A prime example of political risk
Just when you thought we were done with this topic (at least I thought we were done!) the UK government has to pull something like this and force me to write yet another post about voluntary contributions from abroad. Apologies to non-UK readers, we'll be back onto more general subjects next week.
A few RetireJapan readers have contacted me saying their applications to pay voluntary contributions had been rejected, and they'd been told they were ineligible. This surprised me, as I was able to sign up and pay. Then I checked my bank account. The payments (which had been done by Direct Debit) have not been taken since March this year.
I then called HMRC, and after being on hold for 40 minutes they told me they don't deal with overseas residents on that number, and I had to call the secret expat number instead. That number is +44 191 203-7010 (I recommend using Skype to call -just 2 yen a minute to a UK landline). Fortunately they answered almost immediately.
Not so fortunately it took them over 20 minutes to tell me that they didn't know why my Direct Debits had stopped, but they would follow up and send me a letter. At some point.
I am definitely not holding my breath. I suspect they have decided that I am no longer eligible so won't be able to pay in any more. But it seems just as likely that some part of the system broke down somewhere instead. I will clearly have to write another blog post about this. Ugh.
This new development seems to show that HMRC has noticed that voluntary contributions are a good deal, and has decided to restrict them to people who had already paid a decent amount into the UK state pension before moving abroad.
The new rules state that you must have paid in at least three years into the pension before leaving the UK in order to be eligible to pay voluntary contributions from abroad.
It makes sense in a way, as the new rules allow people to had already contributed to finish paying in enough to vest, etc. There doesn't seem to be much of an argument for letting people who have never paid into the system enjoy cut-rate access to the UK state pension.
Still, it's a pretty crappy move to change the rules for people who have already starting contributing (like me). Fortunately I managed to pay enough to vest, but I can imagine there are some people who paid in a few years' worth but haven't reached the ten years needed to be able to claim a pension eventually.
So, it is now slightly harder to pay voluntary contributions into the UK state pension, but if you are able to it is still a stunningly good deal (as long as the government doesn't change the rules again in the future, of course).
How about you? Any insight into the new rules?