Living in Hong Kong, one might think the UK state pension is out of reach. But here’s the good news – even as an expat, you may still qualify for a full UK state pension! Yet, this golden opportunity won’t be around forever. You have until the 31st July 2023 to top up your National Insurance contributions. Let’s dive into how this works.
Know your rights: State pension for UK expats in Hong Kong
The UK state pension currently stands at £203.85 per week, or £10,600 per year. To avail of this full pension, you need 35 qualifying years of National Insurance contributions (NICs). If you have clocked at least ten years of work in the UK, you will be eligible for a pro-rata state pension based on your qualifying years.
Interestingly, even if you’re living abroad, as a UK expat, you can make voluntary Class 2 or Class 3 contributions to qualify for the full state pension. Typically, you can backpay a maximum of six years of contributions, but a special extension currently in place allows individuals to fill gaps in their NI history dating back to 6th April 2006. The initial deadline for this extension was 5th April 2023, but it has been graciously extended. Now, you can top up NICs dating back to 6th April 2006 until 31st July 2023. So, without further ado, let’s explore the steps to secure your full UK state pension.
Guide: How to top up voluntary NI contributions
A UK state pension may not fund a luxurious retirement, but it will certainly supplement any retirement plan. Here’s a step-by-step guide to topping up:
- Check your UK National Insurance record: You can review your record here. This will allow you to spot gaps in your payment record and ascertain your qualifying years.
- Determine eligibility for voluntary NI contributions: HMRC’s NI38 leaflet has all the details. Generally, working expats are eligible for Class 2 contributions, set at £3.45 per week for the 2023-24 tax year. Class 3 contributions are higher, at £17.45 per week.
- Evaluate the value of voluntary contributions: Class 2 voluntary contributions secure over £10,000 in retirement for just about £180 per year. If eligible, it’s likely to be a worthwhile investment. However, Class 3 contributions require a more nuanced decision. Feel free to reach out for advice on how this plays into your overall financial plan.
- Submit your application to pay voluntary NI contributions: If you opt to top up your NICs, fill out the CF83 form and send it to HMRC along with your UK bank details and the signed direct debit instruction.
- Await a response: HMRC will confirm your eligibility and the type of NICs you can top up. As long as you apply before the 31st July 2023 deadline, rest assured you will receive a response.
Beyond the state pension: Retirement planning for expats in Hong Kong
While a UK state pension is valuable, it should be just one part of a robust retirement plan. True financial security requires setting clear goals and building a savings and investment strategy to reach them.
If you’re uncertain about where to start or how to align your financial plans with your retirement goals, don’t hesitate to reach out. I’ve helped numerous expats in Hong Kong craft bespoke retirement plans.