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Old 05.08.2009, 13:14
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UK National Insurance Contributions

I would like to know if there is any sort of reciprocal agreement between Switzerland and the UK for National Insurance contributions. I have paid for many years in the UK and am now living in Switzerland, and I read somewhere that insurance contributions paid here may count towards UK National Insurance contributions. Can anyone help?
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Old 05.08.2009, 15:03
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Re: UK National Insurance Contributions

A search would have found these threads -

National Insurance Contributions Price Increase (UK)

Leaving UK and P85

Pension issue 1 June 2007, collegue leaving

There may be more.
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Old 15.08.2009, 18:38
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Re: UK National Insurance Contributions

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I would like to know if there is any sort of reciprocal agreement between Switzerland and the UK for National Insurance contributions. I have paid for many years in the UK and am now living in Switzerland, and I read somewhere that insurance contributions paid here may count towards UK National Insurance contributions. Can anyone help?
Yes there is what is known as a totalisation agreement. Such agreements exist between all EU/EEA/Swiss countries AND also the USA in most cases; between Canada/Québec and Switzerland but not Canada and the UK (long story, British retirees in Canada and Australia get cheated out of their COLAs).

In principle you are ineligible to pay voluntary Class 2 or Class 3 NICs while you live in a EU/EEA country. But if you have less than 30 years of contributions (and especially if you have less than 10) and if you have a UK address to use, you should definitely pay those. The return your £408 or so a year (will increase soon, perhaps double) is well worth it. Here's the stuff on Class 3: http://bit.ly/19Re1J (Class 2 is cheaper, if they let you get away with that rate). You can pay voluntary contributions for up to 6 years in arrears, but it's at the current rate of tax for the year in which you pay it.

There are also voluntary AVS contributions in Switzerland but they are more expensive. I paid them for a number of years and now I get the princely sum of CHF 212 a month... When I worked in Switzerland I was exempt as it was at the GATT. (Ironically I became eligible for Swiss citizenship due to parentage only after I lived in Switzerland for 3 years, and that happened while I was a foreign diplomat. Go figure.)

If you expect to be employed in Switzerland for just a few years, not enough to get a worthwhile pension, then you can rely on the totalisation agreement for those contributions to be "totalised" into your British state pension.

In my experience (and I get state pensions now from Switzerland, Québec, the USA and the UK) it is better to qualify for different pensions from different countries. The UK and the USA require ten years' of contributions or you don't qualify for a pension. But since you cannot totalise the same year in two countries, if you don't use the duplicate contribution (tax, really) you lose it.

Another point: many or most social security systems skew benefits in favour of the low paid. The USA has a Windfall Elimination Provision to claw that back if you get a foreign pension; and Canada uses a separate Old Age Security regime to avoid significant skewing. But Britain is still fairly generous to the low paid all things considered. (Still, one can't live on what they pay and there are means tested benefits too. To their credit they rang us once to see if we were living in poverty on what they pay us and I had to tell them I'm OK.)

Last edited by evilshell; 15.08.2009 at 18:41. Reason: fixed the quote of the OP. In the future, please use the quote button when quoting another poster. Thanks :)
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Old 16.08.2009, 18:01
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Re: UK National Insurance Contributions

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In principle you are ineligible to pay voluntary Class 2 or Class 3 NICs while you live in a EU/EEA country. But if you have less than 30 years of contributions (and especially if you have less than 10) and if you have a UK address to use, you should definitely pay those.
Your post is very helpful and I can't fault the maths on making the extra payments. But is it altogether a good idea to claim tax residence in one country whilst purporting to be UK resident for NI payments? I'm sure they'd notice at some point!

kodokan
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Old 17.08.2009, 23:52
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Re: UK National Insurance Contributions

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Your post is very helpful and I can't fault the maths on making the extra payments. But is it altogether a good idea to claim tax residence in one country whilst purporting to be UK resident for NI payments? I'm sure they'd notice at some point!

kodokan
I thought it was obvious from what I wrote that voluntary payments do not require you to be resident. Many, perhaps most, of the references on the HMRC and other government pages concern taxpayers who have not earned enough in a particular year to gain NI credit. But you could have earned zero and still pay provided that you are otherwise qualified: http://www.hmrc.gov.uk/nic/class3.htm
And see this leaflet regarding conditions of eligibility: http://www.hmrc.gov.uk/pdfs/nico/ni38.pdf (see pp. 14-15)

Here is some more on that from the DWP which specifically states that residence in another EU/EEA/Swiss country is not an obstacle to making voluntary NI contributions: http://www.dwp.gov.uk/international/...eea-countries/ This surprises me somewhat since the Swiss AVS office, a few years ago, sent me a letter saying that Swiss citizens resident in EU countries would not be able to make voluntary contributions (as I had been doing) in the future. See this notice (in French) concerning current rules: http://www.bsv.admin.ch/themen/ahv/0...x.html?lang=fr
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Old 18.08.2009, 10:55
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Re: UK National Insurance Contributions

Hi andy02,

thanks for your fantastic posts on this issue. Please forgive me but my simple brian still cannot figure out the answer to this question.

If i live in switzerland until retirement age, paying the swiss pension money every month directly from my salary.... AND i make voluntary N.I. contributions back in the UK until i have made 30 years worth.....

at retirement age will i receive BOTH an English and Swiss pension?
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Old 18.08.2009, 11:11
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Re: UK National Insurance Contributions

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Hi andy02,

thanks for your fantastic posts on this issue. Please forgive me but my simple brian still cannot figure out the answer to this question.

If i live in switzerland until retirement age, paying the swiss pension money every month directly from my salary.... AND i make voluntary N.I. contributions back in the UK until i have made 30 years worth.....

at retirement age will i receive BOTH an English and Swiss pension?
I did it the other way, paying UK contributions and paying voluntary AVS contributions (which I could do because I am Swiss, and it was worthwhile doing because I was moderately paid). I now get two separate small state pensions, one in Sterling from the DWP and another in Francs from the Caisse de Compensation. The only nuisance is that Switzerland (like France, I happen to know) requires that you show up to your Commune's town hall or to a Swiss consular office and prove that you are still alive and certify that your état civil (personal status = marriage) has not changed.

It will be the same, mutatis mudandis, for you. So the answer is Yes, if and only if you have at least ten years' NI credits. (30 years' credits will give you a full, rather than a partial, NI pension and if and only if you live in the UK/EU/EEA/Switzerland or the USA you will get annual Cost of Living Adjustments based on the UK RPI.

Those who have less than ten years' NI credits will have them totalised into a foreign system (EU/EEA/Switzerland/USA) but any years that are duplicated may be lost.
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Old 18.08.2009, 11:21
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Re: UK National Insurance Contributions

Having just been on the phone to the HMRC Charity Assets and Residence Residency in the UK, they say also that UK contributions are treated individually from mandatory contributions made in Switzerland and that I will still get a full UK pension if i have made the 30 years of contributions, no matter what.
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Old 18.08.2009, 11:26
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Re: UK National Insurance Contributions

I checked this out last year as I have paid the max UK contribution and therefore expect the maximum state pension at 65.
Payment made into the Swiss AHV system will also accumulate another seperate Swiss pension payable at 65 in addition to that from the UK

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Having just been on the phone to the HMRC Charity Assets and Residence Residency in the UK, they say also that UK contributions are treated individually from mandatory contributions made in Switzerland and that I will still get a full UK pension if i have made the 30 years of contributions, no matter what.
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Old 18.08.2009, 23:42
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Re: UK National Insurance Contributions

Thank you for putting me straight above, andy02 - there are some really useful links here. I'll have a good rummage once the kids are back are at school and I have some time to call my own.

kodokan
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Old 19.08.2009, 14:08
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Re: UK National Insurance Contributions

This is really interesting. I left the UK and filled out the form to claim all my contributions back which I did. Now following the advice above it would be interesting if I contributed for the next 30 years I could also have a UK pension? Even though I filled out the form saying I was leaving to Switzerland?. Also how much approx. are the contributions every year. It could be worth doing and even if I decide that eventually I want to go back to the UK and retire
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Old 19.08.2009, 19:24
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Re: UK National Insurance Contributions

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This is really interesting. I left the UK and filled out the form to claim all my contributions back which I did. Now following the advice above it would be interesting if I contributed for the next 30 years I could also have a UK pension? Even though I filled out the form saying I was leaving to Switzerland?. Also how much approx. are the contributions every year. It could be worth doing and even if I decide that eventually I want to go back to the UK and retire
In my humble opinion offering the return of contributions is a scam of a sort not unknown to the British government, since they get to keep the employer's share of those contributions as a tax. Anyway Swiss don't get refunds anymore because of the totalisation treaty. If you don't havw 10 years if UK credits, what you do have are merged into your AVS and/or any other EU/EEA/USA account.

The UK is the most generous scheme for the low paid of any I know in the world. But not so generous for middle- and high-paid'.

I would never have sought or accepted a refund of contributions.

Voluntary Class 3 contributions are something like GBP 7.35 pw, multiply that by 52 (and check the HMRC Web site in case I made a mistake). Google 'voluntary class 3 nic'. Next year they will go up. By a lot, I recall it being said.
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Old 21.08.2009, 19:18
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Re: UK National Insurance Contributions

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Voluntary Class 3 contributions are something like GBP 7.35 pw, multiply that by 52 (and check the HMRC Web site in case I made a mistake). Google 'voluntary class 3 nic'. Next year they will go up. By a lot, I recall it being said.
The current rate (09/10 tax year) is £12.05 per week: http://www.hmrc.gov.uk/rates/nic.htm

This very useful thread has given me a kick into looking into whether it's worth me paying voluntary Class 3 NICs. I rang a surprisingly informed person at the International Pension Centre, who told me which form to use to apply for a pension forecast; she did say that I have 8 years' Home Responsibilities Protection 'stamps' (for being at home with small children), so I reckon with working years I'll be around half way there to the 30 years' required for a full pension.

I then put on my shiniest actuarial hat to work out how much the remaining 15 years' contributions might cost me, how much I'd have if I just saved that money compounded instead, how much additional pension it would buy me, etc. It's currently coming out that it's worth paying the voluntary NICs if I plan to live at least 3 years after retirement. (I've had to make some major guesses based on contribution rates and possible pension amounts, but it's ballpark enough.) So it's probably worth doing.

On the other hand, I've got 28 years to go until retirement. And how annoying would it be to make voluntary contributions for 10 years, then move back to the UK and work/ pay NICs for 15 years anyway! So I guess I'll leave it for now, but review it every few years or so.

Andy02, thanks for all the links, very helpful in doing the research.

kodokan
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