Client’s often ask me what is the process for maintaining National Insurance contributions whilst living abroad. It is important that British expats understand the rules in relation to their eligibility to the state pension.
The purpose of paying Voluntary National Insurance contributions is to secure entitlement to various UK National Insurance benefits like the basic State Pension. It has agreements with Reciprocal Agreement Countries and European Economic Area (EEA) regarding special benefits.
Living abroad and not paying UK National Insurance Contributions (NICs) may restrict your access to these benefits – not only now, but also in the future. If you continue paying UK National Insurance while living abroad, you may protect your entitlement to the following:
A full State Pension.Particular state benefits in EEA (European Economic Area) as well as some reciprocal agreement countries.
New rules are coming into play from next year, which mean individuals now have to pay National Insurance for more years than originally stipulated, in order to get a full state pension upon retirement.
The changes come into effect on April 6, 2016, and affect anyone retiring after that date. From this date, rather than needing the previous 30 years of National Insurance (NI) payments to qualify for a full state pension, retirees under the new regime will need a complete 35 years worth of contributions. Those with less than 35 qualifying years but more than the minimum qualifying period will receive a proportionally smaller state pension.
If your total years from the UK and EEA National Insurance exceed 10 years, you will be eligible for the UK State Pension, but the amount will be proportional only to your UK qualifying years.
The idea of the new pension arrangements being introduced is to offer a new and simpler flat-rate pension. This is expected to be worth around £155 a week, and will do away with the other elements that currently make up the state pension, such as the savings credit and additional state pension
It is prudent for British expats to find out how many years of NI contributions they have made to date, therefore allowing them to see how many years they will need to make up to achieve the full 35 years. For detailed information it is best to visit the HMRC website https://www.gov.uk/national-insurance-if-you-go-abroad. Or contact HMRC directly if you have specific questions.
If you need help in finding out your current projection for the UK state pension. Or you are looking to make additional contributions as an expat – contct me today
Find out how we can help you
If you would like to understand more about this topic get in touch
Related posts
Published On: October 16, 2024|4.9 min read|Pensions planning as an expat – Is a QROPS still the right move?
More and more people are relocating for work or retirement. As a result, individuals moving overseas often prefer to transfer their UK pension benefits rather than leaving them in the UK. Likewise, those moving to the UK might want to bring their overseas pension benefits with them. Understanding the impact of such transfers is crucial.
Read more
Published On: July 10, 2024|3.2 min read|The Merits of Accessing Your Pension Commencement Lump Sum in Stages
As you approach retirement, one of the significant decisions you'll face is how to access your pension commencement lump sum (PCLS). While it might be tempting to take the entire amount in one go, there are several benefits to accessing your PCLS in stages.
Read more
Published On: June 27, 2024|1.3 min read|A new online tool has launched to check your state pension benefit
No more National Insurance nightmares! The UK Government's new online tool simplifies checking and topping up your NI record. Here's how...
Read more
