Maybe the end?
A long time ago I started looking at the UK state pension. I then had a series of frustrating exchanges with the pension office in the UK. The UK civil service really makes you appreciate the Japanese one 😉
Finally I received a letter yesterday. Almost a year after starting the process, it seems like they will start taking money from my account (Direct Debit) for voluntary class three contributions.
It was a terrible letter, by the way. They managed to tell me when the Direct Debit would start (November 17th), and how much they would take out (441.74 pounds for April to November) but otherwise it’s a standard form letter that talks about class two and class three contributions. It’s quite confusing.
So maybe I can put this one to bed. I’ll need to confirm that they are taking the money out of my account regularly, and that the contributions are showing up in my online pension record, but otherwise that should be the end of it.
And the reason I ended up jumping through hoops for a year? The UK pension voluntary contributions are relatively low (just under 60 pounds a month for class 3, or around 12 pounds a month for the amazing deal that is class 2), the pension is currently more generous than kokumin nenkin, you can claim it anywhere in the world, and it’s basically a cheap annuity that diversifies my future income.
It’s also not going to be tracked and taxed as an investment, something that might become more valuable in the future.
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How about you? Any luck with the UK state pension? Are there any other countries that offer voluntary pension contributions for non-residents?
Got my U.K. Class 2 contributions recently set up in about 4 months. I was expecting the worst, but actually the whole procedure was fairly painless – the letters, forecasts and online account have all been user friendly. I didn’t set up direct debit, though – maybe this explains the longer wait you had? Then again, I compare everything to the nightmare that is U.K. student Loans Co. – everything’s relative, I guess.
Luckily I paid off my loan about fifteen years ago, so have completely forgotten about them 😉
Once I had set up an online account, I found that dealing with them by email through the website much more efficient than traditional mail.
I had no idea that was an option! I must admit they’ve gotten better during the year I’ve been dealing with them: at first it took them months to reply (sending the reply via Malta for some reason). Now they have a phone number and everything…
Doubt I’ll be calling just to say hello though 😉
What is the email address? What is the response time like. It takes a few months to get a letter back from them.
Sorry to hear all the hassle you’re having. I sorted mine out back in ’04 and don’t have a bad word to say about them. In fact, when they sent me a statement showing the back payments I can make, without me asking they changed it from class 3 to class 2 from 2000 when the latter became cheaper!
One thing I can’t work out, and someone out there may know, on my forecast from gov.uk it says I need to pay 4 more years before my retirement date (another 15 years) to get the full £159.55/week. But it also says if I’m working I may still need to pay contributions as they fund other state benefits and the NHS. So which is it, as a voluntary contributor abroad? Can I stop after another 4 years or will they expect me to continue sending annual cheques until retirement? And if they do send me requests for payment, can’t I just ignore them since I will have qualified already or will they rescind my entitlement? This becomes all the more important if Class 2 is going the way of the dodo and I have to start paying class 3, which is 5 times the amount (£14.25 as opposed to £2.85 a week).
Wish I’d gotten mine sorted out earlier 🙂
As we’re making payments voluntarily, we can stop whenever we want. Of course, if you went back to the UK, you’d be forced to pay.
Glad this is finally working for you Ben. Your initial posts on this spurred me into action earlier this year so thank you very much! I managed to pay an extra 11 years of Class 2 for £1537, which boosted my pension from £89 per week to £135 per week. It’s probably the best investment I’ve ever made! I’ll be able to recoup the payment in less than a year if and when I reach retirement age at 67.
My direct debit application didn’t go well though, because it turned out the building society account I specified doesn’t support them (WTF?). So I phoned that number on the letter and was asked to submit the original form again with the new bank details. A bit of hassle but it wasn’t their fault so no problem. I haven’t heard anything since then (it was almost two months ago), but this year’s payments are waiting in the account should they suddenly decide to start taking them.
I too was wondering what we should do when we’ve made enough payments to receive a full pension. The honourable thing would be to continue paying I suppose, like the people in the UK have to. And I’ve noticed there doesn’t seem to be a form for stopping payments, surprise surprise 🙂 Anyway, I’ll cross that bridge later.
One annoying thing about the UK pension is that it only increases with inflation after you start claiming it IF you live in the UK or a handful of other countries. And Japan isn’t one of them! I think it should either increase everywhere or not increase except in the UK. And to be honest it makes sense not to increase elsewhere because inflation in the country you’re living in might be nowhere near inflation in the UK (as is starting to happen now between Japan and the UK). Anyway, we all need to be careful about this and plan for other ways to fight inflation during retirement.
I’m really jealous you are able to pay Class 2s, and you should pay as many as possible at that rate 🙂
Even paying the Class 3 rate, this is an incredible deal. It’s something like an 110% annuity!
We pay voluntary contributions abroad, so I will just stop paying if I reach full eligibility. We have no idea what will happen in the future, so not worth worrying about the ‘triple lock’ or whatever they change it to right now IMO.
After I get my annual request for payment for Class 2, I simply transfer just enough money to my Barclays current account via TransferWise then send a cheque from here to the IR. I’m sure you have your reasons, but I can’t see the benefit of going to the hassle of setting up a standing order on the other side of the world? Am I missing something?
And my way, there’s no need to try to cancel a standing order when you’re senile 🙂
I prefer to automate things if possible, then I don’t have to think about them 🙂
I’ll set up a reminder to cancel the Direct Debit (not standing order) once I get my 35 years…
Can anyone let me know how to set up the online account with the pensions dept? I did set up the account a few years back, but don’t remember an online account being an option then… and it does sound useful. Thank you.
I just went to the website and followed the instructions – it must have been easy as I could do it.
Go here and follow the instructions: https://www.gov.uk/check-state-pension
It’s pretty user-friendly 🙂
Your initial post spurred me on to looking into this back in April too, so firstly thanks so much for the useful info (as always!).
I had a reply in August and now another in November which is exactly the same as yours. The poorly worded letter states they’ll take payment for April to September 2017 in one go next month. After that, it doesn’t say if it’ll automatically continue or not. I also applied to make backpayments, but no mention of them here. I’m getting Class 2 though luckily.
Did you hear anything from them since Ben? Is the contact center worth calling? I have the same number on my letter.
Good stuff. I signed up for Direct Debit, so I presume they will take future payments out until I tell them to stop. I’ll have to remember to tell them to stop once I reach 35 years of contributions 😉
I got a separate letter telling me about backpayments but not telling me how to do them! I’ll probably do another blog post about that soon.
Have the rules changed, or am I missing something? After finally finding my NI number, I checked my record online and the website states that the full basic state pension is 122.30 pounds per week but you only need to contribute for 30 years to get it.
In addition my record suggests that I can make back payments of Class 3 contributions from 2006 (not just the last 6 years). Ideally I’d like to make 6 years of back payments to be eligible for the full pension, but does anyone know if I can choose the years, i.e. do I have to choose the more expensive recent 6 years or is it possible to choose to pay from 2006 to 2012 (the years where my contributions would be much cheaper)?
I believe there are two national pension systems now, the old one and the new one. Which one applies depends on your age.
Be careful with back payments, there have been lots of newspaper stories about people topping up their accounts when they didn’t need to based on faulty information from the pension office, then having trouble getting a refund.
This is a good place to start: https://www.moneysavingexpert.com/savings/state-pensions
Best answer is to phone them: + 44 191 203 7010. They’ll be able to look at your shortfall and tell you what to pay. After phoning, I got a detailed letter explaining exactly what my shortfall was and which years I could pay and by when. Very helpful staff (though it was over 10 years ago).
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The full *new* State Pension is £159.55 per week if you were born after 6 April 1953. The £122.30 you mentioned was for the previous Basic State pension, part of the old two-tier system.
https://www.gov.uk/new-state-pension/what-youll-get
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If 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.
https://www.gov.uk/voluntary-national-insurance-contributions/deadlines
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If you worked in the UK immediately before leaving, and you’ve previously lived in the UK for 3 years in a row or paid 3 years’ National Insurance, you can claim (the much cheaper) Class 2 (although it’s about to be discontinued, apparently)
https://www.gov.uk/voluntary-national-insurance-contributions/who-can-pay-voluntary-contributions
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Not sure about the 30 years. I have 33 full years and 3 not full and still have another 4 years (class 2) to contribute to get the full pension.
How does this all work out for you with UK pensions not being indexed in Japan? Or do you plan to move back to the UK?
At over ¥1.2m pa for a Class 2 contribution of ¥23k pa, I’d say pretty well.
Well, it is a concern. However, the pension only stops being indexed after you start receiving it. For me that is over twenty-five years away. A lot could happen in the meantime.
For now, it’s a very cheap, state-backed annuity. Seems like a good way to diversify without spending much!
I have found this website on the UK Pension system very useful. Actually, I have 27 years complete and received the opportnity to pay some missing gap years. However, my problem is, I do not have a UK bank account, no cheque book and no building society account. So, does anyone know if a bank transfer can be made or any other way I can make payment to HMRC?
You should be able to make a bank transfer (maybe with TransferWise: http://www.retirejapan.info/blog/transferwise-revisited) but I would contact HMRC to find out the account details.