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-   -   scrapping of UK National Insurance class 2 contributions-delayed until 2019 (https://www.englishforum.ch/finance-banking-taxation/282227-scrapping-uk-national-insurance-class-2-contributions-delayed-until-2019-a.html)

Guest 29.04.2018 16:08

scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Class 2 was due to be scrapped this month. The date has now been moved to April 2019. Anyone topping up their UK state pension by paying voluntary class 2 contributions from overseas will be affected. You might wish to buy extra back years now whilst you can.

After this it looks like the option will be to pay the more expensive class 3 (these are around £12 per week whereas class 2 is around £2-£3 per week)

https://www.moneysavingexpert.com/ne...yed-until-2019

The ScottiCH One 30.04.2018 08:07

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
I still think itís worth paying even after the change... ~£750 voluntary class 3 contributions per year for an extra ~£190 per year (probably) index-linked pension for life.

Surprised it took them so long to shut down the class 2 option for non residents. That was a true bargain.

Fish Paste 01.05.2018 11:30

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by The ScottiCH One (Post 2940235)
I still think itís worth paying even after the change... ~£750 voluntary class 3 contributions per year for an extra ~£190 per year (probably) index-linked pension for life.

Surprised it took them so long to shut down the class 2 option for non
residents. That was a true bargain.

Correcting above, I presume you mean £190 per week?

NOTE: if you go to your NI record on the Government Gateway, you can see the missing years and you can buy them. The offered rate is class 3 only.
(@700p/y)

I called HMRC, and the website only offers class 3 by default.
To pay class 2, you need to fill in form CF83 and send it to them.

You have until 2023 to buy back any years over 6 (but only back to 2006 anyway). From 2023, you can then only go back 6 years.
It looks like you have until 2019 to buy back the missing years at the lower rate (as highlighted by OP).

It's a bargain.

The ScottiCH One 01.05.2018 13:13

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by Fish Paste (Post 2940672)
Correcting above, I presume you mean £190 per week?


Nope...each year of class 2 or 3 contributions equates to 1 year of pension entitlement.

Therefore, based on current max pension benefit and needing 35 yearsí contributions for a full pension, this is 1/35 * £125.96 * 52 = ~£190 per year, not per week.

gbn 01.05.2018 15:15

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by The ScottiCH One (Post 2940690)
Nope...each year of class 2 or 3 contributions equates to 1 year of pension entitlement.

Therefore, based on current max pension benefit and needing 35 yearsí contributions for a full pension, this is 1/35 * £125.96 * 52 = ~£190 per year, not per week.

Perhaps explain that another way because it doesn't make sense.

My take on this:

- A class 2 is currently 2.95 per week or 160 per year
- Full pension is 164.35 per week or 8550 per year or 244 for each year of contributions

So each 160 per missing year adds 244 per year

If you have 30 years, you get 7235.
It costs a one off 160*5 to add 244*5 per year for life

Guest 01.05.2018 18:08

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
yes each 160 invested gives you an extra income of 244 per year for all of your retirement. it will be index linked in some form too. so if you live for 20 years after retirement your 160 will generate an extra income of 4880 plus.

i don't think abolishing class 2 is targetted at expats. it is to do with uk selfemployed who pay class 3.

fatmanfilms 01.05.2018 18:12

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by annie (Post 2940799)
yes each 160 invested gives you an extra income of 244 per year for all of your retirement. it will be index linked in some form too. so if you live for 20 years after retirement your 160 will generate an extra income of 4880 plus.

i don't think abolishing class 2 is targetted at expats. it is to do with uk selfemployed who pay class 3.

Expats have only been able to pay class 2 since about 2004, I did not realise the change as I had as DD set up & paid class 3 for several extra years.

Phil_MCR 01.05.2018 19:46

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
I guess paying class 3 will be 5 times more expensive, but if benefits are as today, I think still a good deal. I do find it hard to believe that the benefits will remain as today (triple lock, retirement age...)

HIAO 01.05.2018 20:19

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
You make your extra NI contributions from your net income.

If you are lucky, UK's elected representatives don't change the pension rules again before you reach retirement age.

The additional income you might receive when you retire is gross and subject to tax.

Is it a great deal?

fatmanfilms 01.05.2018 20:51

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by HIAO (Post 2940830)
You make your extra NI contributions from your net income.

If you are lucky, UK's elected representatives don't change the pension rules again before you reach retirement age.

The additional income you might receive when you retire is gross and subject to tax.

Is it a great deal?

Potentially tax free if UK personal allowance remains for expats, so an amazing deal.

gbn 02.05.2018 04:51

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by HIAO (Post 2940830)
...

Is it a great deal?

Yes, based on current information which is all we have.
Not doing anything based on future unknown changes is the ultimate procrastination.

In my case, I'm missing 15 years so 2400 one-off charge for an extra 3665 per year an amazing deal, even if I pay some tax on that.

Also see what FMF said about tax free allowance.

The ScottiCH One 02.05.2018 08:21

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by gbn (Post 2940755)
Perhaps explain that another way because it doesn't make sense.

My take on this:

- A class 2 is currently 2.95 per week or 160 per year
- Full pension is 164.35 per week or 8550 per year or 244 for each year of contributions

So each 160 per missing year adds 244 per year

If you have 30 years, you get 7235.
It costs a one off 160*5 to add 244*5 per year for life

Agree....thanks, forgot they changed the state pension from £125.96 to £164.35 per week. Even more reason to pay the higher class 3 contributions from next year.

I based my sums on the current class 3 rate (£14.75/week), meaning roughly £750 per year of contributions. At the new pension amount this equates to receiving £244/yr as you rightly say.

Where else can one get an index-linked annuity paying 33%/yr? For me thatís worth the risk considering the relatively small outlay.

The ScottiCH One 02.05.2018 08:28

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by gbn (Post 2940911)
In my case, I'm missing 15 years so 2400 one-off charge for an extra 3665 per year an amazing deal, even if I pay some tax on that.

Sorry if Iím misunderstanding but isnít 6 years in the past the maximum length of time contributions can be made retrospectively to make up for missing years?

https://www.gov.uk/voluntary-nationa...-contributions

gbn 02.05.2018 08:50

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by The ScottiCH One (Post 2940931)
Sorry if I’m misunderstanding but isn’t 6 years in the past the maximum length of time contributions can be made retrospectively to make up for missing years?

https://www.gov.uk/voluntary-nationa...-contributions

Oh yeah. Tbh I never got that far.

Still, 900 one off for an extra 1464 per year is a good deal. For me and Mrs gbn.

Saying that, both of us have enough years left to pay up in full I. Future.

AbFab 02.05.2018 09:13

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
A year or so into my UK state pension pay out, they wrote asking if I had been self-employed here. Apparently they learned this form the Swiss pension people.

As self-employed - even though this was in Switzerland - the UK pension payout is better than employed persons :msncrazy:...

But mine not to reason why.

Tip for UK pensioners in CH: the UK office write every couple of year to ask if you are still alive. To prove this you need to send their document back signed and stamped by a recognised Swiss institution. My bank, ZKB, do this by just dropping in and asking them to do it - for free.

Cheshire Cheese 02.05.2018 09:21

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Is there not a risk (especially for those a couple of decades away from retirement age) that the rules will change and no payment will be made for non-residents?

Guest 02.05.2018 09:24

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by The ScottiCH One (Post 2940931)
Sorry if Iím misunderstanding but isnít 6 years in the past the maximum length of time contributions can be made retrospectively to make up for missing years?

https://www.gov.uk/voluntary-nationa...-contributions

The website you link to says you can go back more than six years if:
Youíre a man born after 5 April 1951 or a woman born after 5 April 1953
You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016.

You can pay these contributions at different rates if you pay by 5 April 2019.

CorsebouTheReturn 02.05.2018 09:27

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
It seems only for self employed, no?

What about those who worked for a company?

Guest 02.05.2018 09:29

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by CorsebouTheReturn (Post 2940951)
It seems only for self employed, no?

What about those who worked for a company?

It is for employed and self employed

Guest 02.05.2018 09:33

Re: scrapping of UK National Insurance class 2 contributions-delayed until 2019
 
Quote:

Originally Posted by Cheshire Cheese (Post 2940949)
Is there not a risk (especially for those a couple of decades away from retirement age) that the rules will change and no payment will be made for non-residents?

For me 160chf a year is a small risk

If you think of how many retirees there are in Spain, France etc this would be upsetting an awful lot of people.


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