On Business Matters this week, the main topic is pensions and how if you worked previously in Northern Ireland or Great Britain, not only could you get a small UK pension but by paying additional National Insurance Contributions, you can get an increased UK pension worth in excess of €14,000 per annum.
Many people who worked in the UK and subsequently moved to Ireland, or anywhere worldwide, are unaware of their entitlement to a UK State Pension, or ability to increase their entitlement. By leveraging voluntary National Insurance (NI) contributions (the equivalent of PRSI), individuals can now “buy back” missing pension years at a reduced rate, and significantly boost their retirement income.
As the UK government’s April 5th deadline, to buy up to 18 years of State Pension contributions at a very cheap rate, approaches, document-processing company, XtraPension, is helping individuals worldwide secure and maximise their UK State Pension entitlements through its specialist execution-only service.
XtraPension’s service simplifies the process of boosting UK State Pension income, which can be worth up to €14,000 annually from the age of 67. If you lived and worked in the UK for three years, you’re eligible. You may also be eligible if you paid just one full year of National Insurance contributions in the UK, followed immediately by work (where you paid social insurance) in any EU country to bring you over the three year threshold.
“Former UK workers can secure a full UK State Pension, with no impact on their Irish or other state/ private pensions. Yet, many of those who returned to Ireland after working in the UK forget the pension entitlements they left behind. For those who qualify, this is a once-in-a-lifetime opportunity to secure a UK pension potentially worth up to €280,000 over a typical 20-year retirement,” said John Ring, Operations Director of XtraPension.
To get the full UK State Pension, you need to have 35 years of National Insurance contributions which is available for most people who left the UK years or decades ago. You need a minimum of 10 years of National Insurance contributions to get any UK State pension income; and many people think they need ten years of UK work to get any UK State Pension but in most cases, years working outside the UK count towards this ten year minimum.
The opportunity to buy back up to 18 years of NI contributions is unprecedented and time-sensitive, as after April 5th, the opportunity to purchase more than six years will no longer be available.
The cost of topping up your UK pension depends on whether you have to pay Class 2 or Class 3 contributions, with HMRC determining which class you’re in.
Explaining the opportunity, Ring continued: “For every €1 paid in Class 2 contributions, which costs approximately €200 per year once-off, retirees will receive a guaranteed €40 in pension benefits over 20 years.
“Even with Class 3 contributions, which are more expensive at approximately €1,000 per year, you’ll receive €8 for every €1 paid to HMRC, which is also an excellent financial return. The breakeven point occurs within seven months to three years of retirement. And unless they’re at retirement age, most people can still pay annually for future years up until they reach UK State Pension age which is approximately 67,” he said.
HMRC determines which class you are in based on your application and they may give you a mixture of classes based on your circumstances.
Listen to the full interview with John Ring to find out more.
Also this week, Chris has been finding out about the Enterprise Ireland backed New Frontiers programme and how a number of emerging Donegal businesses were at a showcase last week. He’s been talking with Geraldine Beirne who is the Enterprise Ireland New Frontiers North West Programme manager for ATU Donegal and Sligo.
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