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About UK pensions, especially for expats

Have you ever worked in the UK? or been married to someone who has ever worked in the UK? You may be entitled to a British pension, and it may be worth more than you think. Read on.

Imagine finding $290.00? Now imagine that happening every month for the rest of your life! That is what I did by filling in a form to apply for a British pension, and writing a letter asking to "buy back" years. Well, I also had to follow up on the phone a few times to make sure that they were still processing my case - it took 1 1/2 years! I also received a nice present of a few thousand for the missing pension during the processing time.

Dont miss the busMany British pensions go unclaimed, especially by expats who do not think that they are entitled to much if any pension. The eligibility rules are complex, and different for men and women: to add to the complexity, there are old rules for those who reached retirement age before April 2010 and new rules for those who reached (or will reach) retirement after that date. Working and contributing to a pension plan in Europe counts towards eligibility.

For those who need more years to reach eligibility, voluntary contributions are the key. (Voluntary contributions are also referred to as buying back years or topping up your contributions.)

If you worked in the UK after the age of 16, you almost certainly made National Insurance contributions. The rules as to pension eligibility are extremely complex. Do not try to understand them, but DO file an application. You may be surprised, as I was.

Pensionable age is 65 for men (63 for women), and you should apply at least a year before reaching that age.

Your wife, or even ex-wife, may also be eligible for an amount (Category B pension) based on your pension - even if she has never lived in the UK. Or, she may be able to use some of your payments to increase her own pension.

For expats who have worked an insufficient number of years in Britain, the key to obtaining/creating eligibility is to buy back years: you are able to make voluntary contributions to the pension plan for certain of the years that you were not working in the UK. The rules are incredibly complex and vary with all kinds of special dates, and you must write to the pension department asking about which years you can buy back, and at what cost. 

If you have worked more than 10 years in Britain (3 if new rules apply), still consider the merit of buying years - as many as you can as early as you can. Generally, you can buy back the previous 5 years with a lump sum. If you are retired, you may still be eligible to buy back up to 5 or 6 years. I was able to buy back 5 years - even better, my deferred pension was sufficient to pay for them and then some! Here is information on buying back years.

It may sound strange that I am advising you to voluntarily pay a government! The UK pension system is extremely well-funded and unlikely to collapse, and strangely this is an investment that pays very well - much better than a private annuity. (Part of the reason is the inequity in the treatment of pensioners living in former Commonwealth countries.) If you have a wife who will benefit from a Class B pension, the payback is even higher.

Bottom line - it costs little to write to the pension department. Get an assessment, ask about buying back years, and fill in the form. Here are the official links to information: DWP - pension service, National Insurance. Remember, if you paid contributions you are entitled to benefits when you reach pensionable age: this is not Social Assistance, it is a right.

If you are living outside the UK, consider using the form provided by the Australian British Pensioners Association (ABPA). The main goal of the ABPA is to fight the right of frozen pensioners. They have also helped many former British workers to obtain the pensions to which they are entitled from Britain. Here are the instructions with a link to the form. Notice the important request at the bottom of the form: class 3 contributions = voluntary contributions = top up, category B = pension for wife of pensioner.

Get going and enjoy your pension.