Finally the end is in sight
We've written about the UK state pension before (apologies, non-British people! This should be the last of these posts), but the sheer incompetence and disorganization at HMRC means this series has grown to five posts. It should have been one or two at most...
UK State Pensions
UK State Pensions 2
UK State Pensions 3
UK State Pensions 4
Here are the most important points:
- Overseas residents can pay into the UK state pension on a voluntary basis
- At present, this is a great deal: the contributions are quite low, and the projected payouts are relatively good (cheaper and more generous than nenkin in Japan)
- If you have paid into the pension in the UK in the past and you act quickly, you may be able to pay the much cheaper Class 2 contributions (these are due to be phased out soon). The normal Class 3, while more expensive, are still a good deal.
- The UK civil service in general, and HMRC in particular, are completely overwhelmed (possibly due to the impending Brexit) so trying to communicate with them and get them to do relatively normal things like take your money can be difficult and frustrating.
- If you have the patience to see the process through to the end, contributing to the UK state pension is currently a great deal, is a good way to diversify your investments, and will provide you with a cheap annuity.
* There is some degree of political risk in this, as there is no guarantee future governments will not change the way the pension works. Currently if you are living in Japan the amount of the UK pension will be set when you become eligible to receive it, so it will not increase with inflation. Even with these caveats I think this is a good idea for most people.
In the fourth post I had just managed to set up a Direct Debit from my UK account to pay voluntary Class 3 contributions going forward.
Next I looked at backpaying. I asked HMRC to confirm how much I would be allowed to backpay and they sent me a standard letter saying I could backpay eleven years, with a table listing the amount due for each year. The payment instructions seemed vague, and I really didn't want to make a mistake, so I asked them to clarify exactly how much I should pay and how.
So of course they sent me the exact same letter again. Hmm. Nine weeks wasted.
I looked through all the information again, took a deep breath, and transferred 7620.60 GBP to the HMRC account on March 5th.
I then waited for the contributions to show up in my online pension statement.
And waited some more.
Finally I called them last week. After being passed around a bit (the normal helpline doesn't deal with overseas residents, but they were able to transfer me to the people that do) I spoke to someone who confirmed that they had received my money in March.
Phew. When was it going to show up in my account? I asked.
They then asked me what years the money was for. I dug out the letter they had sent me twice, told them, then they said they would get it assigned to the record properly.
Two days ago I logged in and saw the screenshot at the top of this post: I have now contributed enough to get a UK pension, and if I continue contributing on a voluntary basis until I have paid the remaining 21 years I will get the full amount.
The mind boggles though. What would have happened to my money if I hadn't called them? Would it have just sat in the HMRC account until they lost the record of what it was?
This whole process has taken about eighteen months, for something that would have taken about twenty minutes in Japan. Sometimes you have to deal with the UK civil service to understand just how good we have it in some ways here.
So there you have it, the full UK state pension saga. Now I just have to remember to cancel the direct debit once I reach the full 35 years of contributions in 2039 or so!
How about you? Anyone else backpay the UK state pension? Did you have an easier time of it than I did?