Ever Worked in the UK? Know your UK State Pension Entitlements

Over 400,000 Irish residents have worked or lived in the UK.

While in the UK, most have paid National Insurance and therefore contributed to the UK state pension system, or they may have a retained occupational/employer pension or private pension.

Brexit is spurring fears about the payment of pensions to people living in EU countries if no agreements are put in place with the UK regarding pensions.

The UK State Pension

While working in the UK, it is highly likely you made National Insurance contributions, similar to PRSI contributions here in Ireland. These contributions entitle you to a proportion of the UK state pension provided you have a minimum of 10 years contributions at the date of retirement. The maximum UK State pension is currently ￡164.35 per week or ￡8,575.78 per annum. To get the maximum pension, you need 35 years in paid national Insurance contributions.

How to secure your UK State Pension?

So, what if you have less than 10 years contributions? If you have at least one year in paid National Insurance contributions, you may get permission to buy back additional years to get you to at least the 10-year minimum requirement. If you have 10 or more years, you may well wish to buyback additional years to increase your pension entitlement, or you may be satisfied to leave things as they are.

The price at which a UK state pension contribution year is purchased may vary significantly depending on your employment status and tax position. Hence, it may be wise to seek professional advice from an HMRC authorised broker in Ireland who will act on your behalf.

So why is now a good time to follow up your UK state Pension entitlements?

The simple answer is the cost of buying back years is set to substantially increase. This has been subject to much recent speculation in the British press. Currently the standard rate for buying back a year is ￡741 but it is possible to pay a cheaper rate. To buy back years, you need to have paid PRSI here in Ireland since you returned from the UK. Each year bought back will give you an additional pension of ￡237 per year.

How to claim the UK State Pension?

Having an entitlement to a UK State pension does not impact in any way on your rights to the Irish State Contributory Pension (SCP). You are entitled to the two pensions if you have paid National Insurance contributions in UK and PRSI in Ireland.

At the moment, UK State Pensions can be paid through the Irish Social Welfare payment system and if any tax is due, it is deducted at source. That helps to keep things simple in retirement as it avoids the need for beneficiaries to do annual tax returns.

The good news is that there is an expectation of ‘no change’ to the way UK state pension benefits will paid to Irish residents after Brexit.

Occupational and Private Pensions in UK

For those who have worked for a public organisation or a company in the UK, you may have deferred pension benefits. The Medical and Teaching professions are two good examples.

On leaving the UK your work/occupational pension became paid up, you stopped making contributions and you either transferred the benefits to a scheme in Ireland or they have remained in the UK scheme. They have not disappeared. If still in the UK scheme, you now have deferred benefits; you will become entitled to start drawing a pension when you reach pension age. You may be able to transfer these benefits to a pension scheme here in Ireland, if you wish to do so.

The option may exist for you to transfer any UK employer pensions back to Ireland. It is an important decision and is based on where you intend to retire, the type of pension, taxation, transfer value etc.

It is recommended to seek professional advice about any options available to you to optimise the benefits you will receive, and when it is possible to draw them down.

How will Brexit affect my UK occupational pension?

There has been some scaremongering about pensions not being paid, but this is highly unlikely. Arrangements are in place for occupational pensions to be paid outside the EU and similar arrangements will continue thereafter for occupational schemes. However, if the company ever transfers the pension scheme out to an insurance company, then matters could change. As these pensions come under financial services regulations, it may come about that expatriates living in the EU may lose access to UK private pension and insurance payments after Brexit unless a specific financial services deal is agreed for UK pension providers.

What Next…

You can follow up your UK State and Occupational Pension entitlements yourself or you can use the services of an approved agent such as IPS Financial Advice.

If you have not already done so, I would urge you to attend to this as soon as possible as it can take a number of months to get a response from HMRC in the UK. IPS is an approved agent with HMRC and we have a representative office in UK. We are therefore in a position to do this work efficiently. For a very reasonable fee, we will follow up your UK State Pension entitlements and get confirmation on the number of years you can buy back. We will also get details of any deferred benefits you may have in either an occupational pension scheme or a personal pension and discuss with you the best option for these pensions.

 Should you wish to use the services of IPS Financial Advice in following up your UK State, Occupational or Private pensions you can contact me on 061 513073 or email [email protected]