Plan B

A UK pension would be paid without deduction of any tax by the UK authorities on proof that you are paying tax in Italy. A UK state pension can either be credited in GBP to a UK account or paid out in EUR every 4 weeks into your Italian bank. If using the latter option, the pension's conversion to EUR is done at that day's mid-market rate without deduction of any charges - as happens with my wife's pension.

philat98

I have a company pension that I can take next year. I mentioned this to my accountant and she said I should have been paying tax on the asset value. If I take the pension I am worried I might be fined.. As for tax free lump sums

Geordieborn

Now that sounds a nightmare!

Geordieborn

PlanB I assume the first bit is not regards a state pension? Or do they (and how) deduct tax off a state pension if you have no other UK income. As far as I've been able to tell (we do have other income) the only way they tax you is via other income using a reduced tax allowance. Not too sure what they are going to do if they continue to freeze the tax allowance as everyone will run up against this...

Geordieborn

Thinking of modicasa predicament , I spotted this on MoneySupermarket just now whilst looking for best interest rates for my daughter. It may be useful to others living in Italy who have UK contributions. I know I had a big debate with someone a few years back on the value of paying arrears of UK contributions as it used to be a waste of money. I can't be sure of this, but know it IS now very much worth it for some. The bit I'm not sure about is why, but suspect that because the new scheme in 2016 did away with the additional state pension part they made the full pension much higher than the old 100% - a lot higher... I suspect the answer is in the way they calculate this new pension and treat contributions in the years AFTER 2016 different to those before. Like I say I'm not absolutely sure, but suspect it is only of any value to pay years from 2016/17 onwards unless you need earlier years to qualify regards the minimum years needed. I'm very surprised to see they have extended the deadline for transitional arrangements to 2025 for paying extra arrears over and beyond the normal 6 years. I should add you can always ask what your pension would be if you paid x, y or z. There is no limit on the number of forecasts you can get.

philat98

You are right. I tempted not to take it and just manage on the state pension. The annuity rate is quite low if I opt for inflation protection.

daniel_t

Yes Geordieborn, I wrote to HMRC a few months ago and let them know I'd like to pay voluntary contributions. I'm still waiting to hear back and I don't expect it to happen for another half a year or so. The good thing is I can top up my total contributions to 100% from 2006 if I do it before the extended deadline. The old state pension is about £150 a week when paid in full - and I think the new one is about £200.

Contributions in Italy - I've been told to get in touch with HMRC International Pension Centre. I might be able to top up my years by transferring the contributions I've paid in Italy back to the UK, but I suspect this won't happen.

modicasa

Yes, buying in missing years is one of the factors in my dilemma. I cant work out how and if I would have an advantage claiming state Italian and British pensions, or integrating them and getting almost the maximum possible Italian one. I had in my ignorance, thought that if I bought in some missing years I could then have the 98/103 quota here and retire early - but Ive already been told thats a no-no.

nicktonight

My own case as an example. I have a French pension that has been paid since age 66. I have lived in Italy for the last 11 years and have paid a lot of contributions but not yet the 166,000 required to claim an Italian pension. The fact is you can add the years of paying contributions in different countries to reach the minimum of 20 years required to obtain a pension but you cannot add the actual contributions together i.e. I can't add the contributions paid in France to those paid in Italy in order to reach the minimum threshold of 166,000.
This means that I can't claim my Italian pension until I am 73.
I have checked with the EC and they confirmed that this discrimination is illegal!
I think that these rules apply to both the UK and France and have not been changed by Brexit.
PS If you check into the INPS website with your SPID all the rules are quite clear and they calculate how much your pension will be and when you can claim it

Geordieborn

First thing I would reiterate is, if you have reached pension age in the country you formally apply to get a pension, they will have to give a formal decision which will have the right to appeal. Secondly, do not trust any official replies unless in writing. It’s not that they are trying it on, many simply don’t have a clue what is correct. There were about 3-4 volumes of EU regulations and each was massive, anyone ever looking at the Regs will know how difficult to understand these are…

I can’t believe EU contributions can’t be used to satisfy any minimum contribution test and simply think they are wrong.

Other thing to note is that these contributions cannot be transferred, I suspect this is a lost in translation issue. The records are transferred i.e. copy of what you paid and used in any combined calculation.

This EU link here seems to me to backs the above and covers (a lot better than me) how the calculation works.

Geordieborn

Modi, without knowing your exact situation, I'd hazard a guess you have rights to a pension in both countries (although I know nothing of Italian calculations and rules) with minimum qualifications being satisfied. If that's the case then it is very likely any pension in both countries will be better under on their contributions i.e. ignoring EU calculations (or at least only coppers different). Pre 2016 and I could have calculated your pension to the penny, but since they have changed major parts. So if for instance you were contracted out of the state scheme in the UK (and many were) it can have a significant impact (negative) on your UK state pension after 2016. It should be remembered any entitlement to state pension in the UK often gives rise to other benefits, which I guess may apply there in Italy?