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Paul77

Exploiting UK Pension System

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A friend of mine told me about the scheme, basically it works like that:

- someone sets up a limited company in the UK which does some fictitious activities (potentially several companies so they can buy "services" from each other)

- then, they "employ" people and their wages are set just to pay the full NI contributions

- this fictitious staff is doing nothing but paying the limited company for their own "wages"  + some extra expenses

- the "staff" doesn't even live in the UK, they just come for a day to open a UK bank account and to attend the NIN appointment

- the idea is to have 10 years of full NI payments and then claim the UK pension, so the scheme is popular among people in their 50s - looks like a good ROI and stable, extra income - not that much money here, but for people living in EE countries it is quite a lot!

 

Do you think they will get these pensions at all?

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35 minutes ago, Paul77 said:

A friend of mine told me about the scheme, basically it works like that:

- someone sets up a limited company in the UK which does some fictitious activities (potentially several companies so they can buy "services" from each other)

- then, they "employ" people and their wages are set just to pay the full NI contributions

- this fictitious staff is doing nothing but paying the limited company for their own "wages"  + some extra expenses

- the "staff" doesn't even live in the UK, they just come for a day to open a UK bank account and to attend the NIN appointment

- the idea is to have 10 years of full NI payments and then claim the UK pension, so the scheme is popular among people in their 50s - looks like a good ROI and stable, extra income - not that much money here, but for people living in EE countries it is quite a lot!

 

Do you think they will get these pensions at all?

Given that Employers NIC is charged on top of wages rather than deducted from them it sounds like quite an expensive scam especially as you need 35 years of contributions to qualify for the full UK state pension. Under the new system 10 years contributions will get you a pension of £44.50 a week. You also won't get it until you are at least 67. 

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2 minutes ago, stormymonday_2011 said:

Given that Employers NIC is charged on top of wages rather than deducted from them it sounds like quite an expensive scam especially as you need 35 years of contributions to qualify for the full UK state pension. Under the new system 10 years contributions will get you a pension of £44.50 a week. You also won't get it until you are at least 67. 

The first £2k of employers NIC is no longer due.

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2 hours ago, CunningPlan said:

The first £2k of employers NIC is no longer due.

You still need to construct 10 years of wages over the Class1 NIC LEL to qualify particularly as under RTI you will need to make regular returns to HMRC.  That sounds like a lot of effort for £44.50 a week particularly given you have to wait  until you are 67 for a pay out

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Sounds like complete pie in the sky to me. If there is any scam going on it's somebody claiming to be able to do this and pocketing the cash that is supposedly going to HMRC.

Regardless of all the other stuff, you can't just pop over to the UK for a day and open a bank account (at least not a free one, with a high street bank).

You would also need an NI number, again not exactly difficult to get but you still need to jump through a few hoops.

 

 

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34 minutes ago, gilf said:

Sounds like complete pie in the sky to me. If there is any scam going on it's somebody claiming to be able to do this and pocketing the cash that is supposedly going to HMRC.

Regardless of all the other stuff, you can't just pop over to the UK for a day and open a bank account (at least not a free one, with a high street bank).

You would also need an NI number, again not exactly difficult to get but you still need to jump through a few hoops.

 

 

I would actually take it pretty seriously. At the end of the day you don't need to go to these lengths, just come to this country in your fifties and when you hit state retirement age there will be some form of publicly paid  housing and  income guarantee if you have no other means of support. We have guaranteed that everybody can stay so that is that.

Anybody know of a migrant that doesn't have access to welfare and housing benefit? There may be initial problems, but they will get absorbed into he system eventually.

 

 

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38 minutes ago, gilf said:

Sounds like complete pie in the sky to me. If there is any scam going on it's somebody claiming to be able to do this and pocketing the cash that is supposedly going to HMRC.

Regardless of all the other stuff, you can't just pop over to the UK for a day and open a bank account (at least not a free one, with a high street bank).

You would also need an NI number, again not exactly difficult to get but you still need to jump through a few hoops.

 

 

Maybe - but it could work (in theory)

Say you are a youngish person living in the UK but you expect your parents to join you when they reach retirement age.

Being a good child, you normally send money home to help the family.

You don't need a company to operate paye - you could just set up as a sole trader. You apply for an NI number for your dear mother. 

Stick her on the payroll for £112 per week. No tax or NI payable but full pension entitlement accrued.

When the parents come to live with you in x years time, they will have a decent NI contribution record.

It is a long game but do it for two parents for 10 years and you have got an extra £4500 per year, tax free for the rest of their lives at zero cost to you. That would cost a hell of a lot in a money purchase pension scheme.

Disclosure - whilst different, my Mother has done similar in the US where she lives for half of the year. She was on a company payroll for 10 years (I think did an hour a week bookeeping or some such) and has now accrued full entitlement to medicare.   

 

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3 hours ago, crashmonitor said:

I would actually take it pretty seriously. At the end of the day you don't need to go to these lengths, just come to this country in your fifties and when you hit state retirement age there will be some form of publicly paid  housing and  income guarantee if you have no other means of support. We have guaranteed that everybody can stay so that is that.

Anybody know of a migrant that doesn't have access to welfare and housing benefit? There may be initial problems, but they will get absorbed into he system eventually.

I don't know for sure, but I believe the state pension is topped up by some supplementary social security payment to meet a certain minimum. I think it's over £100 a week. In addition, you will be getting council tax relief, free prescriptions, free dentistry, winter heating allowance, subsidised travel . . . as long as you can provide your Pension Service credentials. 

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1 hour ago, copydude said:

I don't know for sure, but I believe the state pension is topped up by some supplementary social security payment to meet a certain minimum. I think it's over £100 a week. In addition, you will be getting council tax relief, free prescriptions, free dentistry, winter heating allowance, subsidised travel . . . as long as you can provide your Pension Service credentials. 

I would imagine recent migrants from Poland would be expected to use Polish retirement welfare entitlements  as a backstop should they be short on UK contributions. However, as far as some of the more recently joined countries go, where in some cases only a rudimentary welfare system exists, I would imagine the UK will have to pick up the retirement tab. For one thing nobody will be sent home and there are minimum living standards observed for folk of pensionable age both regard to housing and income. These standards will always override anything that is supposed to apply to the Pension service rules.

If you can refer to one octogenarian migrant  who came late in life from abroad and then didn't get gradually integrated into full housing benefit and minimum income guarantee then you would have a case.( referring to migrants of non independent means obviously).

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There are lots of rules for EU residents; all of which may change in the UK after Brexit.

You claim your pension in the country where you retire. You can bring your pension years from other EU countries to your retirement country. Frexample I have 35 years contributions in the UK but to get a full state pension in France I need 42 years so will only get 35/42 years pension. I don't know if the French social security system ask the UK system for the money or if they just assume it all comes out in the wash.

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If people are trying it on as described, them they need to pull it off for at least 10 years to qualify for a state pension. That's a long lead in to a fraud.

Let's hope some investigatory types at HMRC and/or DWP are on the ball. There are people who investigate this sort of stuff, and uncovering a big scam like this (if it's happening) would get somebody a nice promotion.

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The problem with the UK state pension system and indeed the strains on the health service from an ageing popualtion is very little  of it is paid for during a working life. Nobody is suggesting abolishing the system but opening the Ponzi up to the whole world is just crazy. Each person on their death bed has cost the country quarter of a million in accumulated state debt on average. Opening the same system up to migrants is laudable but crazy. 10 years residency seems nowhere near enough imo, may be 20 years at the very least.

The accounting system re.  the benefits of migration on tax is probably the biggest con there is. Millions in surplus now from a young demographic but trillions accruing in off balance sheet health and pension liabilities.

The idea is that the Ponzi is sustainable by further migration and GDP gains. Sadly I don't think it is. I think it is time for us all to bite the bullet and pay for the welfare we receive ourselves; pensioners loans, like student loans, would be a good place to start with a charge on the Estate after death.

 

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On 1/27/2017 at 10:25 AM, crashmonitor said:

The problem with the UK state pension system and indeed the strains on the health service from an ageing population is very little  of it is paid for during a working life.

Yes. It's been a problem since inception. There never was, at any time, a pension fund to be properly administered and invested. From the beginning, money was paid out at the same time as being paid in . . . or faster. And you are correct, immigration exacerbates the problem. Norman Fowler tried to reform the system and produced a very readable green paper on this. But that was back in the Eighties. On the whole, political parties of any hue don't want to touch the issue and few MPs have the brains to understand it. 

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HMRC expects a compnay to have some form of trading.

HMRC or an accountant  will no let a company sit there and do nothing.

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