Two state pensions (EU/UK) [x-post r/UKpersonalfinance]

[directory]

Hi,

Is there any benefit to having two state pensions? From the UK, I live in an EU country and have no plans to return to the UK at the moment but may one day. I am allowed to voluntarily contribute to NI, but I currently have three years of contributions so it would take another 32 to collect on the pension.

I know I can 'transfer' years built up from one to the other, but is it worth me voluntarily paying NI and trying to get two state pensions?

Thanks

 

[resjudicata]

@directory You can't " 'transfer' years built up from one to the other". What you can do is use the year you've contributed in another EU country to make up the minimum 10 qualifying years to be able to claim a state pension. The 35 years you mention is the contributions you need to make for the full pension, if you contribute between 10 years and 35 years you get a lower amount based on how many years you've contributed. So in your case if you have 3 years of UK contributions, you'll need at least 7 years of contributions in another EU country to be able to claim the UK state pension, but the amount of pension you receive will only be based on the 3 years you've actually contributed. But you can use voluntary contributions to increase those 3 years.

Whether paying the voluntary NICs is worth it is something you'd have to calculate. How much do the voluntary NICs cost you, and how much more state pension would you be getting by paying them? Is it £14.65/week Class 3 NICs to get £4.70/week more pension for each contributing year?

Then you need to consider the risks with state pensions, which are: will there still be a UK government in 30 years time and will they honour previous governments commitment of paying a state pensions to their citizens, and if so how much. And how will the UK potentially crashing out of the EU in a No Deal scenario affect your ability to claim a UK state pension from abroad.

 

[godspell]

@resjudicata If there is an agreement between the two countries (as it is at the moment), in the example you said, apart from the UK pension you receive for the 3 years contributed in the UK, you get the pension from the other country for the other 7 years.

So it's not that you lose what you contribute in the other country, the years are add up but each country will pay proportionally for the years contributed in each country.

 

[resjudicata]

@godspell Yes, sorry if that wasn’t clear from what I wrote.

 

[prresearcher]

@directory No.

 

[directory]

@prresearcher Thanks.

Could you perhaps expand a little? Am I not allowed to claim from both? Is it not a good pension scheme?