Pension from UK while in the Philippines

This is the rates page Voluntary National Insurance: Rates - GOV.UK (www.gov.uk) and is stating 15.40 a week for class 3 in 2021-22 it looks like last tax year it was £15.30 per week and 2949 still comes to more than that it is about 191 weeks and class 2 is a small amount so it is hard to see where they get the quote from.

Are you under the new rules Jim i.e. you retired after 2016 with a shortfall in contribution years resulting in a lower pension compared to the current full state pension which would be £175 a week right now with a full record?

Yeah that's the problem I suppose

Make sure to start your letter with "I will not get your reply for 10 months or more unless you use a courier to reply to me".

Are they paying it quarterly to your Philippine bank account?

This image below is my personal forecast as of today, this is the current maximum anyone can get under the new state pension.

You can get less than this if you don't have a complete record, I don't have a complete record but I do have a complete qualifying record in other words I have enough full years in total to get the full pension.

Some people get more than this but that that is because they were part of SERPS and or SSP and or the Graduated Pension schemes and they can in some case get a lot more than this, the reason for that is that the new state pension maximum limit could put them at a disadvantage compared to what they would have got under the old state pension scheme.

Others like me who were in all three additional pension schemes for a while were not in those schemes long enough to accrue a pension bigger than the number below, when the new state pension was brought in my first forecast was about £145 a week but under the old scheme with SERPS and SSP my entitlement would have been about £139 a week so I won under the new scheme as I will get a little bit more than I would have got under the old scheme.

So from what you are saying if you are getting less than the number below I conclude that you were either working overseas for part of your working life and not paying UK NI during those years or that you were self employed with low profits which resulted in you not paying enough NI to get the qualifying years.

As far as I understand it voluntary contributions cannot result in your pension being increased to more than the number below for this tax year so if you can buy an increase of 100 pound a month then your current weekly pension should be about £156 a week, I've got a feeling from what you've said that it is being paid in peso to a Philippine account as that will make it harder for you to know exactly how much you are getting because of exposure to the exchange rate changes.

Ah I see Jim, yeah 195 weeks class 3 at last years rate spread over 5 contribution years.

Ok at this years rate that is 195 times £15.40 so they will be looking for £3003 from you for this year to buy the same or slightly increased change in your pension.

To add to this, if the increase you can buy is definitely per month then it takes you 30 months to recover your investment, if it is per quarter it will take 120 months or 10 years to recover your investment.

For me I would do this if it is per month but per quarter it would not be worth it, hanging on to my capital and using that up over time would make more sense.

On that basis it is a good idea for you as with the triple lock annual increases for the next few years you will get the benefit of slightly larger cash increases on a percentage basis and if you live into your 80s or 90s you will be well ahead in cash terms.

Yes it would appear that you will have about a 30 pound a week shortfall on retirement but they should accept voluntary class 3 contributions for the next 4 years, it appears that you have a short period of missing contributions as the shortfall if you make up the next 4 years would be about £4 a week.

You can pay gaps in the last 6 years normally but it appears those rules are different if you are abroad, not sure about that.

What does your NI record show this is mine, I cannot do anything about my not full years as they are too old but I don't need to do anything about them anyway because I am on the maximum pension already.

In your shoes for 4 quid a week in pension I think I would weigh up whether it was worth filling past missed years, however you should definitely think about paying future voluntary NI until your pension age as you will get a positive return on it within a few years of retiring.

edit: I think it would be better to pay regularly now but don't cough up 4 years in advance not sure they would let you pay in advance anyway.

edit2: I am due to retire in 2025 too, I am projecting that my State Pension will be £198 a week, the percentage is my projection and is only a future guess, the yellow fields are the declared actual rates.

edit3: this is the application page Apply to pay voluntary Class 3 National Insurance contributions - GOV.UK (www.gov.uk)

Yeah that's because of a lifetime of SERPS and SSP and you are old enough to have paid some graduated pension.

edit:
Many of us were sold the idea that Contracting out, betting the market would make our savings grow and would beat the generosity of the state's SERPS scheme, for most it didn't, it saved the government money.

Below is one of my pensions, its transfer value is currently £47,000.

The share of my funds that represents my contracted out contributions is 40% that means that £4700 has grown to £18,600.

The assumption at the start was that contracted out funds would buy an annuity, back then in 1992 you could easily get 10% on an annuity per annum now you would be lucky to get 3%.

That's the difference between £35.70 a week and £10.70 a week.

Now in my case this was only 5 years of contributions between 1992 and 1997 so even although I will only get about £11 a week for my contracted out contributions, in my case it is not so bad and had I paid SERPS and SSP for a lot more than 5 years say 20 years then this pension would have potentially been worth say £44 a week.

As it is, the way I did it, contracted out, my pension from contracted out contributions added to my State pension would be about £190 a week however I will not buy an annuity with this pension, I will transfer all of this in a year or so to a new pension fund along with my main private pension, the new fund will allow me to draw down in tranches.

The reason the graph here is so linear is that this fund has a 4% growth per annum guarantee, most of the fund value is in the with profits investment and getting that kind of guaranteed growth today is neigh on impossible however the final bonus is crap.

I was contracted out for a further 5 years when I worked for the SSEB prior to this but that was a defined benefit (DB) pension which I start to get from 2022 onwards, I will get about a ten grand lump sum and about £28 a week from my defined benefit pension, the ten grand is going into my savings and the 28 quid a week will get recycled into my main pension via salary sacrifice, I won't break the recycling rules because the source is a DB pension but it will mean that I get 40% tax relief on that 28 quid a week.

If you pay for the next 5 years you will have 32 qualifying years so you will be three short for the full pension but if that three short only results in 4 quid a week less then who cares.

You need to do what Jim did and get numbers from them ask them what your projection would be if you pay 15.40 a week for the remaining time before you retire, don't end up paying hundreds for only a tiny benefit.

Your estimate shows 149.58 a week and it looks like if you pay until 2025 they will give you £175.24 a week, I think that might involve back paying for last year as there is less than five full years before 2025 but really you need to ask them directly.

Paying £2400 approx to make up 3 years to get to 35 qualifying years and only get 4 quid a week at the other end makes no sense, but paying regularly to get to 32 qualifying years and to get a 25 quid a week boost that is definitely worth it.

It looks like you could either make up past years (if you do that pay the recent ones first) or start paying by DD on a regular basis but you need proper advice as to which route makes more sense.