IMPORTANT UPDATE! The deadline mentioned in this article has been extended from 5th April to the 31st July by HMRC.
Have You Worked In The UK?
If the answer to this question is Yes then there is a looming deadline which could have a significant impact on your retirement planning if you act now.
Everyone with a UK National Insurance record of more than 3 years national insurance contributions is entitled to a UK State Pension. There are many people living and working in Ireland who will qualify with people in the medical profession, teachers and the financial services sector probably the most prominent. You can receive both an Irish and a UK State Pension. The important message is to check if you qualify and then we can talk about enhancing it.
Similar to Ireland the amount of UK State Pension you qualify for is down to the number of years of National Insurance you have. Pre 2016 the qualifying period was 3 years, this has increased to 10 years with 35 years giving access to a full UK State Pension. Individuals currently have the opportunity to buy back additional years by making voluntary National Insurance contributions to HMRC. Currently you can add back a total of 16 years by going as far back as 2006 but this is changing to a cap of 6 years in April 2023. So the advice is to act now.
It is key that you were an employee or self employed in the UK prior to moving abroad and if you are currently employed or self employed in Ireland you can qualify to pay Class 2 National Insurance Contributions. This is at a rate of £163.80 per year for each year of qualifying service, for a little over £3 per week you can boost your UK State Pension entitlement. Paying for 16 historic years would improve an existing UK state pension entitlement by £79.02 a week. It will be £87.00 after mid-April with a pension rise.
Of course, people are under no obligation to pay for all 16 years. They can choose to pay for some, all or none of those additional years as it is a voluntary system but the benefit is clear. Like the Irish State Pension, the UK State Pension does not factor into the private pension funds threshold so it is a very effective way of retirement planning. Please note however the lump sum from any private UK pension is now taken into consideration against your lifetime limits for tax free cash in Ireland so you may wish to speak to us about that.
To apply you can check your UK State Pension Forecast at https://www.gov.uk/check-state-pension fill in the BR19 application form and send it by post or call the Future Pension Centre (details on the above link) who will post the forecast to you. You will then need to contact HMRC to set up the necessary payments and do so before the 5th April 2023.
Contact
Niall McBride QFA RPA MIIPM
tel: 091 769566
email: nmcbride@mavenfinancial.ie
