Foreign nationals who worked in the UK for at least three years may have been among the 138,000 people who rushed to take advantage of a special deadline which allowed to backdate the state pension entitlement by up to 19 years. TikTok and Instagram accounts run by influencers in Australia and Ireland have been encouraging workers there to take advantage of what has been described as a “loophole”.
Workers from countries which have reciprocal agreements with the UK have been allowed to backdate their National Insurance contributions for years, but until 2016 they would only have been allowed to do so for the previous six years. In 2016, changes to the state pension prompted the government to give all workers a longer window to backdate their National Insurance records. HMRC allowed backdating to 2006, a move that was extended to all, including foreign nationals.
A TikTok channel called Malone Financial told his 11,000 followers that “the best part” was that adding a qualifying year costs as little as £164, and entitles you to £275 per year of state pension “until you die”. He said it was a “no-brainer” before adding: “The UK state pension can be claimed in addition to the Irish state pension”, The Times reports.
An article in the Australian Financial Review also notes: “An extraordinary, yet largely untapped, resource exists for anybody who has worked three years or more in the UK: the state pension. Thanks to an unusual provision in UK law, Australians who have worked in the UK for at least three years may be eligible to claim a state pension that can provide them with an extra $24,000 a year from the age of 67 onwards.”
An HMRC spokesperson told the Daily Express that anyone previously lived in the UK for 3 years in a row or paid at least three years of National Insurance contributions (NICS), could continue making voluntary NICs towards a state pension.
They explained that the extended deadline to top up as far back as 2006 expired on April 5 this year, and that foreign nationals could continue topping up but only for the previous six years.
Sir Steve Webb, a former pensions minister and partner at pensions consultancy LCP, said the top up had been aimed at people who work in the UK, move abroad but come back to retire.
The Financial Times points out that only those living in the European Economic Area, Switzerland or a country that has “reciprocal agreements” with the UK will benefit from the triple lock.
It reported that people who paid tax in the UK are being alerted to the top up via social media posts and news stories across the world including posts on Instagram confirming that the ‘wild loophole’ is set to close.
John O’Connell, chief executive of the TaxPayers’ Alliance, told The Times: “Brits will be outraged that people with minimal ties to the UK can buy cut-price pensions funded by taxpayers.
“This loophole is being openly marketed abroad as a cheap route to generous British benefits, while HMRC claims it can’t track who’s cashing in. The government must get a grip and put a stop to this exploitation of the system.”
Making up for one year of missed NI contributions costs up to £907.40, which will add £302.64 per year or £5.82 per week to the state pension. The state pension is not funded – which means it it not aside in a separate pot and exisiting state pensions are paid out of the tax and National Insurance taken from current workers.
To buy an annuity – a private pension, paying out the same amount as the state pension a saver would have to have amassed a pension fund of over £100,000.