What does the hive mind think about buying back missed years of state pension?

I’ve worked abroad for 10 years, not sure if we will or won’t end up back ‘home’ when we retire

From my limited understanding it used to be a no brainier as it was cheap £300 per year, but now I think it’s £1800 per year and who knows how old before you can claim it?

It won’t be my only income and I’m won’t be relying on it, currently entitled to £150 pm according to the calculations and I won’t be able to max out my Canada pension as you have to work 40 years to get that

Earlier this year I bought missing years from when I was abroad and it was a no brainer, as you say. Not aware that it’s changed recently? It WAS a royal pain in the blx to get them to credit my account properly, but well worth the effort.

Come back illegally apparently you’ll get £29k per year and a full pension.

Come back illegally apparently you’ll get £29k per year and a full pension.

per week….

Can you see your NI record online?

Curious to check mine….

I’m filling out the paperwork at the moment with the help of my Mum

Dr J I think it’s like being self employed you pay your NI, so when I was self employed it was £5 per week, talking to a tradesman I know now it’s £1800 per year, think it changed last year which is the story of my life, a day late and a dollar short, think you can only go back 7 years now though as well, but can contribute going forward

Bear in mind I’m out of country so feel a bit disconnected with current mood and opinion so hearing headlines like pension age of 75 etc gets me wondering

It’s complicated all of a sudden becoming a grown up, everyday is a school day again lol

Yeah sign up for the hmrc app

Yeah, it’s Class 2 vs Class 3. Sounds like I just squeaked in, which is unusual for me – usually my financial decisions are crap.

Also I read the same thing about only going back 7 years, but they credited me for older missing years. Maybe they made a mistake …

(If HMRC are reading this, it’s not about me, honest, it’s just what a bloke in a pub told me, sorry, can’t remember his name …)

Edit – dealing with them was a nightmare – every time you have a question it’s another issue that a case worker may get round to dealing with in 3-4 months. Then their answer is not complete so you need a follow up question, 3 months more. Years pass by. Then some idiot tells you “we’re busy, it’s tax filing time” – yeah but it wasn’t when I started this shenanigans!

Yeah sign up for the hmrc app

There’s an App! How 21st century……..

Dr J

They are a perfect fit for me then, I’ve only been getting on this for 8 years so far, so between me and them I will have it sorted at 68 and know if it’s worth it

Can you see your NI record online?

https://www.gov.uk/check-national-insurance-record

I have lived abroad for 20 years and pay ni voluntarily to max out my state pension. I think I have 35 qualifying years now so just 2 to go, or 33 out of 35 I cannot remember. However, I do think by the time I get there the state pension will be means tested, and as a non resident doubt I will qualify. But at c 700 per year now…i have started so I will finish.

Canada freezes uk state pensions I believe, my uncle is a canadian resident and receives a whole 17 quid a month. You better mke sure you have other funds in place.

You nailed it tho, I started at 300 pa, now its 700, or as you say more. If it were over a grand and I had 7 to buy I may not do it. Also, i have done it as i went along so did not really notice it.

Actually, just to add, when the price goes up its only the qualifying years post price increase that are charged the higher amount. The old gaps can be bought at the rate prevailing at the time. So your old years will cost you c 600 to 700. Sorry I don’t know the actual costs i just pay it and forget all about it.

I think the payback time vs purchase cost of a missing year is still running at under 4 years – haven’t checked lately – which would make it one of the most advantageous ways of bumping up retirement income you can get.

The only drawbacks are age of qualification moving ever outward, and the classification of State Pension as a benefit, which makes it politically vulnerable. No party would dare mess with it at the moment but a demographic shift towards a younger voting population might bring that into play. So it’s worth topping up, but not worth doing so too early, IMO.

I have just bought back 3 years. Each extra year costs approx £15/week and increases your pension by approx. £5week. As Johhners says the payback time is about 3.5years if you are taxed. But after that you have the extra income index linked.

HOWEVER you also have to check what your total qualifying years will be at retirement age. Buying more years than the maximum qualifying years (35 on new state pension) will not gain extra income.

This is slightly confused if you overlap new and old system – you can get a forecast and then phone to check what payments are worthwhile. They are actually good on the phone.

https://www.gov.uk/check-state-pension

The forecast will should give you 3 figures – how much you would get on current contributions – how much if you continue making contributions to current retirement age and the maximum you can get if you make a top up.

Canada freezes uk state pensions I believe,

Not quite. Canada is one of the countries where the UK government doesn’t have an reciprocal social security agreement, so you get your pension paid at the same rate as when you retired.

https://www.gov.uk/government/publications/state-pensions-annual-increases-if-you-live-abroad

Its not a very long list once you discount the EEA countries:

Barbados
Bermuda
Bosnia-Herzegovina
Jersey
Guernsey
the Isle of Man
Israel
Jamaica
Kosovo
Macedonia
Mauritius
Montenegro
the Philippines
Serbia
Turkey
USA

The same may be true of the UK and other European countries at the end of next year depending on how negotiations turn out…

Thanks that is really useful. I just have 2 left to buy, but my celebrations at buying my 30th year were a bit premature, it then went up to 35.

Also, bear in mind the 160 pw is a target, you have to net off your contracted out years. Still a good investment as pointed out.

How does one pay HMRC for it? I have an online account, and I tried to click through and buy a partial year once, but got absolutely nowhere. And I’m not completely computer illiterate either…

When you say the payback time is about 3.5 years do you mean I have to live 3.5 years to be ahead?

Also if it costs £15 pw but I receive £5 pw I would have to live a long time as in 105 years after retirement to break even so I must have the wrong end of the stick there

How does one pay HMRC for it?

I requested a statement of what I could buy (there’s a form to fill out on the HMRC website – can’t remember what number it is), and the cost, and then phoned them to ask what to do. They gave me their bank account details and a reference code to use when making the transfer.

BUT.

After a long time nothing happened, so I phoned again and asked if they had credited my account and bought the missing years. They said “no, but we can see that a payment has been made, we don’t know what it’s for, it’s just a credit on your account”. I asked them to apply the credit to the payment, and they said they would. I checked later and they’d bought SOME of the years. More phone calls, letters, months going by. THey finally completed the transaction.

Yes I have a paper trail of letters confirming what qualifying years I have, they said x then y, then another letter saying the first letter was a mistake. I suspect the rules change and staff turnover.

So i pay by cheque sent to hmrc for each gap year even if I am buying 3. Then I can prove i bought each one. Each year I get a paper statement confirming what years I have, how many gap years I can buy and the cost.

Fin – I think I bought a part year once, they told me i could top up to buy a complete year so I did. All the other gap years were whole years tho. I do everything by phone and letter.

‘re payback I just calculated 3 years based on 700 cost and 160 full state pension.

re Payback – 1 year costs approx. £750/year – extra pension = £250/year hence 3 year payback. Bit longer dependent on tax.

BUT Do check the links above re NI record and pension forecast – lots of folk have paid for years that do not qualify. Also phone Future Pensions – who are v good.

Payment online – no acknowledgement – just eventually appeared as an update to pension forecast – not the best system.

If you have been opted out you wont get full £160/week but I am pretty close.

And I just got a £10 Christmas bonus 🙂