The UK government has confirmed a major change to the way British expats can build their state pension entitlement. From 6 April 2026, access to Class 2 Voluntary National Insurance Contributions (VNICs) will be removed for most people living abroad. At the same time, the government will extend the initial residency or contributions requirement to 10 years.
The Budget described the move as a way to “put an end to those living abroad being able to buy cheap access to a UK state pension.” While the language is strong, the practical effect is simple: expats who have relied on lower-cost Class 2 contributions to maintain or top up their state pension record will soon lose that option.
What is changing?
- Class 2 VNICs abroad will be removed
Currently, many expats can pay Class 2 contributions if they were previously employed or self-employed in the UK and had lived in the UK for at least three years before moving. Class 2 is significantly cheaper than Class 3.
From April 2026, only Class 3 contributions will generally be available for expats who want to fill gaps in their National Insurance record.
- Initial residency requirement extended to 10 years
To qualify to pay voluntary NICs from overseas, UK nationals will now need a minimum of 10 years of UK residency or contributions. This change is designed to bring voluntary NIC rules in line with the minimum qualifying period for receiving a UK State Pension.
- A wider review of voluntary NICs
The government will also launch a public consultation in early 2026. This may signal further reform to how expats interact with the UK pension system, particularly around fairness, affordability, and long-term sustainability.
Why this matters for expats
For many British nationals abroad, the ability to pay Class 2 NICs has been one of the most cost-effective ways to preserve access to the UK State Pension. Moving from Class 2 to Class 3 represents a meaningful cost increase, especially for those still filling historic gaps.
The extended 10-year residency requirement may also stop some long-term expats, especially those who left the UK at a young age, from topping up at all.
From an advice perspective, 2025 is expected to be a transition year. Many expats will be reassessing whether contributing at the higher Class 3 rate still makes sense, and how these changes fit into their broader retirement planning. We also expect more expats to revisit private pension consolidation, residency strategies, and long-term tax planning as the UK system becomes more restrictive.
What expats should consider in 2025
- Review your NI record now.
- Understand how Class 3 contributions change your projected State Pension.
- Compare the value of Class 3 top-ups against alternative retirement strategies.
- Confirm your eligibility under the new 10-year rule.
- Keep an eye on the 2026 consultation for further potential changes.
While the reform aims to simplify and align rules, it removes an important planning tool for many British expats. For those who have relied on Class 2 to build an affordable, inflation-linked retirement income, the jump to Class 3 may reduce the perceived value of continuing contributions.
Even so, the UK State Pension remains a strong long-term asset for many expatriates. Whether continuing to pay Class 3 is worthwhile will depend on individual circumstances, time abroad, overall pension assets, and retirement horizons.
Need help planning your next steps?
If you’re unsure how these changes affect your retirement strategy, book a call to walk through your options and model different outcomes.
