I've decided to buy back the missing years of my UK national insurance contributions after 10 years in Switzerland.

I got really confused with Class 2 vs Class 3 National Insurance, which Class 2 is way cheaper than Class 3.

I am currently working in Switzerland, it seems I can be qualified for Class 2.

Will there be benefit differences when paying into Class 2 vs Class 3 when I retired? Will I get less National Insurance pension if I pay in Class 2?

Why is Class 2 way cheaper? just curious. it seems only to apply to people who are employed in Oversea, or self-employed in the UK? what's the idea behind it?

Thanks, folks.

it's basically a loophole that was never closed. just pay the class 2 and save money!

I think it would be the same in the end.
I googled "Class 2 cheaper than class 3" and found the following:


https://www.litrg.org.uk/tax-guides/...-contributions



"Class 2 NIC can also be paid on a voluntary basis if an individual leaves the UK. However, this only applies where you will be self-employed or employed abroad. Class 2 contributions are cheaper than Class 3 contributions and actually protect more benefits than Class 3, so if you want to pay NIC on a voluntary basis, and will be employed or self-employed in some form whilst overseas, it may be cheaper to pay Class 2 NIC."


Doesn't help to explain why the differences are there though. I suppose maybe it's thought self-employed do more work the the same reward as employed?


Another web page goes on to say about paying back years "However, Class 2 contributions are to be abolished from 6 April 2019, so 2018/19 is the last year for which this option is available." so do it now if you want to.

Pay class 2. You get the same pension money. Everyone does under the current system.

Class 3 also includes maternity pay, sickness pay etc etc, everything you wouldnt be entitled to claim even if you paid it.

Class 2 is likely to be stopped soon, so rack up as many cheap years as possible.

UK Pension link:

https://assets.publishing.service.go...1DXy960iAHkRLk

Just applied to pay in future and for missing years. This could be an extra 10,000 francs a year on my final pension, so for 5 francs a week, it's a no-brainer.

I do wonder if my children might do this when they've got employment?

They'd have to have worked in the uk.

From gov.uk:

Living and working overseas:
"Class 2 - but only if you worked in the UK immediately before leaving, and you’ve previously lived in the UK for at least 3 years in a row or paid at least 3 years of contributions"

Edit: and you can only pay in at the class 3 rate if you've lived in the uk for 3 years in a row.

So there's no way to pay into the uk system without 3 years of residence.

The youngest was 4 before we came over... So, £15 a week class 3, for forty years = £32K. For a £7K a year pension. That means after 5 years of pension, a return on investment.

Worth ringing up hmrc and asking whether they can pay 3 years of class 3 then class 2. The X and Y or Z structure to their explanation regarding who can pay class 2 repeated in my post above is inherently unclear - is it (X AND Y) OR Z, or alternatively X AND (Y OR Z).

If they are still young then a summer bar job in the UK followed by coming back home to Switzerland would be handy! That should qualify them I think.

To pay class 2 you need to have been working when you left UK & when you started working in CH so that won't work for a child.

It's well worth to mention that:
1) usually you can only back pay the last 6 years
2) at the moment you can pay back years all the way to 2006 (@16 years)
3) after April 5th 2023 it reverts back to 6 years only
"You have until 5 April 2023 to pay voluntary contributions to make up for gaps between April 2006 and April 2016."
4) current rules are to get a full state pension you need 35 years contributions

discussed as well in another thread around uk pensions...

You simply find the uk.gov form, fill it in, ask the pensions dept to make missing contributions at class 2 and then wait (as currently am) for them to make a ruling

which form is that ?

I was quoted a huge amount of money to get an extra fiver a week and I didn't think it was worth it tbh

Care to expand upon this?
So far everyone on these NI buyback threads on EF pay @£160 for each year they buy back for class 2.

CF83 which can be found at the end of NI38

HMRC only accepts paper copies!

HMRC sometimes seem to take a hard line and insist on Class 3

It could also be that you have to pay a mixture of class 2 and 3....for example I moved here in march 2019 and started work August 2019. For the 19/20 tax year they said I'd have to pay class 3 between march and August then class two from August onward as I hadn't worked when I first arrived. The amount was too much so I declined.

Also if you have gaps in the record from working in UK these would be charged at class 3 so would definitely be more than the £156 or so per year based on class two.

Great thread.

Suggest people call the Future Pensions Group on +44 191 218 3600, who can confirm on the phone what the extra contributions years will yield in terms of state pension value. You can also see this on your online HMRC account, but it's nice to have it confirmed verbally.

I can boost mine from £67 pw to the full £180 with back years and a few more future years, at Class 2 rates the payback is just over six months. Seems a no brainer.

You do have to send form CF83 with an extra sheet of your full employment history to PT Operations NE England, HMRC, BX9 1AN, UK though, as you cannot do that by phone.

__________________
www.templeman.net

I'm very wary of anything to do with HMRC online services as I was the victim of an ID fraud a number of years ago, it involved my details being stolen from their system. Someone managed to get a 4k tax rebate using my NI number, yet none of the other details they gave matched mines - for example they claimed they were employed as a manager with the Post Office, yet I was self employed as a partner in a software development co. It seems 2 emails with a password HMRC sent to me were intercepted, I have always suspected it was part of an inside job - a few months later it was reported a gang got away with 6m, one of them was temping with HMRC. Only 2m was recovered, the other 4m made it back to the gang's country of origin with the other members, the temp took the rap. In my case I found out what happened via an online form that had been completed in my name, it was on my tax account.

It was pretty scary as I had to give the local police a statement and they had to refer it to the fraud squad at the Met. HMRC refused to take responsibility and said it was my fault.

Don't you automatically open a liability to pay the contributions if they accept the CF83 Form you submitted ?
Or there is further back and forth, ie they write to you and there is a further step for accepting the liability to pay them further class 2?