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The UK is increasing the cost of voluntary national insurance contributions used to build up state pension entitlements. While this allows people with at least 10 years of contributions to continue buying back years, the higher price tag means it will take longer to recoup the cost of these payments in retirement. Whether it is still a financially sound decision depends on individual factors such as life expectancy, future pension rates, and exchange rates.
The UK has raised the price of building up pension rights but does it still make sense for Irish people who once worked there? Illustration: Paul Scott I have received a letter from HMRC saying that, since April 2026, I can no longer pay Class 2 NI contributions towards a UK pension.
I worked in the UK and, between living there and topping up from abroad (here in Ireland), I have 20 years of contributions towards a UK pension. Now it seems if I want to continue to top up these payments, I will need to start paying Class 3 contributions at a significantly higher rate. Is this worth my while?
Hundreds of thousands of Irish people who worked and lived in the UK for at least three years have built up rights towards a UK state pension. And many of them took advantage of a recent opportunity to buy back additional years of national insurance to either get them over the 10-year minimum to qualify for a minimum pension payment or increase the pension they would be entitled to.
Almost €180m stolen in financial fraud in Ireland in 2025, new Central Bank figures show That buyback window allowed for UK residents buyback as many as 18 years of pension entitlements for just over €200 per year acquired. It was a no brainer. But, as you have discovered, the UK tax authorities - His Majesty's Revenue & Customs (HMRC) - have now changed the rules.
And while that does not impact any rights you already have, it will make it more expensive to further increase your pension entitlement. For those who spent less than 10 years in the UK and had not yet applied to buy back national insurance years, they are now locked out of the system as, under the updated rules, you require 10, not three, years of national insurance on your record to be allowed to buy additional years on a voluntary basis.
But the key question, as you note, is whether it still makes sense financially? Is it still a good deal? Infuriatingly, the accurate answer is that "it depends". On what?
Primarily on how long you draw down the state pension and on what level that pension will be paid at. The UK is changing the age at which you can start to draw down the pension. Up to April this year, it was 66 but that will rise to 67 by April 2028. Anyone retiring between those dates will have their pensionable age adjusted on a phased basis.
A similar, though less complicated, plan to raises the state pension age in Ireland was scuppered when all Ireland's major political parties took fright at voter opposition on the doorsteps ahead of the last election. The old Class 2 contributions that many Irish people paid to buy back national insurance years at a cost of around €209 per year would hit breakeven point around six months after you started drawing down your pension.
The higher Class 3 rate this letter is advising now applies to any future voluntary purchase of national insurance lengthens that timeline. You pay £18.40 per week for Class 3 contributions this year. That is £956.80 a year - or just shy of €1,115 at today's foreign exchange rate. Each year you buy back should add £6.89 a week to your UK pension payment at today's UK pension rate - or £358.28 over a year.
That weekly figure is 1/35th of the £241.30 full weekly rate of the UK state pension this year, 35 years being the magic figure to qualify for a full state pension. On that basis, it will take two years and eight months of drawing down the pension before you break even on the payment. Now that is at today's figures. That will change obviously by the time you retire.
As the actual pension payment rises between now and then, the time you require to break even reduces. At present, the UK has a formula to determine the annual increase, if any, in state pension payments. You may have heard talk of it - the triple lock formula. It is designed to make sure that the value of the pension keeps pace with the cost of living over time.
Essentially it guarantees that the weekly state pension payment rises each April by the highest of one of three measures - average earnings, the consumer price index or 2.5 per cent. However, there is growing political pressure in the UK to rethink or abandon the triple lock - largely because it is proving very expensive for the UK exchequer. If that were to happen, it could fundamentally alter the value-for-money calculation on your contributions.
As you are in Ireland, the other obvious factor that needs to be taken into account is the rate for converting sterling into euro. That affects both the cost of making your contributions and the amount in euro that you will receive in retirement. And there is no way of getting precise fix on that.
So, you can see, there is no way I can give you a precise yes/no answer on whether it is worth your while to continue to make voluntary national insurance contributions under the new, higher Class 3 rate
UK State Pension National Insurance Voluntary Contributions Class 3 Class 2 Retirement Pension Buy-Back HMRC Ireland Triple Lock
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