UK State Pension
If you have previously worked in the UK you have the ability to ‘top up’ and maximise your State pension which is payable from the UK Government.
The UK State Pension is a credit based system and not means tested, unlike the Australian Age Pension.
Therefore if you have ever worked in the UK and paid National Insurance contributions you will have an entitlement to the UK State Pension, even if you are not a UK national.
The amount of pension you receive depends on the number of National Insurance years you have been credited with.
National Weekly Annual
Insurance Pension Pension
Credits Entitlement (£) Entitlement ($)
1 £4.45 $439.38
10 £44.47 $4,393.78
20 £88.94 $8,787.55
30 £133.41 $13,181.33
35 £155.65 $15,378.22
35 years’ worth of credits currently entitles you to the full basic state pension however you may receive more than the amount quoted above if you have built up an additional entitlement through the earnings related schemes known as Graduated pension, SERPS or S2P and you may receive less than the amount quoted above if you were contracted out of the additional State Pension at any time.
Enhance Your UK State Pension
You have the ability to ‘top-up’ your State Pension entitlement by paying additional voluntary National Insurance Contributions whilst abroad.
Each additional National Insurance credit that is purchased will provide you with an additional 1/35th of the basic state pension until you have topped up to the maximum of 35 years.
Class 2 National Insurance:
If you meet certain criteria each National Insurance Credit will cost approximately $276.93. This would increase your annual pension by $439.38 per annum for life. This is known as Class 2 contributions.
You are able to purchase up to ten years of contributions as a lump sum and then top-up each year whilst you remain in Australia until you have the maximum entitlement or reach State Pension Age, whichever is sooner.
The UK Government announced at the 2016 Budget that Class 2 contributions will be abolished from April 2018 which means there is only a limited time left to take advantage of this.
Due to recent legislation changes, if you have less than 10 complete UK Tax years’ contributions, then you will NOT be eligible to claim a UK pension, although you have paid into this. It is very beneficial to at least make sure that you have topped up to 10 qualifying years, rather than lose your entitlement.