Author Topic: UK: Will you make voluntary National Insurance contributions after ER?  (Read 2184 times)

shelivesthedream

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Today I was, as you do, reading about the changes to state pension eligibility and National Insurance payments. What are UK FIREers going to do about NI contributions? Make voluntary ones to get the full pension? Stop contributing when you stop work and let your stash carry you through?

theonethatgotaway

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My neighbors who just moved here from Scotland via Singapore make their full NI contributions since if they stopped they would lose all previous and not be able to claim at age. We are in nyc.

tetlee

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Re: UK: Will you make voluntary National Insurance contributions after ER?
« Reply #2 on: December 16, 2015, 12:52:25 PM »
Old thread I know... but I'm reading about voluntary contributions at the moment and thought I'd bring this back.

I believe making voluntary contributions for me is a no brainer.

It seems as a UK Expat living in the US (who worked immediately prior to leaving) I can make class 2 contributions which would be amazing as they are only £2.80 a week! That means to make up my extra 20 years worth of contributions for just £2,912.

Receiving a UK State Pension would reduce my Social Security as I wont have 30 years social security meaning WEB deductions will apply... but as I wont have worked in the US that long I doubt I'd get much anyway.

cerat0n1a

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Re: UK: Will you make voluntary National Insurance contributions after ER?
« Reply #3 on: December 17, 2015, 04:54:56 AM »
Today I was, as you do, reading about the changes to state pension eligibility and National Insurance payments. What are UK FIREers going to do about NI contributions? Make voluntary ones to get the full pension? Stop contributing when you stop work and let your stash carry you through?

As things stand, it will make sense for me to do so. AIUI, you need 35 years of contributions to get the full pension and I'm currently on 27 I think and not likely to retire for 3-4 more years. I've had two 12-month periods of time out of work - one for final year of university and one for travelling, but both of those spanned two tax years, so currently have an unbroken record back to 1989. Currently, it is much cheaper to call yourself self-employed and pay class 2 rather than pay the class 3 voluntary contributions. My wife, on the other hand, having been a stay at home mother for 15 years and spent some time out of the UK before and after university, probably doesn't hit the 10 year minimum yet.

However, as will all things related to pensions and benefits, the government of the day can change the rules on a whim. I think the argument to combine income tax & NI into one single tax is a pretty strong one. As someone preparing to live off my income, I'm OK with tax on earnings from savings/investments being lower than tax on earnings from working, but it's not obvious why this is the right thing for the country. It's largely a hidden transfer from those of working age to wealthy pensioners.

Playing with Fire UK

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Re: UK: Will you make voluntary National Insurance contributions after ER?
« Reply #4 on: December 17, 2015, 07:41:12 AM »
Ceratonia - currently if you receive Child Benefit for a child under 12 and don't work, you get a NI Credit for that year. I think it looks backwards as well - but maybe worth looking into further.

I'm also planning on doing something to call myself self-employed and pay Class 2. Although I'm not 100% confident that the State Pension won't vanish or become means tested I think it's well worth the risk.

Just had a quick trawl and found this:
Some people donít pay Class 2 contributions through Self Assessment, but may want to pay voluntary contributions. These are:
examiners, moderators, invigilators and people who set exam questions
people who run businesses involving land or property
ministers of religion who donít receive a salary or stipend
people who make investments for themselves or others - but not as a business and without getting a fee or commission

So maybe won't even need the token work.