Pension top-ups may be hiked 500%

IF YOU top up your British state pension entitlement from France with voluntary National Insurance contributions (NICs), or have been considering doing so, an important consultation exercise is under way on proposals that could hike the cost by 500%.

As we report in the January edition of The Connexion newspaper – out now – the British government is considering abolishing Class 2 NICs, paid by low-income self-employed people in the UK and by employed people in other EU countries, at £2.80/week.

As part of a reform of the NICs system, the government proposes instead that self-employed people in the UK would pay Class 4 NICs, which are already paid by higher-earning self-employed people and are based on a percentage of UK-declared income. These workers would all accrue pension rights from a minimum declared income of £5,965/year, the proposals suggest.

However as people living and working in other EU countries generally do not have UK-declarable income, the plan suggests they should instead pay Class 3 NICs, which are currently £14.10/week (this suggests a possible exception in the case of expats with income from UK rents of £5,965 or more).

Class 3 NICs are already the only option for early-retirees in France – ie. those who are not yet UK state pensioners but who are not employed or self-employed in France.

These proposals concern all those expats who make regular or occasional payments of Class 2 NICs to the UK because they lack the full amount of years paying in so as to draw a full UK pension when they reach state retirement age.

Note that those reaching retirement age from Agril 6, 2016, will need to have paid in for 35 years, up from 30, however the level of the state pension is also being increased (in 2016-2017 it will be £155.65/week).

To see more about the proposals visit: NICs consultation.

Comments and suggestions for alternative approaches may be sent, by February 24, to: class2abolition.newtest@dwp.gsi.gov.uk

For more about other money-related changes in 2016 and other practical changes in daily life, January’s paper is now on sale in newsagents (see findthepressinfrance.com) or for a PDF download visit connexionfrance.com.