Around half a million public & private sector workers can massively boost their state pensions. Here’s how
Put £700 in and get £5,000 out. That’s the deal potentially on offer to thousands of British expats (or anyone who has worked and paid taxes in the UK for a minimum of 3 years ) – who can top up their state pension at what are essentially “bargain basement” rates.
In simple terms, you can benefit greatly by paying heavily subsidised voluntary national insurance contributions for the years between the date when you stopped UK work and when you reach state pension age.
Of course, you have to have money to be able to afford it. And not everyone will warm to the idea of using today’s cash to buy an income for later when you do not know how long you might live.
But if you are an expat and earning reasonably well, finding the £700 or so pounds shouldn’t be a problem.
The deal is linked to the introduction of the flat-rate state pension for everyone reaching state pension age on or after 6 April 2016. The full amount, currently £155.65 a week, is paid to those who have made 35 “qualifying years” of national insurance contributions (NICs).
It is an attractive proposition because the rate is heavily subsidised by the government.
For example, a single year of contributions can be bought for a lump sum of around £733. This will boost someone’s state pension entitlement by around £230 a year for the rest of their life. That £733 would generate a pretty impressive £4,600 over the course of a 20-year retirement. Someone who bought 5 “missing” years could receive an extra £23,000 for an outlay of less than £4,000. £19,000 free money!
Taking care of your UK pension could be one of the best investments you ever make!
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