If you are a British expat living overseas, and you have already paid some UK National Insurance contributions, you may be able to secure yourself a UK state pension, even if you don’t ever intend to return to the UK. Here’s how.
The full UK state pension is currently £179.60 a week (2021-2022) which works out at over £9,000 per year. If you’re relying on that to retire on, you won’t be living the high life, but it’s not an insignificant sum and is definitely worth securing as part of your overall retirement planning.
The UK state pension age has been something of a moveable feast in recent years as an aging population places a larger burden on state coffers. Depending on how old you are, the state pension is payable when you reach 66 (over 60s), 67 (most people in their 40s and 50s) or 68 (under 41s).
British citizens who have worked in the UK (as well as some non-Brits) may well be entitled to a UK state pension without realising it.
To be eligible for any kind of pension income from the UK you will need at least 10 qualifying years of National Insurance (NI) contributions while 35 qualifying years entitles you to the full state pension. If you have between 10 and 35 qualifying years your UK state pension will be calculated pro rata.
It is easy to check your eligibility and how many qualifying years you have on the UK government website. Do it now! You might be pleasantly surprised at how many years you have accumulated.
How British expats can secure a full UK state pension
What many expatriates don’t know is that when you leave the UK you can apply to pay voluntary class 2 contributions for the entire time you are overseas in order to secure your eligibility for the full UK state pension.
Class 2 contributions are £3.05 per week (2021-2022) which makes this extremely worthwhile. Think of it as £150 of investment per year to guarantee a return of £9000+ per year in the future and you’ll see why this is a great deal!
Even better, if you have been living abroad for a while, all is not lost. You can apply to backpay contributions for years missed. If you wish to do this, do make sure you apply for class 2 rather than class 3 contributions, as long as you are no longer resident in the UK.
Whether you choose to return to the UK when you retire or continue to live abroad, once you reach retirement age you can claim your UK state pension.
Retirement planning for expats
Don’t make the mistake of thinking that securing the UK state pension is all you need to do to guarantee a comfortable retirement. As mentioned above, this should be just one small element of your overall plan. Everyone, no matter their age, should be saving and investing towards retirement.
There are a wealth of products out there and it can be confusing to know which are the best ones for you. Here at Infinity we offer pension planning services across the Asia region and can help you find the retirement solutions to meet your specific needs.
Feel free to contact us for further information on financial planning to secure a worry-free retirement.