Living Overseas and NI Contributions

#1
Any ex-pat squaddies out there who still pay national insurarance? If so - why?!

I am getting mixed opinion on if I should, or should not keep paying NI if living overseas after de-mob.

Any advice is most welcome.
 
#3
Why, what's the point?

You can make voluntary contributions, yes.

Why would you want to do that?

So you can receive a higher pension at the end?

I'm semi-retired at 53. I don't pay NIC because;
a.) I've got sufficient to survive on and that will always continue,
b.) I'm fcuked if I'm going to pay for something I'm never going to need the benefit of, and
c.) the system is set up for abuse and I won't support it.
 
#4
Swamp_Rat said:
Why, what's the point?

You can make voluntary contributions, yes.

Why would you want to do that?

So you can receive a higher pension at the end?

I'm semi-retired at 53. I don't pay NIC because;
a.) I've got sufficient to survive on and that will always continue,
b.) I'm fcuked if I'm going to pay for something I'm never going to need the benefit of, and
c.) the system is set up for abuse and I won't support it.
You will, by now, have made x payments towards your old age pension. For the maximum pension, you will need to make y payments. Go to the pensions site, fill in the form and then sit down and work it out. If the internal rate of return is higher than that which you can get from a building society, then start paying. If you are up to your eyeballs in debt, then don't. I am reasonably well off, but that £80+ per week will keep me warm for a few days each week, at least. Plus, not claiming it would make Gordon happy and I can't do that.....

Litotes
 
#5
True, true. Yes that would always make good sense for one and all to do the sums before committing.

I did the calculation when I left the kate and mobilised the family overseas on discharge so I haven't paid a penny for fifteen years.

I'd also like to add that buying a bottle of One Barrel every week gives me more enjoyment than paying it to a foreign (UK) government :)
 
#6
I do remember something about the Government freezing pension payments to ex-pats in Australia, New Zealand, Canada and South Africa at what the current pension paid out in 2002 and will no longer be indexed linked for people living in those countries. If that is the case then it is hardly worth contributing to a pension like that as it will be worthless by the time you retire. There was something about it being taken to the European court of human rights and was overturned. I know that if you make contributions up to five years after your last payment , your pension is not effected, after that you will not get the maximum payable. Seems like a private pension or playing the stock market yourself might well serve you better than anything else, even property might be a better nest egg than the vagaries of the pension system.
 
#7
xpatkiwi said:
I do remember something about the Government freezing pension payments to ex-pats in Australia, New Zealand, Canada and South Africa at what the current pension paid out in 2002 and will no longer be indexed linked for people living in those countries. If that is the case then it is hardly worth contributing to a pension like that as it will be worthless by the time you retire. There was something about it being taken to the European court of human rights and was overturned. I know that if you make contributions up to five years after your last payment , your pension is not effected, after that you will not get the maximum payable. Seems like a private pension or playing the stock market yourself might well serve you better than anything else, even property might be a better nest egg than the vagaries of the pension system.
My sentiments entirely. Enjoy it while it's in your hand or at least put it into something where you know it will make an effective return. As you say, even property where you will always have the rent to supplement your income.

Also, I understand the countries you mentioned have a reciprocal agreement with UK, for tax and pension purposes.
 
#8
I have the same dilemma as yourself. I have paid in 22, i think the max is going to be reduced to 30 years, which I find goes well against the Pension headlines. My wife who is a Canadian has paid in less. I think we are better off, starting up something new in the country we will make home.

Slightly off thread but does any expat out there have any good gen about pensions and lump sums, ie is the monthly index linked when you are receiving it overseas, and secondly for the lump sum did any expats get jiffed with foreign tax.
 
#9
Mate, I would suggest starting a new thread with that as the topic.

After clarifying your question because I'd like to help you if I could but I don't really understand what you're chatting about.
 
#10
I moved abroad 1 month after discharge. I initially paid NI cont at the voluntary rate (about £30 per month) but later switched to the self employed rate (at the suggestion of HM R & T) of £8 per month. I received a letter last year advising me to stop paying as I have completed 30 years of contributions & am therefore eligable for a full state pension.

I wrote to HMR&T in Jan to clarify the situation & await their answer.
 
#11
fingers_1661 said:
...I didn't commute & therefore receive a fixed rate (WOII) of appx £700 until I reach 55. HMR&T take around £50 in taxes per month but the rest is mine.

Surely if you are ordinarily resident overseas, you are therefore not subject to UK tax? Why are you paying 50 quid a month tax on your pension?
 
#12
There are multi-national agreements in place that mean you get taxed at source but do not get taxed again by your adopted country, unless you are in one of those countries that does not subscribe to the agreement, then it is up to you and your tax declaration! Sorry, don't know what the agreement is called but I looked into this when I left over 12 years ago. Regardless of where you go though, HMG will take their pound of flesh!
 
#13
Thats called the Double Taxation Agreement and currently the list of countries that subscribe is over 30 (See link section 9.16 for a complete list.

Residence, ordinary residence and domicile - more detailed definitions from HMRC

9 Double taxation relief

9.1 If you have income or gains from a source in one country and are resident in another, you may be liable to pay tax in both countries under their tax laws. To avoid 'double taxation' in this situation, the UK has negotiated double taxation agreements with a large number of countries. A list of these is given at paragraph 9.16.

Non-residents, and residents of more than one country

9.2 If you are a resident of a country with which the UK has a double taxation agreement, you may be able to claim exemption or partial relief from UK tax on certain types of income from UK sources. You may also be able to claim exemption from capital gains tax on the disposal of assets. The precise conditions of exemption or relief can be found in the relevant agreement. It is not possible to give full details here as they vary from agreement to agreement. If you are resident both in the UK and a country with which the UK has a double taxation agreement, there may be special provisions in the agreement for treating you as a resident of only one of the countries for the purposes of the agreement.

9.3 Normally, you will receive some relief from UK tax on the following sources of income under an agreement

pensions and some annuities (other than UK Government pensions)
royalties
dividends (paid before 6 April 1999)
interest
Some agreements state that you must be subject to tax in the other country on the income in question before you get relief from UK tax.

9.4 If you receive a pension paid by the UK for service to the UK Government or to a local authority in the UK, you will usually be taxed only by the UK.

Tax-free personal allowances for non-residents

If you're a Commonwealth citizen (including British), European Economic Area (EEA) citizen, or a current or former Crown employee, you'll still get your tax-free personal allowances to reduce the amount of UK income due. Members of certain other special groups also qualify.
So in summary you will pay tax on your pension but you also are eligible for your tax free allowance, providing it is your only source of income while living overseas. If you do want to protect your NI contribution status you can back date payments up until 5 years of not being "ordinarily resident". I am not sure what happens past that point yet but I need to find this out as I have now close to that point,

Hope that helps :plotting:
 
#14
Got out after 12 and moved straight here to the US 2 years ago - Not been paying it. Not sure whether to pay the catch up or not; probably not in all honesty, if the worth of the state pension is to be believed in another 30 years time when I'm set to retire. Plus, I'm paying into the spam system here - 30 years of that is about the same as what its worth in the UK.
 
#15
RE: fingers 1661; you said that you had paid 30 yrs and that qualified you. I just spoke to the Pension Office and they said it was currently 44 years of payments but MAY come down to 30. Suggest you check!

For ex-pats out there, you can ring the Pension Overseas Dept on (44) 845 9154811. they are easy to talk to and very co-operative.

As to if I will keep paying NI? Not sure! Currently it is GBP 7.55 PW for Class 3 contributions which adds up to quite a p*ss up at the end of the year!

As to double tax, you can ring the tax office on (44) 845 3003949 and ask to be put through to somebody who deals with double taxation agreements. I did this and that found a chapter in the deal the UK has with Denmark (where I will settle) and gave me all of the details on how I was not eligible for Danish Tax on my Service Pension - very helpful
:biggrin:
 
#16
Listening to radio 4 tonight and I believe that the bill to bring NI contributions down to 30 years (to be fully paid up) is going through now.

Still time for it to be scrapped though.
 
#17
bullshit said:
RE: fingers 1661; you said that you had paid 30 yrs and that qualified you. I just spoke to the Pension Office and they said it was currently 44 years of payments but MAY come down to 30. Suggest you check!

For ex-pats out there, you can ring the Pension Overseas Dept on (44) 845 9154811. they are easy to talk to and very co-operative.

....they suggested I ring again in Sept 07.

Re Tax on pension; I can't understand why we (mil pensioners) must pay into UK coffers from afar but are excluded from the benefits available to 'ordinary residents':(
 
#18
Fingers,
is it taxed at source or,
you have to complete an annual tax return and after they calculate how much you owe, you pay them?
 
#20
Either way, if you;
a.) declare your pension as your sole source of income and
b.) are not ordinarily resident in the UK,
then surely you are not liable to UK tax?

Unless of course the place where you are ordinarily resident (that is, for more than 186 days in the tax year) has a reciprocal agreement with HM tax office?

Not saying I'm right, please correct me if I'm wrong or missed something.
 

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