Making Sense of My Situation with the UK National Insurance System

[Contrafibularity]

Hi everyone, first post, very grateful to be here. I’m not sure anyone will have any definite answers for most of this post, but here goes.
I recently enquired about my eligibility to make voluntary National Insurance contributions from abroad. Here is the letter I received in the post (within a month of applying, better than I was expecting!):




The payable gaps are somewhat manageable for me to pay by the deadline. However, if I log into the Government Gateway, it shows that after 2011, the payable gaps are a LOT higher:



Of course, I would be very happy if the correct amounts are what is shown in the letter, but the pessimist in me expects that this is some unfathomable error.

As a side note, I have 5 full years on record, which I have no complaints about, yet I have only ever been in full-time employment in the UK for one consecutive year, and that wasn’t even April to April. Any other work I had done was part-time for no longer than a few months in a row. The 5 years are acknowledged online, so hopefully that doesn’t get reassessed at some point.

So going forward, I have a few questions:

1. Do I have to pay all of the years listed in the shortfall table for any of them to be accepted?
– I definitely can’t do this by the deadline if the correct amounts are the higher ones.

2. If not, then can I choose the years to pay?
– i.e. cover the smaller gaps first (the earliest five years)

3. Once I hit the minimum ten years, is it better to continue paying the remaining 25 years over my working life, or is it better to put that money into Ideco/Nisa? (I'm 35)
- I think I probably will just so I have some security from my home country, but I’m wondering whether it’s worth the overall cost, transfer fees and taxes, particularly if the exchange rate doesn’t improve enough.

Thank you in advance for any insights. I imagine I will end up having to call HMRC, but I thought some people may be interested to see another example of someone going through the process of paying the UK pension from abroad.
Once I make my decision about NI, my next step will be to start investing, so apologies for the newbie questions that are sure to come!

(also sorry for the large images)

[adamu]

For 2014 onwards, it looks like the website is quoting you the standard voluntary payment (class 3) rates, whereas the letter is quoting you class 2 rates based on your individual circumstances (probably because you were working abroad during those periods). I'd go with the letter.

At 35 years old, it might not even be worth back paying, as you could still theoretically return to the UK and end up paying compulsory class 1 contributions and still accumulate the 30 qualifying years for the maximum pension. Or just pay remaining years voluntarily from now. However, as an insurance policy it's still pretty cheap and worth doing even if events unfold such that you would have been better off not paying. Plus, they could increase the required qualifying years in the future.

P.S. approve of the icon on tab #4

[taneandy]

I was in pretty much the same situation a few years ago.

Firstly, I agree with Adamu about the quoted back payments. The letter should be correct if you've been accepted for class 2 rates. Don't expect your government gateway account to be updated to reflect that any time soon though, if ever.

In the end I made back payments for the years I was eligible for class 2 payments, but not the class 3 years.
You can freely select which years you want to pay, but you will probably need to let them known which payments are for which years, otherwise the money may sit unassigned in your account and result in any direct debit you have set up being cancelled.

[Contrafibularity]

Thank you both for your responses.
I hadn't considered I would be approved for class 2 payments. That's great!
I guess I will only pay for the class 2 years, plus 2011~2012 class 3, and that puts me up to 16 years' contributions. Then I can continue contributing as long as I'm here while focusing on Japanese investments. Here's hoping the class 2 contribution rate doesn't increase too drastically in the future.
Thanks again!

approve of the icon on tab #4

[Seasider4374]

Hi late reply - so sorry if this is now of no use to you.

I was accepted and got a similar letter in March this year.

From your info (35yo) I wouldn't pay back the class 3 contributions - HMRC over the phone confirmed this in my case where I had one year of class 3, before a run of class 2s. You just need 35years (though maybe 37years - thread on this Pension forum explaining why) to get a full state pension so at 35yo you have another 32/33years of paying-in potential until reaching 67/68yo so I'd pay all class 2 and ignore the class 3.

Though if your future may include a return to the UK then maybe seek other advice.

Also, and thanks for uploading your letter, like you my 2021/22 contributions were shown charged at £3.05 pw, not £3.15 like every other year. I had assumed this was a typo and that I'd need to send a small £5.20 payment to correct this "typo". Though perhaps due to Covid this year's rates were reduced - off to investigate...

[edit]
... and seemingly no typo. weekly rates for 2021/22 were £3.05.

Also, if you are to backpay I'd recommend doing so as soon as you can (certainly don't leave it until next year). I'm currently waiting for my bank transfer to be allocated to my back payable years three months after making the transfer with the correct payment reference (mix of NI # & name from memory - info on website linked in the letter). A phone call to HMRC and they can see my funds but say it may take 2-3 months for the allocation team to allocate it. I imagine with the influx of Class 2 payment applications (especially concerning the extended back-payable period ending) that the allocations team are going to get swamped next year with 2025 payment deadlines...

And my government Gateway site still shows class 3 payment amounts, despite three months prior having received the letter saying I'm eligible for class 2...

[RetireJapan]

And my government Gateway site still shows class 3 payment amounts, despite three months prior having received the letter saying I'm eligible for class 2...

I think the Government Gateway site can only show Class 3, you need to contact them to get Class 2 quotes.