Making voluntary contributions for UK Pension - worth it?

[rickyrickygrimes]

Hi

I've lived outside the UK for 25 years. Prior to leaving I was mostly a student, so didn't accrue many years. Since then, I worked but was also a SAHM for 10 years. I'm now 52, back in the workplace full-time and living in France for the last 17 years.

As you can imagine my pension history is very patchy. I worked FT in NZ when we lived there, but I'm pretty sure I opted to take a lump sum of my pension contributions from those 5 years when we left.

In France, I was a SAHM for 10 year, back in the workplace PT from October 2017 and full time from October 2024. The French state pension is very much based on a full 40 years full time contributions, so mine is never going to match that.

I have the opportunity to make voluntary Class 2 and Class 3 contributions to buy back the missing years in the UK and qualify me for a full state pension. It's going to cost quite a bit though, as I have left it so late: about £1400 in monthly payments, plus £10,000 as a lump sum.

Is this generally a good thing to do? I can't imagine the UK pension is particularly generous, and I'll need to be at least 67 before claiming it. Financially, we are not super-well-off: we've moved around because we wanted to, not because DH has some big expat job / salary (he's a teacher).

Claiming UK National Insurance for years abroad is a great investment given how much pension you get back.

There may be a limit on how many previous years you can claim.

The UK state pension is £221, over £12k a year. So it sounds as if it would worth you investing £11400 now as you'll recoup after even 1 year?

Are you back here now? If you live overseas I don't believe you get the inflationary increases each year. Hopefully someone with more knowledge will be along shortly.

We are still in France and likely to be for some years yet, youngest DC is 14 and we don't want to move until he's out of school at least. DH still has several years to go before retirement, he's a little older than me. We might move back to the UK, if only for social reasons, and family reasons, but who know?

I've been in touch with HMRC and they have given a clear (if complicated to follow) statement of what I need to pay and by when, to qualify for the full state pension.

I think that the monthly payments over the next year are to take me over the 10 year minimum, and the lump sum is to add all the possible qualifying years.

I spoke to an accountant about this. He told me it was a no brainer, pats for itself in no time. We have both 'topped up' as we were 3/4 years short as we'd been in public pension schemes and therefore 'opted out'.

I can't see why it is so much as when I was working overseas recently I paid Class 2 Voluntary NICS and that was only around £160 per year. My partner (also overseas) has just been in touch with HMRC to fill in some missing years and they tried to charge him £800+ per year but he's challenged this and sure enough they've now said said he can pay the lower rate.

Will this add up to the necessary years to get full state pension? Or do they expect you to top up £900.00 (currently this is the cost per year) a year til you are 67 too?

We lived abroad a lot and returned to the UK. I topped up all my missing years. I think it is definitely worth it at your age.

I have 9 years to go til I reach the full quota and we will be moving abroad again so I will top up those years. Just have to work it into your budget.

Yes, if you are in good health it is worth it. Contrary to PP, if you are resident in EU, the pension does increase annually. Certain countries don't, Canada is one I believe. It might be worth a visit to your local France Services to speak to them about pension and taxation though. I think that you will pay tax and social contributions on UK SP.

Definitely do it. Yes there will be an outlay now to buy back your missing years, but the investment is definitely worth it ( UK pension currently about £1000 per month and if you're still living in France when you claim it, it will continue to go up - unless of course the current rules change). In addition the qualifying years you have in the UK can go towards your french pension - they will be added to the 'trimestres' you'll need to claim a pension in France.
I'm in a similar boat, worked in the UK for 10 years, had a career break and have been working here since 2001. I've bought back about 17 years of class 2 contributions, need another handful for a full UK pension and plan to retire here in about 3 years.

Yea, it’s a no brainer. I loved overseas for 25 years and paid voluntary contributions and will get a full state pension.

I got assessed as most years Class 2 but a few years Class 3. You can call up or write and ask for your contributions to just go to Class 2 years, as that is cheaper if that gives you enough years for a full pension. It took about 12 months and 2 hour long phone calls to finally get my contribution record straight.

I don't really understand the Class 2/3 distinction - I was taking a career break to look after my young children when we left the UK, but still got most years Class 2.

I don't understand your figures. I had less than a month 10 years and was able to buy back 17, it was class 2 (I think in about £260) per year for the years I could prove I was working abroad and class 3 (about £850) for the years I was abroad but not working. So mine was about £5500 all in for 17 years.

Max it should be is the class 3 contribution shown on your NI record for each of the years that are open.

Have you already sent in your application?

Could you get some financial advice to compare to other investments? I really need to understand pensions better myself but if you don't reach SP age you don't get anything. My mother made top up payments only to pass away two weeks after her 68th birthday. She did collect two years pension though as she qualified at 66. Would some other form of investment mean that you don't lose what you've paid into should something happen/ you could access earlier if you wanted or needed to? Some are going to struggle working until retirement age especially if it keeps moving.

Sorry -start of my post should be "I had less than 10 years of NI contributions"

Sounds like I'm in a similar position to what you were. 14 years accrued when we left UK in 2005 and at that point hadn't worked for a 2.5 years as had 3 young kids. Started working 2 years after we arrived overseas and have worked 18 years since. I've been classed as having to pay ALL years since 2005 at class 3 as I wasn't working "immediately" before leaving or on arrival. My argument is that receiving child benefit at the time should surely offer me some protection against being treated differently for having children. Were you able to use this reason for getting Class 2?

@cabbagefordinner That sounds very similar to my work record. I just got assessed as the few years I didn't work being class 3, I didn't have to argue this. I hope you can get the same, it doesn't seem fair otherwise.

My problem was that the first year of the gap in my records to pay back was a class 3. When I made a voluntary contribution, it just went to that year then my whole record of remaining years switched to class 3 as I had made a class 3 contribution. I did get this sorted eventually by writing letters and calling up.

If you want a pension you need to pay your contributions. The DWP website explains it
It is a no brainer at the moment. It may not be available for much longer either. Not surprisingly

Thanks for reply. I'm going to call again today. So just to clarify, you were able to argue that the not working "immediately" before leaving and on arrival due to child care reasons didn't bar you from Class 2 once you did start working?

@cabbagefordinner Not exactly - I didn't have to argue this. I applied to pay class 2 contributions and this was accepted except for the 3 tax years when I wasn't working which were classed as requiring class 3 contributions.
2006-2007 paid maternity leave, normal full year
2007-2008 part of year paid maternity leave, in England, class 3
2008-2009 moved abroad, not working, class 3
2009-2010 living abroad, not working class 3
2010-2011 Back in work abroad, class 2
I don't plan to pay off the class 3 years as I have enough with class 2's.
Hope that helps!

Thanks so much for that info. having spoken to other people, the "working immediately" criteria is incredibly vague. I have no problem being assessed as Class 3 for when I wasn't working, but not for the past 18 years that I have been!

Thanks all for the input. I have been back and read through all the paperwork (I had left it to DH tbh, he's been on a mission to sort all our pensions out as he is older than me and wants to retire sooner).

I had 9 qualifying years before leaving the UK in 2003ish. I can only buy back as far as 2006-07. They have sent an assessment of all the years from 06-07 to 23-24, which is a mixture of class 2 and class 3 - depending on whether I was working or not. It looks correct to me (generous if anything as I was very part-time for some of those years). The total to pay for those years will be £9047 - most of it has to be paid by 5 April 2025. Once I have paid these up, I will have 9 existing + 18 made-up = 27 qualifying years, leaving me pay up a further 8 years to qualify for a full UK state pension. If I continue to work, this will be as class 2 contributions, or class 3 if I stop.

So yes, it looks very worthwhile considering my age / situation to make up the years now.

You can choose to either transfer years from the UK to France or vice versa.
So your years working in France would count towards your UK pension.

You need to work out if it's better to claim your pension in France or in the UK.

I'm also pretty sure you can claim a % in France and a % in the UK - so split but you'd have to check this.

Have you checked your French pension contributions ? This is important to do.
You need 172 trimestres, so 43 years for the full amount. You could transfer the 9 years so 36 trimestres from the UK to add to what you've accumulated in France.

If you don't have the full 43 years, but say half that, you'd get half the pension.
It is also based on your average earnings over your highest earning 25 years with a maximum of 40 000 euros.

You may even be able to transfer years from NZ, I had an American colleague who retired in France and all the years in the US were transferred over.

More info here:
www.service-public.fr/particuliers/vosdroits/F21552

I paid. I could only go back to a certain date, so it's not a full pension.
I will break even after about 2 years, so figure that it's a good investment. (Unless I suddenly die, but won't be here to worry about it.)
As an aside. I sent an international payment (via a money broker) & there was a huge wait months for them to "find it".. I actually cried down the phone (frustration/relief) when after months, the DWP woman said that the money was in the right department & allocated. I thought my 12K had disappeared into the ether
The money came out of a French bank, got to the broker's bank & was proved to have been sent on with the correct references.

A friend of mine has the same issue, its not comfortable.

I paid a similar amount (c£10k) in voluntary contributions a few years ago and gave kept it up since . I am on track now to receive a full state pension.