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In March 2019, Endeavour advised British expats living in Australia and eligible Australians who have worked for at least three years in the UK and paid national insurance contributions that the British Government’s pension discount scheme was closing on 6th April 2019.

This scheme – known as the Class 2 national insurance contribution scheme – allows people who have already qualified for a British pension to buy extra pension entitlements at a much lower rate than the contribution amounts that millions of workers in Britain and Northern Ireland must pay.

Class 2 contributions also provide a way for people who have worked in Britain in the past to qualify for the pension, even if they have not made the minimum 10 years of national insurance contributions necessary to get the basic British Pension.

This could deliver those eligible hundreds of £pounds of extra British Pension payments on retirement.

A British resident would have to pay £762 ($1386) in the 2018-19 financial year to voluntarily boost their British Pension annual entitlement by £246 ($448). This contribution arrangement would pay for itself within 4 years. These costlier contributions are known as Class 3 contributions.

Expats and Aussies who have worked for at least three years in Britain and made their compulsory national insurance contributions only need to voluntarily contribute £153 ($278) this financial year under the Class 2 scheme to enjoy the extra £246 ($448) pension payment each year on reaching pension age – for the rest of their lives. This super-discount contribution scheme pays for itself in the first year of pension payments! It then becomes a gift that goes on giving for a lifetime.

Projecting this benefit over a 15 year timeframe would see eligible expats and eligible Aussies who make this voluntary contribution and then collect the British Pension receive more than $6,600 extra in Australian dollars (based on current exchange rates) in their British pension in return for a one-off payment of $278 this financial year.

The news gets better!

The British national insurance system allows for payment of up to six years of retrospective contributions, meaning anyone who is eligible can also make voluntary retrospective contributions back to the 2012-13 tax year. These retrospective contributions can be made under the discount Class 2 contribution scheme provided you are eligible. That means eventually even more money in your British pension on retirement.

It’s important to note, though, that if you have already reached British Pension age, you are no longer eligible to make Class 2 pension contributions.

If you’re in this situation, you could still make the more expensive Class 3 contributions retrospectively up to a maximum of six prior years to boost your pension entitlement.

That’s the good news.

Now the bad news.

A negative feature of the British pension scheme is the British Government’s continuing refusal to index the pensions of expatriates and other pension recipients in Australia.

This is in contrast to British pension recipients in Britain as well as in a number of other countries including the United States and Israel, who receive indexed British pensions.

If, like us, you consider this refusal to index British pensions for those pensioners living in Australia to be inequitable, we encourage you to contact the British Pensions in Australia body – see our BPIA website link or visit

The dedicated people who run this site provide excellent advice about British pensions – see their Frequently Asked Questions section for some clear information about British pensions.

BPIA have been fighting relentlessly to secure indexation of British pensions for recipients of British pensions in Australia. We encourage you to support their cause.

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