Topping up your UK State Pension before 5 April 2023
Updated: Mar 2
How as an expat you can boost your income in retirement by Increasing your UK State Pension while you are living abroad
There is a limited window of opportunity to increase your UK State Pension by filling in any gaps that you might have in your national insurance contribution record between 2006 and the 2016/17 tax year.
Your UK State Pension forecast
If you have not already done so the very first thing you should do is get your UK State Pension forecast.
What is the state pension forecast?
This will tell you what State Pension you are due to receive based on your actual NI history, and also what you could expect to receive if you were to make NI contributions in the future to your State Pension age.
It will also show any gaps in your history.
How to get your forecast?
Probably the simplest way to do this is to go online and visit The Future Pension Centre website which is part of the Department for Work and Pensions.
You will need to be registered for the Government Gateway to be able to get your forecast.
Instructions as to how to do this can be found on The Future Pension Centre website.
You will be able to see your forecast immediately. You can save it as a PDF, or log back in any time to check it.
Once you have your forecast you will be able to see if there are gaps in your NI record.
Any gaps over this ten year period can be filled by paying voluntary National Insurance contributions.
HMRC have communicated that to do this the following form should be completed and received by them before 5th April 2023.
CF83 - Application to pay National Insurance contributions abroad
Before completing this form, you should read the leaflet NI38 – Social Security abroad
What type of National insurance contributions should you be paying?
I’m afraid that I am not able to answer this question as it will depend on your individual situation. However, HMRC advise that if you are living and working abroad, either on a self-employed or employed basis you are more likely to be eligible to pay Class 2 contributions rather than Class 3
HMRC specifically state the following on their website:
"You can pay Class 2 or Class 3 voluntary contributions if you had either:
previously lived in the UK for 3 years in a row
paid at least 3 years of contributions
To pay Class 2 voluntary contributions you must also have worked in the UK immediately before leaving."
To fill a complete tax year, you will need to pay the full yearly rate of the relevant NI Class. You would then need to multiply the full year rate by the by the number of years that you would like to fill.
National Insurance Rates for tax year 2023 to 2024
Full year rate
How is the new state pension calculated?
The State Pension that you will receive depends on your National Insurance record.
From the new tax year, the full state pension in 2023/24 will be £10,600
To receive the maximum New State Pension a national insurance contribution record of 35 complete tax years is needed. If you accumulate less than 35 years by the time you reach State Pension age your pension will be reduced on a pro-rata basis. i.e., 25 years will get you a pension of 25/35 of the full amount.
From the new tax year 2023/24 the state pension will be £10,600
So, for illustration purposes, using this figure you would get 25/35 of £10,600 which equals £7,571
Is it worth doing?
Depending on how long you live this could be great value for money.
If you were to buy 10 additional years and lived to 87 this would provide an additional income in retirement for you of £60,571 in today’s money.
Remember this is in today’s money the inflation increases the State pension provides will increase the pension paid over the years. See You want to retire overseas below for more on increases in retirement.
Important information: it is also possible to fill gaps in your record from 2017
The Future Pension Centre are currently advising that if you have gaps in your record from 2017 that you should contact them after April 2023 to arrange to fill these gaps.
Useful numbers to call:
HMRC - I found the easiest number to get through to HMRC on is +44 191203 7010
You can also try The Future Pension Centre helpline, but in my experience it can be very difficult to get speak to someone:
Telephone: 0800 731 0175
Telephone from outside the UK: +44 (0)191 218 3600
What is your State Pension age?
If you were born on or before 5 April 1970 your State Pension age will be 67
For those born after this date. Under the current law, the State Pension age is due to increase to 68 between 2044 and 2046.
You want to retire overseas
You can claim the new State Pension overseas in most countries.
Your State Pension will increase each year but only if you live in:
· the EEA
· certain countries that have a social security agreement with the UK
Your new State Pension may be affected if your circumstances change. You can get more information from the International Pension Centre
This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.