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 and were working in the UK before you left, you’re eligible to make up National Insurance contributions much cheaper – for just £3.15 a week, or about £163 a year for past years and about £179 from 2024 on.
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 April 2025. Which seems like a long way off but the deadline has been extended twice (from April 2023, to July 2023) because HMRC were, unsurprisingly inundated and the backlog is months. I sent my form off to pay from overseas in February and have still not hear back in June 2023. So get yours in so you hear back sooner rather than later (and also so you don’t lose access to the furthest back of those 16 years). Or maybe I should say, later rather than a LOT later.
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. The exception may be if the country you retire in subtracts the UK pension from their pension payments eg New Zealand, Finland. Check that but if you don’t know where you’re going to retire, paying NI may be a good safety net.
You should at least consider paying into the UK system if you’re overseas as long as you’ve lived in the UK for 3 years in a row at some point OR have 3 years of working there (seems this does not have to be all in one go)l 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 already have a few years. Most people I speak to are convinced they won’t and then, when they check the NI system, they find they do.
I want to read and decide!
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 (as long as the form is in by April 2025)
- 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’ll send you some information about pensions in general as well as the NI. You can unsubscribe any time if you don’t want to hear from me again.
Things I write 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?
Over 600 people have downloaded the pdf and I bet the large majority have been able to pay their contributions at the lower rate. Many of them didn’t even know you could make up contributions at all so will be getting a bigger pension than they knew was possible.
If all of us teamed up at retirement in our first year and pooled our first year’s pension it would be just under £7 million. That could be one amazing party!
Hi. As an English person living in Girona for many years it hasn’t been easy to find out what UK/Spanish state pensions I am entitled to. In the post- Brexit world information is hard to come by as UK based advisers cannot offer any help and the Spanish ones give varying advice. Your article on NI contributions is spot on and I have been doing the same. I was thinking that an article on using the UK NI contributions, whilst previously working in the UK, to help qualify for the Spanish state pension would also be useful. As I understand it, the UK contributions can be added to the Spanish years and can entitle you to the Spanish state pension at 65 instead of 67 (or at 63 at a slightly lower rate). Although the Spanish pension level is dependent on the years paid into the system, at least the UK years help you to qualify for it earlier.
There seems to be a lack of information available.
All the best.
Martin Lorman
Hi and thanks and I’m glad it was useful. I don’t know enough about the Spanish state pension in this regard but the best place to go to ask is a Facebook group called something like Protect EU Pensions. I’ve never heard that the UK years mean being able to retire early though. The Withdrawl Agreement means we maintained the right to EU pension aggregation and so years in different countries will still count even if you weren’t in that country long enough to meet their usual minimum contribution years. And you can only take those pensions at the age that each individual country sets its state age so you might find you’re not old enough to claim some of them even if you reached state retirement age where you lived. So while you’re supposed to have contributed 15 years to qualify for the Spanish state pension, any years in the UK would mean being able to get you over the line to get something from Spain, but what you get would be in a proportion in line with the number of years in Spain. I’ve never heard that it allows you to retire earlier though but I’d ask a Spanish accountant or direct to Social Security for that as I don’t know and wouldn’t like to advise – Spain is too complicated for me to be confident writing about things like that and maintaining the info as up to date when anything official in spain seems to change a lot depending who you ask!
Thanks for that. You’re right it is complicated. As I understand it, you need 38 and a half years of contributions in total to retire at 65. As I have 25 years in Spain and 14 in the UK I would qualify. I would get 25/38.5 of the Spanish pension and then need to apply for the UK pension at 67. Between 63 and 65 it seems that the Spanish pension can be claimed at a lower rate if you have enough years. I’m still trying to clarify all this!
Sorry, if I have misunderstood something but I am surprised you would ony have 14 years of UK contributions. Can you not make up any of the missing years? The last 16 are available to top up, until 2025 when it will go back to the last 6. And you would, in addition, be able to pay from now until retirement age, so that would give you another few wouldn’t it?
Hi. Yes, I have topped up the UK years which will count towards my UK pension. However, for the Spanish pension I have been told that they only take into account the years that you were actually working in the UK, which in my case is 14. Thanks again.