Please can somebody help before the wife and I start strangling each other!

We are moving to NSW on a 457 visa soon and need to sort out our finances, espescially our NI Contributions...

Jo is going to be in full-time employment as soon as we get there and I am currently job-hunting. We are both in full-time work in the UK and have paid our Class 1 NI contributions for all of our working lives.

I know we can protect our NI Contributions by making voluntary Class 2 or 3 payments whilst out of the UK but there is still some bits that confuse me:

The booklet Jo downloaded from Inland Revenue says that you cannot pay Class 2 or 3 payments for the first 52 weeks you are abroad but you can only pay Class 1 contributions if your employer has a UK base (Jo's Oz employers do not). It then goes on to say that if you don't make payments for these first 52 weeks then you may lose the right to your benefits!

So how do we cover that first year?

I guess we need to cover it somehow in case we only stay in Australia for the 4 year visa and then return to the UK.

Hope someone can help.

Cheers
Mike & Jo

Hi Mate
They dont make it easy but here goes!
when you get here you only qualify to pay class2 if you are employed here in Oz - you'll have to provide evidence of employment status from your Oz employer before this'll be recognised. As a sponging freeloader (as I was too until employed) you only qualify to pay class3 contributions. You only pay these contributions after the end of the financial year i.e. for 2004/5 we paid GBP 110 each class2 which we paid early 2006.
You cannot pay these contributions in advance. Hope this helps

Mike,

Have you downloaded the right booklet? at the end of the booklet is a form CF83 application to pay national insurance contributions abroad -you select the NI class your applying to pay for and tick monthly direct debit box, you do have an option to pay in arrears annually.

also there is a big difference in NI2 & NI3 contributions NI2 £2.55pw/ NI3 £7.55pw. If you work for the OZ govt you can pay NI2- hope this helps

taffy

Hey

A few questions as I have been wondering about this myself-

1. Is it worth making voluntary contributions at all? Is the difference between paying some / all NI financially significant when it comes to collecting your state pension (I am early 30's, been working since I left Uni at 21)

2. Understand that if we stay in Oz you don' get increases in the UK state pension - at what date is the amount we get determined? The date of retirement? Given the above, is it really worth it?

3. If we do decide to pay them, Class 2 seems to be only for self-employed. Where do I find out about paying class 2 for an employed person is Oz?

Thanks for any assistance at all...
Jx

I have made some headway on this now...

Spoke to HMRC and they told me this:

Basically to qualify for the state pension you need to have payed NI for a set number of years. Now, currently this is 44 years but the is to be a major review of pensions in the summer, which should bring this down to 30 years.

If you are only moving to Australia for a couple of years then you have to work out if you can afford to take a few years out of your NI payments and still qualify.
As a basic guide, the average working life they say is 49 years, so at the moment you get 5 years grace. If it drops to 30 years, you get 19 years grace.
(not sure how they are doing all this maths!)

If you think you need to make those years you are away count then you can make voluntary payments. I think these payment merely make those years count however, they do not add any value to your pension fund. That means if you go away, come back and have still made your 30/44 years of payments in the UK then the voluntary payments you made whilst you were away were a waste of money.

Of course all this only works if you are actually intending to come back! Not sure what happens to all your NI contributions if you decide to stay in Australia for ever?

Anyway, that is what I think I learned. Someone will no doubt be able to tell me if I am completely wrong or maybe slowly getting there!

Cheers
Mike

quote:

Originally posted by jandm:

Of course all this only works if you are actually intending to come back! Not sure what happens to all your NI contributions if you decide to stay in Australia for ever?

G'day

If you remain resident in Australia, you still become eligible for a UK pension. The rate of pension once claimed will not be index linked and go up each year with cost of living rises. It will remain as it is. The value of the UK pension will affect the rate of your Australian pension (if any).

Depending upon your personal circumstances, investing in class 3 NI contributions may be a beneficial thing. It is for me and my partner. Talk to a good accountant. Perhaps try Alan Collett.

Cheers
Bob in Bull Creek

"Basically to qualify for the state pension you need to have payed NI for a set number of years. Now, currently this is 44 years but the is to be a major review of pensions in the summer, which should bring this down to 30 years."

Sorry, can I get one thing right. Are you saying that if you don't work / pay for the whole 30 /44 years, you don't get ANY state pension? Surely that can't be right? What happens to the 11% of my salary that I will have paid for the 43 /29 (say) years??!!

Please help me out!

jux

Hi All

It's my understanding that the 30 year limit only applies to women, who have to take time off work having kids etc

The basic state pension is £80.00 (ish) and eack year you work will increase this.

I am 60, and have my 44 years in, and my proposed state pension is a lot higher than the basic.

If in doubt contact Newcastle for a forecast

Remember I am not an expert, but have been involved in my own and my oh pensions.

regards

Terry