PaulGent

Iam not sure whether this will be of interest to many of the younger people on this site (ie less than 45 years old ).

I have been over here in NZ for 18 months and I decided that I should find out if I will still be eligible for a UK pension when the dreadful day arrives. I worked full time in UK for 33 years and made my NI contributions throughout that period.

I rang the HM Revenue and Customs today to enquire about my UK pension. This is the info that they gave me:

- You can get a forecast of your pension based on the contributions you have already made. To get this go to the HMRC website home page at www.hmrc.gov.uk and then use the search to find a form CA3638. Send the completed for the HMRC and they will give you a forecast.

- You can then opt to make voluntary contributions to the UK state pension scheme. I beleiev that this would mean a contribution of around £45 per year for me. By making this contribution I would then be entitled to a full UK pension at age 65. The voluntary contribution is explained in a leaflet No NI38 which is also available from the search facility on the website above. The leaflet also includes a form to fill out if you decide to make contributions.

A word of caution You need to be careful that you check the impact that taking the UK pension wil have on any NZ state pension. Aparently, you can't have state pensions from both NZ and UK. This is apparently explained in the leaflets above.

The people in HMRC that I spoke to today also told me that the UK government is considering lowering the number of years of contributions required to give entitlement to a full UK state pension from 40 years to 30 years. In my ase this would mean that I am already entitled to a full UK pension when I reach 65. Aparently an announcement from the UK Government on this is expected in the UK summer. It would probably be worthwhile waiting to make a decision on whether to make contributions.

I also have some information on private and company pension schemes from the UK and how to avoid having to pay tax on these in both the UK and in NZ under the reciprocal agreement. Please let me know if you would like info on this.

Nisey

Thanks thats usefull, you dont have any advise as to what to do with a company pension do you.

I have had two schemes over my career, both are suspended now from contributions. Don't know whether to transfer them to a nz policy when we move or leave them where they are.

Karen2000

Hi

My husband and I are making voluntary contributions in the UK , at the moment we are paying about 30 pounds a month each . You have to be in NZ for 10 years to qualify for a full NZ pension and anything you got paid from UK would be deducted from it I understand.
It is a difficult decision to make , you can always make back contributions to pay up to date if things don`t work out and you return to UK . 10 years is a long time and even those commited to their life here don`t know what the future holds . We are going to carry on paying for the time being but if you look at the situation long term it would be money wasted if you eventually retired in New Zealand.
Can you take contributions paid here for credit against a Uk pension if you return within 10 years ? Does anyone know the amount of pension paid here ? That is my concern as the cost of living here seems fairly high you would need a decent pension to make ends meet . I believe if you have a private pension it can be paid to you here with no penalties except tax .
Perhaps this is something I might look into a little more and post my findings , or if anyone has more info I would be very interested

Thanks Karen

uk+kiwi

Does anyone know how much a full state pension would be in both the UK and NZ? I know it's not an amount one could live off.

There's a big difference between 40/30 and 10 years required to get full entitlement?

And Karen, presumably one needs to be in employment making pension contributions and not just 'in NZ for 10 yrs' to qualify? What would self employed people do? There must be a sub-section of society that take an element of their pay 'cash in hand' that make me wonder. Window cleaners etc. I'm sure not everyone declares all their earnings.

PaulG - I'm in my 30's, so apologises if the questions sound daft! BUT on a serious note, pensions are a bit of a worry for us, albeit one we cannot afford to address through increased financial plannning (young kids, life being expensive). Our private ones are market based (not final salary) and are thus pretty dire looking.

PaulGent

Based on what I have heard the NZ state pension is not really worthwhile and if you are within 10-15 years of retirement the UK pension might be a better option. It also gives you a "safety net" if you do have to return to the UK.

In NZ I would recommend copying what the Kiwis do which is to invest in proerty. This is especially true for rental property where the interest you pay on a mortgage is tax deductable and you do not pay capital gains on the sale of a second property. The NZ Inland Revenue site has lots of information on tax advantages of rental property. There is a strong belief here in NZ that you are better off borrowing as much as you can to buy a property which you can then rent out. Many people believe that you are better off in the long term living in rental property and renting out your own property. The maths on this do seem to work out as well. Looking at the long term property in NZ has, on avreage, doubled in value every 7.3 years. That means if you buy a house with 100% mortgage in 7.3 years you can sell it and get all the money from it and pay off your mortgage! If you rent it out for the 7 years then the interest you pay on the mortgage is all tax deductable too as are depreciation and wear and tear costs.

Worth thinking about!

Paul

uk+kiwi

It is, although it's not strictly true about their being no capital gains tax, although there is nothing that goes by that name. Anyone buying property in NZ with the intention of making a profit, is required by law (as in the UK) to declare that and pay tax on any profit. Admittedly, the targets are developers, although this was originally the case in the UK too of course.
(before some people started being able to afford more than one house).

I also read yesterday that there was a paper released in January of this year tightening up in this area, with the introduction of something akin to capital gains tax - called Associated Person Tax. You can read about it here:
http://www.propertytalk.com/content/view/2524/72/

HTH - Carmen