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Government extends deadline for expats to secure full UK pension

Expats who have missed filing national insurance years from 2006 to 2016 now have until 31st of July 2023 to secure a full UK state pension. The previous deadline of the 5th of April 2023 has been extended, with the government announcing yesterday they’re granting expats more time to get their paperwork in order after numerous reports that critical government helplines have been unreachable in the run up to the deadline.

Helplines managed by HMRC and the Department of Work and Pensions (DWP) have been inundated with calls in the run up to the filing deadline. Many callers have expressed frustration at being unable to get through to anyone, despite calling multiple times. Unfortunately, part of the top-up process is a call to these helplines to obtain vital information. 

By extending the deadline the government is ensuring thousands of individuals who currently have gaps in their national insurance records from 2006 to 2016, who currently do not qualify for a full state pension, have an extended period to acquire all the necessary information from the government helplines and make any voluntary contributions to national insurance via HMRC. 

Why Is It Important To Fill The Gaps? 

Individuals accumulate qualifying years for their state pension through various means, like employment or through claiming specific benefits. Years when an individual doesn’t pay into national insurance by one of these means are considered gaps, which can lead to a shortfall the means they’re not entitled to a full UK pension. They may choose to rectify this by making a voluntary contribution for missed years. Doing so can be a very profitable move, as some individuals will spend as little as £800 bridging any gaps in their records while seeing a return of £5,500 or more. 

What Happens From July 31st?

From 1st August onwards it will no longer be possible to fill gaps in tax years that took place more than six years ago. While there are currently ‘transitional arrangements’ in place which were introduced during the roll out of the new state pension system in 2016, they are about to be terminated. The aim of these arrangements was to give those under the age of 70 more time to accumulate ‘qualifying’ national insurance years so they could be eligible to obtain the full new state pension.

What’s Changed?

While those with gaps in their national insurance records from 2006 to 2016 previously had until the 5th of April – the end of the tax year – to bridge any gaps, they will now have until the 31st of July.

One of the necessary steps in filling any gaps is to contact the Pension Service (if you’re already at state pension age) or The Future Pension Centre if you’re below the state pension age. Following this a second call is needed to HMRC to obtain a unique 18-digit reference number. It’s impossible to verify which years in your records are ‘incomplete’ or make payment with your unique reference number without help from these official channels. Unfortunately both helplines were experiencing such an overwhelming number of calls that thousands of individuals found themselves unable to get through, despite repeated attempts. 

By extending the deadline those who haven’t yet been able to get through have additional time to get through and verify whether making an additional payment will enhance their state pension or not and, if so, by how much. 

As a result of the delay, the planned price increase on 6th of April has been delayed, meaning the cost of filling a full year of national insurance contributions will remain at current prices until the 31st of July.

The price for most qualifying years was about to increase by 10.1% as of the 6th of April. This price hike will now take effect from the 1st of August. Following this date, the weekly cost for almost all years will rise from £15.85 to £17.45. The exception years are 2021/22 and 2022/23, which will remain the same. As a result the price of filling a full year in your national insurance record will increase to £907.40.

What Does It Mean For British Expats?

Those living overseas experience even more trouble getting in touch with the relevant helplines that Brits at home. As a general rule, expats often have more significant NI gaps in their records, as – unless they made voluntary contributions – they won’t have paid into national insurance since they were last residents in the UK.

Individuals living and working overseas may – under the right conditions – qualify to pay class 2 rather than class 3 contributions. This saves a substantial amount as Class 2 contributions are a significantly lower cost than the standard class 3 ones. Unfortunately, applying for class 2 adds an additional step to the process for which you need to receive approval/confirmation from HMRC to prove you qualify before you can begin the payment process. 

The extended deadline is even more vital for expats as a result of this extra hoop to jump through, added to the already extended difficulties of getting in touch with the relevant hotlines. 

Don’t Use The Extension As An Excuse To Delay

While the short-term pressure has been relieved by the extended deadline it’s important to continue the process as quickly as possible. Deadlines have been extended as a result of high demand for hotlines and their capacity to meet that demand. It’s likely many will still experience difficulty getting through, they simply have longer to successfully do so. The longer you leave it, the longer it will take for your case to be handled and the more likely it is you will miss the deadline, even with the extension. 

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This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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