Thousands of Irish people who have worked in the United Kingdom have just days to act to secure a UK pension when they retire. Others run the risk of paying €6,250 to improve pension cover that costs just €1,250.
The UK is changing the rules about who can voluntarily buy back years of national insurance to fill gaps in their social insurance record, which determines if and how they will receive a UK state pension.
At the moment, anyone who lived there for three consecutive years or who has made three years of paid national insurance contributions can purchase voluntary national insurance to secure the 10 years of cover that is a minimum to qualify for a UK state pension.
Above that minimum threshold, people can purchase voluntary years to bring their weekly UK pension closer to the maximum weekly payment, which requires 35 years of contributions.
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Hundreds of thousands of Irish people have spent time working in the United Kingdom before moving elsewhere or returning home.
However, from next Monday, unless they have already started buying back national insurance years, they will not be allowed to unless they already meet that 10-year threshold, or have lived in the UK for 10 consecutive years.
The new rules will also make it more expensive for Irish people to purchase voluntary national insurance.
At present, if you either worked until you left the UK or were formally unemployed, that is, in receipt of jobseekers’ benefit or other welfare payment – and are still working, you qualify for what are called Class 2 contributions, which cost £182 (€209) for each year of national insurance that you are purchasing.
Anyone else must pay £907.40 (€1,042) for Class 3 contributions.
Former UK workers can buy back national insurance for the previous six years.
From April 6th, only Class 3 purchases will be available to people in the Republic and elsewhere outside the UK to purchase.
With people entitled to buy back national insurance cover for the previous six years, it means that anyone qualifying for Class 2, who fails to act in the next couple of days, will face a bill almost five times higher to do so – €6,252 versus €1,254.
Galway-based XtraPension, which has specialised in helping people who worked in the UK to maximise their pension benefit, says the important thing for anyone looking to get their foot in the door before the new stricter rules come into force is to file a Form CF83 to the UK tax authorities. An online version of this form can be found here.
“We find that 23 per cent of our customers have more than 10 years’ history,” said John Ring of XtraPension.
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That means that over three-quarters of applicants have less than a 10-year national insurance history. If they do not act before April 6th, they will not be able to buy back years in the future.
The new rules bring the UK system broadly into line with what is available in the Republic for people looking to pay for voluntary PRSI cover. In this State, you need a minimum of 10 years’ paid PRSI stamps to qualify to buy back additional PRSI cover voluntarily.
You are also required to act within five years of the end of the last year in which you paid PRSI here and to date any voluntary PRSI back to when you stopped paying PRSI.
