BY JOHN ELLIS, FINANCIAL ADVISOR
If you now live in Ireland but previously worked in the UK there’s a probability that you are entitled to both the UK and the Irish State pensions. The UK State pension is currently £185.15 a week and, if you have paid the equivalent to Irish PRSI in the UK – national insurance contributions – you can claim the UK pension when you reach 66. (In five years’ time the age rises to 67). The amount of UK State pension you are entitled to is linked to your national insurance record and as you are now living in Ireland you most likely will have breaks in your record.
In 2016 the UK Government changed the pension rules but made temporary arrangements for people to top up their national insurance record in order to increase their entitlement to the State pension. This facility will now close on April 5 this year.
If you have worked in the UK you have until April 5 to make up for the missing years to enhance your pension. You can make payments for the missing years from 2006 but after the April deadline you will only be able to go back six years.
Why do it? Remember the high take-up when the SSIA was introduced in Ireland back in the day. A total of 1.1 million people invested and for every €4 invested you received a credit of €1 up to maximum monthly saving amount of €254 a month. Many received back over the five years in excess of €14,000. You could see a comparision here but more valuable.
To buy back one full year national insurance will cost you £824. This ‘investment’ can add £275 a year to your pension. If you were to avail of this offer, reach 66 and live a further three years you would get your money back and every year after that would be a profit.
Or suppose you buy back one year and live to 80 – the Irish male life expectancy – the investment return would equate to 6.9% on the investment and for a female who lives to the female life expectancy age of 84 the return increases to 7.6%.
Maybe you are thinking, I was in the UK but was not working all that time? There are other ways you may qualify. Did you receive national insurance credits if you were, for example, unemployed, ill or a parent or carer? You may have paid voluntary national insurance contributions. You may also qualify if you paid married women’s or widow’s reduced rate contributions.
Where do you start? Go to the online calculator at gov.uk/check-state-pension. If the calculation is less than the £185.15 a week, then the option is available to you. This in not available if you are already claiming your pension or you have delayed or deferred claiming it and if you worked in certain public sectors or were self-employed and different rules and rates may apply.
If you wish you can get the BR19 application from the website and return it by post, but online is more efficient. To help you the UK government has also set up a free helpline called the Future Pension Centre which will help you to understand your options. The number is +44 (0) 191 218 7777 Have your national insurance to hand when you call.
It would be nice to have an extra cushion in place as your near retirement and this extra would allow you to maybe take more risk with your current Irish pension provision. And, while you are at it, begin a search for any private pensions into which you may have invested while in the UK. Again remember the rules will change in April so act fast to make sure you’re getting your maximum UK entitlements. Happy hunting.
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