We have reopened for Applications due to HMRC Deadline Extension
Extension Newsflash! It has been announced that HMRC have extended the deadline to claim up 17 gap years of UK State Pension.
Mel Morgan of UK State Pension Abroad spoke with Joe Lynam on Newstalk Business Breakfast (28 Nov 2023) Listen back to the interview below.
Listen to Mel on Newstalk Business Breakfast (5 mins)
Claim Your UK State Pension
If you’ve worked 3 years or more in GB/Northern Ireland, you may be entitled to redeem a UK State Pension of more than €230* per week when you retire.
You Need to Act Now. Up to April 2025** only, you can buy back up to 17 years pension rights at very little cost. After that you can only go back 6 years, limiting your ability to claim full State Pension rights.
*Currently full UK State Pension payment is £203.85 per week and index linked for future years (see the Triple Lock Guarantee below)
While you have until April 2025, HMRC are guiding up to 10 months to reply, meaning you have only until May 2024 in reality.
UK State Pensions Abroad is an Independent Official Overseas Agent of His Majesties Revenue and Customs
We provide information and execution not pension advice
We are not part of the UK Government, but an Independent agency helping people enhance their UK State Pension.
UK State Pension Projected Calculator
Potential Estimate of your weekly UK State Pension age 66-67*
NOTE: This is the estimate of the current potential value and will involve further contributions to your UK State Pension. This is the value if you were 66-67 today. It is index linked annually by at least 2.5% from now until you reach that age through the Triple Lock Guarantee
*Depending on your current age you could be assessed between your 66th and up to your 67th birthday
At UK State Pensions Abroad, we do not offer pension advice; we offer specialised information and implementation assistance on UK State Pension entitlements. For pension advice contact your financial advisor.
What is the UK State Pension?
The UK State Pension is a contributory pension which is funded by the UK government and provides a pension amount in 2023 of up to £203.85 per week on reaching pension age. This amount usually rises year on year (+10.1% in 2023), and is subject to a unique Triple Lock, guaranteeing a worthwhile boost annually towards your final amount when retirement beckons.
When will the UK State Pension commence? For people currently above 60 years in 2021, the retirement age is between 66-67 years old. Generally, for those who reach 60 after 2021, the pension payments begin on their 67th birthday. (It should be noted that UK government has a plan to extend the retirement age, but this would be very gradual should it happen).
It is worth noting that the State Pension scheme was revised in 2016 with a new State Pension being introduced. the new State Pension applies to those claiming benefits in the years before then.
How do your UK State Pension Entitlements Work?
If you have worked and paid National Insurance (NI) contributions in the UK (minimum of 3 years), you have a potential entitlement to a UK State Pension. However, until you have 10 years of National Insurance contributions, you do not qualify for a pension at all. That is not bad news because you may have the ability to “buy” back years of NI contributions (2023/2024 final year to buy up to 17 years back, after that is just 6 years) and you can continue to contribute annually until you reach retirement age.
The full State pension is (at 2023 value) is £203.85 per week. To achieve this, you need 35 years contributions. While that may appear unattainable, it can be, as illustrated below.
Example 1: Age 55, worked 5 years in early 2000’s in the UK before returning to Ireland.
Number of qualifying years 8 (UK Government allow bonus years for education and training in almost all cases of 1-3 years).
Qualifying years are 10, then add 12 years contributing annually until retiring + buying back 17 years =35 years contributions on reaching age 67. This yields £203.85 weekly on retirement (at 2023 values which are index linked for the future).
These buy back and continuing contributions are effectively “Additional Voluntary Contributions” (AVCs) to your future State Pension benefits.
These AVCs can be very good value and come in two Class types: Class 2 and Class 3. If you are fortunate to be deemed by HM Revenue and Customs (HMRC) as Class 2 (as most are who returned to Ireland and continued in employment here) they can be redeemed for approx £165 per year.
That means in the example above the 17 years in the past to 2007 can be bought back for £2789 and the annual payments (10) from 2023 until retirement will cost approx 10 x £165 = £1650. That total cost will be £4439.
Upon retirement in this example the benefit will be £203.85 per week (this is 2023 value and should be much more on retirement as it is triple lock index linked) or £10,600 per year pension.
The payback on the investment is less than 6 months!
If you don’t qualify for Class 2, then Class 3 Applies, which costs appx £800 and still pays back the investment in approximately 2 years
Example 2: Age 60. Qualifying years 8
Age 60. Qualifying years 8 +6 years contributing until retiring + buying back 17 years = 31 years contributions on reaching 67. This yields £180.55 weekly on retirement at 2023 values which are index linked.
These buy back and continuing contributions are effectively “Additional Voluntary Contributions” (AVCs) to your future State Pension benefits.
These AVCs can be very good value and come in two Class types: Class 2 and Class 3. If you are fortunate to be deemed by HM Revenue and Customs (HMRC) as Class 2 (as most are who left the UK continuing to work abroad from the UK) they can be redeemed for approx £165 per year. That means in the Example 1. above the 17 years in the past to 2006 can be bought back for £2789 and the annual payments (6) from 2023 until retirement will cost approx 6 x £165 = £990. That total cost will eventually be £3779.
Upon retirement in this example the benefit will be £180.55 per week (this is 2023 value and should be much more on retirement as it is triple lock index linked) or £9389 per year pension.
The payback on the investment is less than 6 months!
If you don’t qualify for Class 2, then Class 3 Applies, which costs appx £800 and still pays back the investment in approximately 2 years
Example 3: Age 47, worked 7 years in the UK 2006-13 before returning to Ireland to work.
Number of qualifying years 9 (UK Government allow bonus years for education and training in almost all cases of 1-3 years).
Qualifying years are 9, then add 20 years contributing annually until retiring + buying back 6 years =35 years contributions on reaching age 67. This yields £203.85 weekly on retirement (at 2023 values which are index linked for the future).
These buy back and continuing contributions are effectively “Additional Voluntary Contributions” (AVCs) to your future State Pension benefits.
These AVCs can be very good value and come in two Class types: Class 2 and Class 3. If you are fortunate to be deemed by HM Revenue and Customs (HMRC) as Class 2 (as most are who returned to Ireland and continued in employment here) they can be redeemed for £165 per year.
That means in the example above the 6 years in the past to 2007 can be bought back for approx £980 and the annual payments (7) from 2022 until retirement at 67 will cost approx 20 x £165 = £3300. That total cost will eventually be £4280 (future annual contributions may increase slightly in line with inflation, but then the eventual weekly pension benefits increase annually also).
At today’s values the weekly UK State Pension payment is £203.85 or £10600 annually. So, the payback for your eventual £4280 investment is less than 6 months!
Why is it Critical to Apply Immediately?
The rules are changing and from next year you will no longer be able to “reach back” 15 years to improve your UK State Pension entitlements. Processing your claim by HMRC is steady but very slow, and you will need to ensure you have approval in good time.
Will this affect my rights to the Irish Contributory State Pension?
The Department of Social Protection have answered our specific enquiry on this topic “Your UK pension does not impact the personal rate of your Irish State pension”.
When you redeem extra years on your UK State Pension, you are making an AVC (Additional Voluntary Contribution) to your UK State Pension. Effectively, you are accessing (probably) the best value AVCs that exist. If your contributions are assessed as Class 2 by HMRC, the cost of all your contributions are paid back within 6 months on retirements, and you enjoy the benefits for your lifetime. Even if you are assessed as Class 3, the payback is just 2-3 years.
Your UK State Pension can allow you to double the value of your Irish Contributory State Pension!
Is Brexit a factor?
Happily, the agreement concluded between the UK and Irish Governments in 2019 reaffirms that existing cross-border social security arrangements, including UK State Pension, will continue post Brexit. the Under the CTA (Common Travel Area) Irish citizens have access to the UK state pension in the same way as the British so, we have the ability to boost our UK state pension rights while outside the UK (subject to approval from HM Revenue & Customs).
What is the Triple Lock Guarantee on UK State Pensions
Annual increases to the UK State Pension are based on the Triple Lock provisions introduced by the British Government in 2010. This states that the UK State Pension benefits increase by whichever of these is higher of 2.5%, the UK rate of Inflation, and annual UK earnings. Effectively this means a minimum of 2.5% growth per annum, and more if either of the other 2 are higher. In 2022 the annual increase was 3.5% and in 2023, because of increased inflation the increase in pension was 10.1%
What can UK State Pensions Abroad do for you?
We can simplify what is an involved procedure dealing with two separate UK Government departments. We have a defined process, taking your information just once and populating all the forms needed from this, getting your e-signatures and handling all the paperwork, as an agent of HMRC.
We do not offer pension advice; we offer specialised information and implementation assistance on UK State Pension entitlements. For any pension advice contact your financial advisor.
We can assist by liaising with the two UK authorities that assess and approve State Pensions on your behalf. The UK Department of Work and Pensions (DWP) to get a Pension Forecast for you and His Majesty’s Revenue and Customs (HMRC) who are the ultimate arbiter of your UK State Pension rights. We are a registered agent of HMRC.
Here is how it works:
1. You complete one secure form on our platform.
2. We fill in all the required forms for you, get your signature and get them to the UK Government Departments on your behalf.
3. We review with you the Pension Forecast report from UK DWP once received after 3-5 weeks.
4. You decide if you wish to move to Phase 2?
Phase 2 – Pursue the HMRC State Pension statement which will assess whether you are in Class 2 or Class 3, determining the cost and ability of claiming past year AVCs.
Phase 1 Fee to UK State Pension Abroad is €275 payable on registration
Phase 2 Fee to UK State Pension Abroad is €275, payable should you wish to progress to Phase 2.
