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).

What made my mind up to pay was that it only takes three years to get money back. So you put in £1000 each year you get c£300 in increased pension.

It sounds a lot to me, £1400?

I sound to be in a similar boat (worked in the UK, but only in students type jobs) and mine is nowhere near that amount.

But aside from all this, yes, apparently it's the best deal going really!

It’s very stressful, my parents has the same thing happen when they bought their holiday home and the money took weeks to get to the buyer.

DH has already made a lump sum payment for his missing years, and used the HMRCs own payments page which worked well. Also we are making the payment from a UK account which will help - though we will undoubtedly get a grilling from the bank at some point.

You are quite right: that was my mistake. The sums on the letter I received were for class 2 OR class 3. I’ve since been confirmed as class 2 payments, so it’s only £17.80 a month, maximum, as long as I’m working.

Hi did you take out a lump sum of your NZ pension when you were in your 30s?

We were only in NZ for 5 years, and from memory I basically took everything I could with me when we left, as a lump sum.

Hi OP, I got a considerably better exchange rate at the time, but paid for it in anguish !
Its great you can pay from UK funds.

On the plus side,
I must say the people who work on the International DWP phone lines are remarkably, (unbelievably compared to France) helpful, polite & aren't expedient.
Got to love Blighty for that😊

Just be aware that the ability to pay back to 2006 will disappear soon. Read Martin Lewis on this...

www.moneysavingexpert.com/savings/voluntary-national-insurance-contributions/

I have looked at my French record, it’s very patchy as you can imagine. I suspect the UK pension will be the better deal - I’ve never been a high earner, here or in the UK, and I went even have 25 working years to throw in the pot. I did get ‘gifted’ a couple of years after DS2 was born here, but that’s about it plus the last 7 years, part time for 6 of those.

No wonder French women go back to work full time so quickly after having a baby!

it might be different for DH though - he’s a much higher earner and will have more than 20 years working in France by the time he retires. And he started working at 16, only taking breaks to study / uni. Definitely worth looking at the French one.

But could he still claim that if we moved back to the UK??

Why did we make life so complicated 🤦‍♀️😂

You should be able to see online what your weekly pension would be if you left it as now and then you will be able to see what you would get. Look at the difference and work out how long it will take you after retirement to recoup the outlay. I was in a similar situation and in the advice of my FA I paid them about 11k and am now on full pension now. I've been retired for nearly three years and it was two years to be " in gain" as it were. Savings interest rates are dropping here with Labour so it's a good investment. Make sure you don't overpay though. I spoke to someone on the phone and he was very good in explaining it and making sure I only paid what was needed to qualify.

Bloody typical British ... stay in UK and you pay more, God knows why!

I think you pay more if you stay in the UK as your NI contributions covers other benefits like unemployment and sickness whereas if you are abroad you can't claim these.

Ok - that sounds similar to mine ( you've reassured me with this info!)

Setting up the whole thing isn't easy, but appears to be well worth it.

Not sure if anyone is in Canada and has mentioned this, but once you start collecting it, the amount is frozen and does not increase - just an fyi for any Brits in Canada

Isn't the pension age in France 62, rather than the UK at 67?

It’s actually 62 and 6 months. I have 6 months to go. Have worked here for 24 years and have two children but the pension isn’t great. I would have had a nice teacher’s pension had I stayed in the UK - I worked for 11 years.

Before paying such a large lump sum, I'd definitely talk to Axis Financial Consultants. They work with expats in France all the time and can check if topping up actually improves your retirement situation, sometimes it's better to look at a SIPP or QROPS depending on your plans

I've done similar - I had a patchy UK employment history but have fully paid up and am continuing to pay so I get full UK pension and, due to living in a Crown Dependency, I can claim the CD state pension too. So I'll get both regardless of whether I move back to Uk or not...

https://www.moneysavingexpert.com/pensions/voluntary-national-insurance-contributions/

good advice here - especially for UK based people.

This is really interesting - I didn't know it was even possible to do this!

You'll still get your partial teacher's pension though surely? 11/60 for 11 years?

because if you're in the UK you're not only paying for pension "insurance" but also health "insurance" and unemployment "insurance". If you aren't resident you're only entitled to one out of those three, so you only pay for one.