Like many others I bought back all the years that were available to me through the UK pension scheme. <\/b><\/p>\n
I could not remember my working dates correctly and was offered to buy back the years at the higher rate. I was delighted to be able to buy back the years and paid over \u20ac13,000. <\/b><\/p>\n
I now realise that I should have paid the lower rate. Can I claim back the overpayment from HMRC?<\/b><\/p>\n
Ms R.K.<\/b><\/p>\n
*Hundreds of thousands of Irish people who, at one time or other, worked in the UK had the opportunity earlier this year to buy back up to 19 years of UK pension rights \u2013 most of them at knock-down rates.<\/p>\n
Normally, anyone who has worked in the UK can buy back national insurance dating to six years before the current year \u2013 and they can continue to buy back years until they hit retirement age.<\/p>\n
That\u2019s still the case.<\/p>\n
However, as a one-off due to the UK changing their state pension system, they allowed people buy back years as far back as 2006 as long as they applied before April 5th. Assuming people bought back all the years available to them, that would add 18 years to their UK national insurance record.<\/p>\n
You need 10 years of national insurance to qualify for a pension. Without buying back years on a voluntary basis, many of those Irish who had worked in the UK would not meet the threshold, so voluntary purchase was a good idea.<\/p>\n
For others, it brought them up to or close to the 35-year point that guarantees you a full UK state pension.<\/p>\n
The issue for you \u2013 and many others \u2013 is the price you pay for buying back those years.<\/p>\n
There are two classes of contribution: Class 2 or Class 3. Class 2 cost \u00a33.45 per week, or \u00a3179 per year while Class 3 was priced at a multiple of that \u2013 \u00a317.45 a week or \u00a3907.40 per year.<\/p>\n
What is the difference? Class 2 was available to people who had at least three years\u2019 worth of national insurance contributions already, who had lived in the UK for three years in a row and who were working both up to the time they left the UK and were working in Ireland (or had done so immediately upon their return to Ireland).<\/p>\n
If you did not meet those criteria but either lived in the UK for three years in a row or had three years of national insurance contributions, you could qualify for Class 3.<\/p>\n
Those rules have now changed, which we shall get to in a minute but for anyone who applied before April 5th to buy back all the years available to them between 2006 and 2024 \u2013 the cost would be different depending on the year \u2013 is \u00a33,147.65 if they qualify for Class 2 or \u00a315,850.35 under Class 3, according to XtraPension, a Galway broker specialising in helping people who worked in the UK for a time to access UK state pension. <\/p>\n
Most of those applying qualified for the better deal \u2013 Class 2 \u2013 only to find, as you have, that when the UK authorities got in touch, they were prepared only to offer Class 3.<\/p>\n
It must be said that the system over in the UK end seems chaotic. Tens of thousands of applications have still to be addressed, close to eight months after the deadline passed.<\/p>\n
And it appears that whoever is dealing with them is struggling to understand the position of people in Ireland \u2013 possibly because they have no visibility on Irish PRSI or other EU social insurance records, which would show that people met the conditions for Class 2. <\/p>\n
To compound the problem, people were told that they had to act within 31 days of an offer or run the risk of losing out. Given that it is next to impossible even to get through from here to the UK authorities overseeing this scheme in their department of work and pensions, never mind finding someone who understands the position and can actually make a decision on it, most people paid up rather than lose out.<\/p>\n
Appeals <\/p>\n
But can you appeal? Even if you have already accepted the Class 3 offer by paying the amount demanded?<\/p>\n
Yes, and yes, according to XtraPension, even if you are now retired and drawing down a UK pension.<\/p>\n
Not only can you appeal a decision made now in your case, according to XtraPension, but you can appeal any more expensive class 3 payments you have already made \u2013 at least since the start of last year.<\/p>\n
That may reassure many people who, afraid that they could lose out altogether, simply accepted the HMRC decision and paid for the back years of national insurance at the higher rate.<\/p>\n
The problem appears to be that many of the case worker staff managing the operation in the UK do not properly understand the rules governing eligibility for people who have worked in the UK at one time or another.<\/p>\n
If you meet the conditions for Class 2 outlined above and you can provide the documentary proof to back it up \u2013 such as your PRSI record since you came home or your social insurance record in another EU state \u2013 you should appeal and do so with some confidence that it will succeed.<\/p>\n
If you are worried about taking on HMRC by yourself \u2013 or even just keeping track of what is going on in a process that can take years to sort out, you can always do so through a broker, such as XtraPension, which has certainly been the highest profile interlocutor in the Republic on this issue.<\/p>\n
XtraPension tells me they are working with 8,000 Irish people looking to access or improve their UK state pension rights, half of whom are based in the Republic. <\/p>\n
So how much will that cost?<\/p>\n
XtraPension sets out its charges on its website. Essentially, there is a \u20ac100 deposit that you pay up front. Then there is an appeal fee of an additional \u20ac900 payable when XtraPension lodges your appeal with HMRC.<\/p>\n
If the appeal is rejected, XtraPension says that the full \u20ac1,000 outlay is refunded. However, if it is successful, an additional \u20ac500 success fee is charged for a full cost per successful appeal of \u20ac1,500.<\/p>\n
As that is a fraction of the difference between paying for national insurance at Class 2 or Class 3, it seems a price worth considering. <\/p>\n
Also bear in mind that, apart from buying back years, you can continue to pay voluntarily for national insurance going forward until you retire. And if you accept a Class 3 decision, correct or otherwise, that is the rate you will continue to be charged, whereas if you are accepted as qualifying for Class 2, you will pay this lower amount in future years if you choose to continue buying national insurance cover.<\/p>\n
Can you do it yourself? Of course you can. The issue is that many Irish people have had big problems trying to get through to the relevant people in the UK HMRC and Department of Work and Pensions. That can be dispiriting and frustrating.<\/p>\n
XtraPension is warning that it could apparently take 18 months or more for HMRC to process an appeal, which seems extraordinary. But then, many people have yet to hear back on their initial application from eight months or more ago. <\/p>\n
New rules<\/p>\n
It will come as little surprise that the UK authorities have finally woken up to what a ludicrously good deal they were offering and, in their budget announced last week, have made some changes.<\/p>\n
As chancellor of the exchequer Rachel Reeves said in her speech: \u201cThe UK government is closing loopholes in current Voluntary National Insurance contributions (VNICs) rules that allow those with a limited connection to the UK to build UK state pension entitlement at a cheaper rate whilst overseas. <\/p>\n
\u201cTo fix the most unfair elements of these rules, the government is removing access to the cheapest Class 2 VNICs for individuals abroad and increasing the initial residency or contributions requirement for VNICs to 10 years. The government is also launching a wider review of VNICs, with a call for evidence to be published in the new year.\u201d<\/p>\n
These will not affect anyone already in the queue to buy back national insurance for the years since 2006 but they will affect you if you are looking to continue to pay voluntarily for national insurance from next year to boost that UK pension.<\/p>\n
From April 6th, even if you have been eligible for Class 2 contributions up to now, you will have to pay at the higher Class 3 rate from now on. <\/p>\n
As I understand it, you will still be able to pay Class 2 for the 2024\/25 tax year and, if you did not avail of the full dispensation on back purchase, for any purchase of national insurance going back to 2019. But for any year from 2026\/27, the Class 3 rate applies.<\/p>\n
The other change is that people will now have to have lived or paid national insurance in the UK for at least 10 years before they are eligible to pay voluntary national insurance \u2013 up from no more than three years previously.<\/p>\n
According to the HMRC website, the 10-year rule will only affect \u201cnew applications to pay voluntary Class 3 national insurance contributions\u201d. That means anyone paying Class 3 is still okay even if they lived in the UK for fewer than 10 years. <\/p>\n
What is not clear is if those people paying at Class 2 \u2013 and who will be moving to Class 3 in the future \u2013 will be caught by the new residency limit. Will they be seen as \u201cnew applicants\u201d? I suspect they should be okay, but we will have to wait for the promised details of transitional arrangements.<\/p>\n
It\u2019s hard to argue with Reeves, really. As the HMRC site says: \u201cThese changes are being made to ensure that individuals building a state pension from outside of the UK have a sufficient link to the UK and are paying a fairer price to do so.\u201d<\/p>\n
The idea that you could buy access to a state pension for as little as \u20ac205 a year was clearly a throwback to a bygone era of empire and became a loophole through which tens of thousands of people from outside the UK, who worked there for a short time but then made their lives elsewhere, were able to take a lifelong charge against the UK government (and taxpayer) in retirement.<\/p>\n
Anyone following this story through the column will know that I was one of the people eligible for purchase of national insurance at Class 2. For full transparency, it is only fair to disclose that I am pursuing that claim through XtraPension. However, I have no other link with the business either before the national insurance issue came up or since.<\/p>\n
No decision has yet been communicated to me on my initial application.<\/p>\n
*This article has been updated to reflect changes made to the UK voluntary national insurance regime announced in the UK budget on Wednesday, November 26th, 2025.<\/p>\n