A prime example of political risk
Just when you thought we were done with this topic (at least I thought we were done!) the UK government has to pull something like this and force me to write yet another post about voluntary contributions from abroad. Apologies to non-UK readers, we’ll be back onto more general subjects next week.
A few RetireJapan readers have contacted me saying their applications to pay voluntary contributions had been rejected, and they’d been told they were ineligible. This surprised me, as I was able to sign up and pay. Then I checked my bank account. The payments (which had been done by Direct Debit) have not been taken since March this year.
Ruh-roh.
I then called HMRC, and after being on hold for 40 minutes they told me they don’t deal with overseas residents on that number, and I had to call the secret expat number instead. That number is +44 191 203-7010 (I recommend using Skype to call -just 2 yen a minute to a UK landline). Fortunately they answered almost immediately.
Not so fortunately it took them over 20 minutes to tell me that they didn’t know why my Direct Debits had stopped, but they would follow up and send me a letter. At some point.
I am definitely not holding my breath. I suspect they have decided that I am no longer eligible so won’t be able to pay in any more. But it seems just as likely that some part of the system broke down somewhere instead. I will clearly have to write another blog post about this. Ugh.
This new development seems to show that HMRC has noticed that voluntary contributions are a good deal, and has decided to restrict them to people who had already paid a decent amount into the UK state pension before moving abroad.
The new rules state that you must have paid in at least three years into the pension before leaving the UK in order to be eligible to pay voluntary contributions from abroad.
It makes sense in a way, as the new rules allow people to had already contributed to finish paying in enough to vest, etc. There doesn’t seem to be much of an argument for letting people who have never paid into the system enjoy cut-rate access to the UK state pension.
Still, it’s a pretty crappy move to change the rules for people who have already starting contributing (like me). Fortunately I managed to pay enough to vest, but I can imagine there are some people who paid in a few years’ worth but haven’t reached the ten years needed to be able to claim a pension eventually.
So, it is now slightly harder to pay voluntary contributions into the UK state pension, but if you are able to it is still a stunningly good deal (as long as the government doesn’t change the rules again in the future, of course).
How about you? Any insight into the new rules?
My direct debit also stopped and told me to pay by lump sum. It stopped in September 2017. I sent a lump sum for back payments and that was not located as a back payment but just as my current payments so the system thought it didn’t need to take any money.
That sounds very similar -I back paid ten years around the time the direct debits stopped. Hopefully this will sort it out…
I was thinking of setting up my direct debit with another bank account and hopefully that restarts payments.
I don’t think the three year rule is new, but I won’t be able to check the old information until next week. I have vague memories of that being the case before too, though. I do know is that they can’t just make up new rules, everything they do has to be based in law.
That is interesting. The text on the site is new, and of course I was able to start paying monthly last year despite never working in the UK, so if it isn’t a new rule it’s one that was spottily applied…
I read through the text recently (I’m assuming it was the new version) and gave up. I’ve never worked in the UK either. Can I ask how long you were in Japan before you started paying? I moved here in 1998.
I came to Japan in 2000. Had never worked in the UK, but had three years of eligibility (I think from being in secondary school).
Hmm, that sounds close enough to give me some hope that I’d be eligible too. Will look out for an update when you hear back from HMRC!
If you read all the old posts (I think there are six now!) you can see that they knocked me back a couple times and it took about a year and a half to get everything sorted out.