Did you know that you remain eligible to contribute and then receive the UK state pension even if you live overseas? Here’s the lowdown on the UK state pension and how to make sure you qualify for it.
How much is the UK state pension?
The full UK state pension is currently £175.20 a week (2020-2021) which works out at £9,110.40 per year. It’s not a fortune but it is a nice bonus, which could be used for things like medical insurance costs if you are living overseas in the future.
At what age is the UK state pension payable
This depends on your current age as the state pension age in the UK is rising.
- If you are 60+ now, you will receive your state pension when you reach 66
- If you are 42-59 now, you will receive your state pension when you reach 67
- If you are 41 or younger, you will receive your state pension when you reach 68
Am I eligible to receive a UK state pension?
If you are a British citizen and/or if you have worked in the UK you may well be entitled to a UK state pension.
Eligibility is based on your National Insurance (NI) contributions and you will need at least 10 qualifying years to receive a pension income from the UK.
To qualify for the full UK state pension you will need 35 qualifying years.
If you don’t have 35 qualifying years, the amount of the state pension you receive will be calculated on a pro-rate basis.
To check your eligibility and how many qualifying years you have, check your National Insurance record at this link.
Can I contribute if I live overseas?
Yes, you can. You can carry on paying voluntary class 2 contributions while you live overseas to secure your right to the full UK state pension. If you have been living abroad for a while and not contributing, don’t panic, you can pay up to six missed years and then carry on paying monthly going forward.
Class 2 contributions are less expensive than Class 3 contributions so if you decide to backpay, make sure that you are contributing the correct amount relevant to your status as a non-resident.
Is it worth contributing while I’m living overseas?
In most cases I would say, yes! The Class 2 rate of contributions is currently £3.05 per week (2020-2021) which works out at £158.60 per year. So you pay £158.60 per year to receive £9,110.40 per year in retirement. It doesn’t take a genius to work out that that is a good investment.
What if I retire overseas?
It doesn’t matter. You can continue to pay your Class 2 NI contributions wherever you are in the world and when you reach retirement age, you can claim your state pension even if you stay living outside the UK.
The main difference is in certain countries, the annual amount you receive will not be index linked and increase each year, depending where you live.
I’m young, I don’t need to think about this yet
You do! The earlier you start, the more chance you have of clocking up 35 qualifying years and securing the full UK state pension.
That’s my retirement sorted then…
Well, not quite. Clearly, it’s a great idea in most cases to continue paying your NI contributions to secure your UK state pension. What is NOT a good idea is relying solely on that pension to fund your retirement.
If you’re an expat working overseas you should also be saving and investing towards your retirement with products tailored to your situation.
Here at Infinity we offer pension planning services across the world and can help you find the retirement solutions to meet your specific needs. Feel free to contact me at cturner@infinitysolutions.com with any questions you have about your own circumstances and how to secure a worry-free retirement.
Senior Financial Consultant- Highly Commended Emerging Talent of The Year (International Investment Awards 2019)
I aim to maintain and grow an excellent relationship with each client which lasts throughout their working lives and beyond. I strongly believe that a good financial adviser can make a significant difference to an individual’s financial success and positively impact their lives, which is why I love doing what I do.
