A little-known legal amendment is being leveraged by savvy New Zealanders and expat Brits to supercharge their retirement savings.

Not many people are aware that on November 9, 2020, New Zealand law changed such that any part of a UK State Pension gained from making voluntary contributions is no longer deducted from NZ Superannuation.

“That means that New Zealanders can effectively claim two retirement incomes (plus any KiwiSaver or other private income they may have),” says John Ring, Operations Director of XtraPension – an Irish based company that helps people around the world to maximise their UK State Pension.

To qualify for the UK State Pension, you must have worked in the UK for at least three years. The opportunity is available to men born after April 5, 1951 (i.e. aged up to 74), and women born after April 5, 1953 (i.e. aged up to 72).

To get any pension, you need a minimum of 10 years of National Insurance contributions, and to receive the full pension, you need 35 years of NI contributions. But the kicker is that you can buy up to six past years of any missing contributions, plus future years of contributions to get as close to your desired maximum years.

National Insurance is a system of contributions paid by UK workers and employers, as well as self-employed people, to fund various social security benefits, including the pension.

How much does it cost to bolster your UK State Pension?

The cost of buying a year varies depending on whether or not you’ve been working since 2019 outside the UK.

Most New Zealanders and expat Brits can buy six past years at NZ$400 per year = $2,400 once-off cost.

It is also possible to buy years annually into the future, all the way up to the age of 67 to maximise your pension.

Each year purchased from the UK Government at $400 equates to $700 per year in pension, so for example, 10 years of NI contributions would provide $7,000 per annum in pension payments payable from the UK Government.

“For someone who needed to buy 10 missing years, it would cost them only $4,000 which would pay them $7,000 annually from the age of 67 for the rest of their life,” says Ring. “Over a typical 20-year retirement (to age 87), this investment strategy would be worth $140,000. Not bad for a $4,000 investment.”

Most people who qualify will get a guaranteed $40 back for every $1 they pay to the UK government over a 20-year retirement.

“Interestingly, the rules are different for people outside the UK, and it is much cheaper to buy voluntary NI contributions outside the country, though the pension is not indexed and is frozen from the date it is first claimed,” says Ring. “This ‘frozen pension’ issue impacts 600,000 people around the world and there is a big campaign underway to change it. Regardless, financial experts say it is still a very worthwhile financial decision for people in New Zealand and an excellent return on investment.”

Information required to claim a UK State Pension

Firstly, check your eligibility here: https://check.xtrapension.com/

Your old UK National Insurance Number – see 5 ways to get it here

The name, address, and work dates of your last UK work (even if the company is defunct)

When you left the UK

What you’ve been doing since 2019 (or later if you left the UK later) including employer details and dates

Ring says the process is very nuanced and it is easy to fall through the cracks.

“Up to 500,000 New Zealanders and expat Brits in New Zealand are eligible to claim this potentially life-changing pension, but it requires some finesse to ensure you get the best possible outcome,” he said.

“That’s why we set up XtraPension as we want to help as many people as possible to maximise their UK State Pension so they can enjoy a much more comfortable life in retirement.”

To find out more about how to maximise your UK State Pension, visit XtraPension,  WhatsApp +353 83 123 4000 and watch this video.