In April 2016 the rules relating to who can qualify for the British state pension are changing quite significantly, and among those likely to be affected by the new rules are expats. Currently you have to have made 30 years National Insurance contributions (NICs) to qualify for the full state pension, and have been contributing for at least a year to have any entitlement at all.
From April 6th 2016 the rules change as follows: anyone retiring on or after that date will have to have made 35 years of National Insurance contributions to be entitled for the full state pension. What’s more, anyone wishing to claim any of the entitlement at all will need to have been paying in for at least 10 years.
Whilst this will come as music to the ears of some who are well aware of unfairness in the British social payment system currently, it may concern those expats who have missed some years of National Insurance contributions. However, there is a way to play catch up with your NICs to ensure you will still qualify for the full state pension.
If you’re British and you’ve lived abroad for any number of years during your working life it’s highly likely you will have stopped paying NICs during that period. As a result you may well have too few years contributions on record to enable you to qualify for the state pension.
You can find out your current position as long as you know your National Insurance number, by visiting the government’s ‘check your National Insurance record’ page and following the onscreen instructions.
You will be given a statement covering what you’ve paid, whether you have any gaps, and what you can conceivably do to catch up. Most people can make voluntary contributions to catch up the years they have missed.
See also HMRC’s own online PDF about making voluntary contributions and what it will entitle you to. The same PDF contains the form you need to complete to apply for voluntary contributions.
Many of us take our retirement very much for granted for far too long. This can mean we let any thought of a pension slip. The bottom line for many people becomes the state pension in the UK…however we should all keep in mind the significant qualification rule changes that are coming into effect in just over a year.
What’s more, many say the writing is now on the wall, and that the concept of a universal state pension is simply not viable.
In the UK we have a rapidly ageing population and very stretched taxation revenue. Will the state pension still be there when you retire – even if you’ve made 30, 35, 40 or even 45 years worth of NI contributions?
Use this wake up call from the government as a sign to look at your entire retirement position. Don’t just focus on your NICs and the state pension, make sure you’ve given thought to whether your personal retirement plans actually factor in somehow funding the lifestyle you would like to enjoy!
Contact us if you would like to speak to an expat financial adviser about your personal pension position, and to discuss whether you should be paying top up NICs.