Should you make up National Insurance contributions?

For years, living abroad teaching English and, later, writing materials, I gave no thought to paying UK National Insurance. But I should have because if you make up national insurance contributions from abroad, you’re making one of the best and safest investments there is.

I used to Self Assess for a while. For some reason I don’t know now as I wasn’t really living in the UK, I would blithely tick a box saying I didn’t want to pay NI. I didn’t care about pensions and all that whatever stuff about money and old age … and what-EVV-AAA. I think I just vaguely thought I should be paying tax somewhere and the UK was who I wanted to give my money to if I had to give it to someone. This was pre-Brexit, of course.

I think this was largely down to the terrible phone advice I got once when struggling over a UK tax form asking where I was legally domiciled and the HMRC guy said “Think of it like ‘Home is where the heart is.'”

I took it too literally, and even though it seemed like a dubious way to decide a legal status, my heart has always felt the pull of home even while my brain tells me life in the UK has plenty of demerits and reminds me that I’ve never managed to stay put there.

Anyway, as a result, I didn’t pay NI even while I was claiming tax status there and thought I was saving money. In fact, NI would have paid me back in pension later while tax just went to the government’s pocket.

Once I realised pensions mattered, I went in every once in a while and topped up any partial years from working summer or other jobs in the UK. But otherwise, I’ve let the lost years pile up because it seemed expensive to pay for missing years. I skipped them even though I mostly spent my TEFL life pre-2017 not paying into any state pension system because I was either employed dodgily, or not eligible, or off the grid, or just generally clueless.

But here’s the big secret that applies to many of us in TEFL who have spent time any time working abroad.

And by secret, I mean here’s something else about money that no-one told me until last month – not on my TESOL course, not on my MA in ELT, not on any staff inductions or inset sessions.

As soon as you’ve lived overseas for 52 weeks, you’re eligible to make up National Insurance contributions much cheaper – for just £3.15 a week, or about £163 a year.

Once you have 35 “qualifying years” ie years you’ve ticked off through making overseas or UK-based national insurance contributions, you can claim a UK state pension, currently £185.15 a week, when you reach state pension age.

That’s a really good great investment.

A great investment

It’s FREE MONEY, once you’ve earned back the money you paid in (for which you only need to live a few years after retirement).

At the moment there is a government offer to make up the last 16 years of contributions if you make your claim by July 31, 2023. After that, it will only be possible to go back 6 years and, of course, it’s always possible to do it each year from now on. So, even if you’re not overseas but you have missing years, it may be worth your while to make them up

You should at least consider paying into the UK system if you’re overseas as long as you’ve worked in the UK for 3 years at some point and will have between 10 and 35 years of contributions by the age of 67 if you make up some now and pay in going forward.

Seriously, just read all the info I’ve compiled in a handy pdf before dismissing it because it doesn’t matter if you intend to live in the UK again in the future or not. And, you might have forgotten some part-time jobs you did at school or in the summers that mean you do have that 3 years.

How to pay missing national insurance from abroad

I’ve done for you what no TEFL certificate provider, private language school or other TEFL employer, EFL Masters program, or professional training body did for me.

I’ve compiled all the info you need to:

  • pay overseas national insurance contributions from now on
  • make up missing or partial national insurance contributions from the past (up to 6 years back or, if you pay before July 31, 2023, 16 years back but you may need to get your forms in by April 5, tbh it’s not very clear!)
  • take all the steps, fill out the forms, and deal with the hassle (yes, it’s a bit of a hassle but doable) to get it done.

This is a FREE resource and you can grab it here in exchange for your email address. You’ll end up on my mailing list too and I promise that’s a nice place to be and you can unsubscribe any time if you don’t want to hear from me again.

Things I talk about are life, related to investing, and how I got into it and occasionally about the course I run teaching people how to invest.

My investing course is for beginners and aimed at people in ELT but, really anyone who didn’t get the financial education that would have made us all much better off and more secure.

As an investment, you can’t really beat making up national insurance contributions from overseas as each qualifying year amounts to an extra £275 on your state pension per year. Most people will break even on their investment after 3 years.

The information I’m providing is accurate to the best of my knowledge and understanding but I’ve included links to other sources, including the government and pensions forecasting service, so you can check for yourself and decide what’s best for you.

It’s just nicer when someone else has waded through it all for you, isn’t it?

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