Voluntary National Insurance Contributions

Published / Last Updated on 16/01/2015

Video explores Voluntary National Insurance Contributions if you have a shortfall due to not working or working or living overseas as an expat. To protect and make up any UK state pension shortfall.


“Hello there the subject for this video is paying voluntary national insurance contributions, class III national insurance contributions.

So I just keep it very simple, Social Security national insurance contributions in the United Kingdom, what do they pay for?

“[It] pays for the benefit system, it pays for your state pension, it pays for the National Health Service et cetera. So all of those ‘benefit’ type things.

Now, there are a number of types, number of classes of national insurance:

Class I national insurance is basically PAYE so if you're an employee and work and you pay class I National Insurance contributions.

If you are self-employed you will pay Class II flat rate national insurance contributions which are slightly lower than class I but you will also pay class IV national insurance contributions on the share of your profits basically.

So that leaves class III and class III is voluntary national insurance contributions.

Now, why would you pay voluntarily National Insurance?

You may wish to pay voluntary National Insurance contributions because for whatever reason you’ve been out of the United Kingdom for a period of time so you haven't built enough credit up towards your state pension and may be aware, that it’s January 2015 shooting this video, but in April 2016 the new state pension will start and for you to qualify for a full state pension in the UK you must have at least 35 years Social Security national insurance credits.

Now, for those people that have worked and paid national insurance for 35 years plus no problem, for people who have received credit towards their national insurance for example unemployed received credit towards National Insurance, people who receive child benefits, for example if you’ve given up work to look after children, if you receive child benefit you receive something called ‘home responsibilities protection’ so you receive National Insurance credits, as do carers and things like that.

So that's not a problem but it just may be that for whatever reason you didn't work for a period but you had no home responsibilities you were’nt looking after children, you didn't receive child benefit or you stayed at home but you didn't need to work or you didn't have anyone to care for or anything like that, so you could have a shortfall with your National Insurance record.

Or likewise, as I mentioned earlier, if you've lived or worked overseas then you may have a National Insurance shortfall and I’ll just cover that a little bit as well because there are some countries that have Social Security treaties with the United Kingdom. To give you an example the United States has a social security treaty with United Kingdom and the old Yugoslavian states has a treaty, China has a treaty, Jamaica has a treaty for Social Security, as does most of Europe et cetera.

But some countries, and this is where you have to be careful, South Africa, Australia is a big one, those countries don't have Social Security treaties with the UK so if you lived and worked in America for a period of let’s say, United States, say 10 years and you paid social security contributions there when and if you return to United Kingdom you will actually be given credit for the 10 years that you were paying Social Security in the US or as I mentioned within the European Union or other countries that have a treaty with the UK. But what if you've lived and worked and paid Social Security in countries that don't have treaties? I’ve mentioned the classics Australia, South Africa and Zambia was one I came across the other day when I was dealing with a client and you may have a Social Security shortfall there.

Or like I have said, if you been in the UK but you didn't work and you didn't have unemployment benefit or family allowance or anything like that, you may have a shortfall there. So if you have a shortfall for National Insurance, so if your National Insurance record is incomplete, then that's the time to think about paying voluntary national insurance contributions.

[And] they’re not that expensive it might be sort of, well they do increase each year, but you know, if so at the time of shooting this video, let’s assume a cost of £10-£15 per week or something like that. Now you may think that's quite extreme but not when you look at how valuable the state pension is in retirement.

So, ‘phone the Department for work and pensions, get a free state pension forecast which is free if you live in the UK, it's also free if you are expatriates and live overseas. Find out what your current National Insurance projections and contribution records are and then you'll know whether you have a shortfall or you may already know. Or indeed, contact us and we can sort that out for you but that's what voluntary national insurance contributions are for.

They are there for you to either protect the fact that you know that you're not building up credits for whatever reason or alternatively to make up past year shortfalls if you haven't qualified for credits or you haven't worked or alternatively you been working in countries that don't have a social security treaty with United Kingdom. Any questions, as ever, please do contact me. Thanks very much for watching.”

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