise he'd have more, being older. The very helpful lady at the Pensions overseas office said they fully expect it to rise to 40 years to match other European countries.

You can pay the current year, plus 6 years back vol conts, certain age groups, this can be paid after retirement age. Not too sure how your OH is not covered whilst working in the army. If HM forces, then they pay NI the same as anyone else, although prior to 6/4/75 (or was it 78?) these were recorded differently.... If it is in a period a while back you may need to chase the DWP to make sure the period is recorded on their records.... As to the possibility of it going to 40 years, it always was until they reduced it to 30 as a sweetener for removing things like the married woman's pension based on her husbands insurance and this was the justification for doing so. Obviously they knew then they would simply remove this sweetener  over time and no one would be any the wiser... It just goes to show what a total bunch of ..... these UK politicians are!

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Re: Missed out on NI payments

Post by Admin on Mon May 04, 2015 2:38 pm

Thanks Steve I'll get him to chase it with the DWP. I don't think he gets it for the first 2 years as he went in at 16 and for some reason it doesn't count.
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Re: Missed out on NI payments

Post by stevegwmonkseaton on Mon May 04, 2015 6:40 pm

Okay I had a quick look, it was from and including the 75/76 tax year that National Insurance Contributions (NICs) became earnings related, 74/75 and prior they were flat rate and for HMF it was during the flat rate period they used peoples dates in HMF to post contributions. After that, from and inc 75/76 it was on earnings and there was a minimum amount before you paid (called Lower Earnings Level - LEL). If it was this period and HM forces were paying that little, then they may not have paid... The proper process would have been to issue a deficiency notice to anyone falling into this category advising you could pay class 3 (voluntary ) to cover that year. For a number of years during this period I'm sure due to systems failures many  did not get these. Those that did likely ignored them as you didn't have to pay....

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Re: Missed out on NI payments

Post by Admin on Mon May 04, 2015 9:55 pm

Thanks Steve. He left in 85 but I suspect the pay was very verh low and was paid in Deutchmarks!
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Re: Missed out on NI payments

Post by stevegwmonkseaton on Tue May 05, 2015 8:41 am

84/5 the LEL was £34 per week (from here) and the German mark around 3.8 to the pound ( from here ). Rough idea of the pay and you may know why the years were not covered. I can't recall if they posted "Nil" contributions (a job, but below the LEL), but I suspect they should have, if they did, then they should be able to confirm they know there was a "nil" return on his NI account. Payment in DEM or other currency would make no difference as the wage would be calculated in GBP and converted (I guess to make it easier for those posted abroad).

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