AIBU to think claiming two state pensions seems unethical?

[CoffeeAndCats3]

I wrote about this on another thread, but thought I'd start my own as it irks me and I'm wondering if IABU.

My parents emigrated from the UK in their early/mid thirties and have never lived in the UK since. They are now late 60's. My Mum told me recently that both her and my Dad are claiming a full UK pension, in addition to a full pension in the country them emigrated to. They don't need this money, but she seemed quite smug about how they can 'double dip' and live the Life of Riley while sitting on a load of money, rental properties etc. I told her it seemed a bit unethical to me, but she didn't understand my viewpoint at all.

How is this possible? She said that they only had to pay their (national insurance?) for a period of time after moving, to then be eligible for the full UK pension on retirement? Can someone explain to me if this is correct, as I half think they've scammed the UK system somehow!

Until literally 2 months ago you only paid £180 a year in order to be able to claim from outside the UK.

It’s farcical it was allowed for so long.

You are aware that a common loophole used by UK small company owners means they get NI credits and thus build up a full state pension without actually paying any NI contributions at all, don’t you? They receive most of their income as dividends from the company, which has a lower tax rate and no NI, then pay themselves a minimal salary via payroll at a level that gives an NI credit without actually reaching the level where employees NI deductions are taken. At least the OP’s parents paid some contributions!

I can see my parents living at least another 20-30 years as they are both currently very healthy. If this happens (big if), then thats over 250,000 in money paid out to them

So when your parents do eventually die, you will be writing a cheque for that amount and returning it to the government then?

What would be your logic?
There’s no suggestion the money would go to OP?
The parents could be happily spaffing all their money, and OP has made no suggestion she’s angling for inheritance. Why would OP feel like she owes the state for money family members have claimed?

How is it a "loophole". HMRC aren't stupid - the system has been in place for a great many years. It's just not everybody has heard about it, it's never been a big secret, the information has always been readily available on their site.

Where I live you need 42 years of contributions to get the full state pension. If you move overseas part way through your life it's not possible. Also couple that with low salaries meaning, lower contributions which then also equates to a much more meagre pension... Without the UK state pension I'd be in trouble when I reach retirement.
Admittedly being able to 'catch up' with paying for missing years was a very good deal, however I would have been paying the same had I remained in the UK.

I understand where your coming from however the department that pays it is called the future pension centre.

They also give out pension statements so the word pension is still a very valid and used term.

It’s absolutely was loophole to allow those not working or paying tax in the UK to buy NI contributions at a hugely, hugely discounted rate, which exactly why it was so unpopular that people like you were allowed to milk the system for so long and the exact reason it has recently been made a lot less profitable and rightly so.

Why would OP feel like she owes the state for money family members have claimed?

OP says that she feels that it is unethical for her parents to have been paid this money. Of course there is no guarantee that her parents won't spend the lot, leave it to charity but if the OP does inherit any money (and I agree, this is a big if and is not the point of the thread...) then logically she should "repay" the amounts unethically received.

They probably did, or at least voted for one choice out of two or three similar options. But on structural issues voting doesn't have much influence on the direction of travel, the WASPI debacle has it's origins in the last century ago but has been processed through by both red and blue (and yellow) teams.

The ability for certain people living or working overseas to pay voluntary Class 2 National Insurance contributions was an explicit part of UK law and HMRC policy.

There's alwsys exceptions for almost anyyhing. And the situation you describe is one of them. Im talking about the norm rather than the exception. But i think you know that....

Which was widely felt to be unfair, which is why it changed?
I’m not sure what point you’re making, your statements don’t seem to bear much relevance to the comments. Something can be immoral and legal, something can be legal and disagreed with by a majority of people and become illegal.
No one is claiming it once wasn’t legal.

It's the use of loophole. It was never a loophole.

The whole "moral" argument can be debated until people are blue in the face, it doesn't change anything. The ability to claim more than one state pension having worked in different countries, has been around for nearly 70 years.

Agree, I was paying over £2000 in NI contributions in 1995/96 tax year through PAYE so it seems like a bargain to be able to “fill in” years for £900 each 30 years later. Tbf I was living in UK so benefitted from healthcare etc.

The government pays housing benefits, universal credit, disability benefits, PIP, carers allowances, mobility and god knows what else to people who have never contributed into the system, and never will, a great many of whom are not even British.

I can’t get excited by people paying into the system getting something out of the system.

What I’ve seen is people living abroad for many years, then coming back here in their retirement and claiming pension credit as their state pensions are so low.
And they also got given social housing despite barely ever working here.

Yep, seen that too. If you don’t have a state pension, you get pension credits.

So, people begrudge you a pension that you’ve contributed to for over 35 years, but it’s ok to rock up and say you’re skint and get housing and pension credits.

I also know a few pensioners who live abroad but come back to use the NHS.

If you work FT and pay tax I strongly advise you to make sure you get everything you and your family are entitled to because you are paying for the world and his wife to milk our country dry.

I agree. It should be completely overhauled and every single person claiming should prove that they need it.

I was talking about where I live. Pension is not the word used here by the government.

It’s £900 a year. And you can only go back 7 years!

There was a time you could go back 19 years to 2006, and my sister chose self-employed which is a lot cheaper. That window ended last year. She’s been working about 6 years now so I’d imagine she paid for 14 = £2800.

But I checked in 2019 and couldn’t go back further than 7 years? I don’t understand how that was possible?

Unfortunately for you it seems it was a temporary thing, just googled and was about 2021-25. Hugely frustrating I know, after you checked, who would’ve thought they’d open that offer up? My sister got very lucky!

From a moral standpoint, is it any different from putting a bonus into a pension so it doesn’t tip you into a higher tax bracket, thereby losing you certain benefits?

I’m one of the people taking advantage of this as I immigrated abroad and have been paying NI contributions. From next year my (and my husbands) contribution will be around £900 and change, up from £185.

I’ve always looked at is as payment towards services I might need when we eventually move back (like NHS for example).

So you want it to cover getting a state pension, PLUS use of public services?