First time expat move from London to NY
Jan 10th 2019, 12:20 pm
#16
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Re: First time expat move from London to NY
If you have worked in the UK before you leave and will work in the US when you leave (which is the case for you, not sure about your wife), you qualify for class 2 contributions which are very cheap and a no-brainer. Otherwise you have to pay class 3 contributions which are more expensive and whether they're worth it depend on your circumstances.
In order to apply, you fill out the form in the NI38 booklet.
https://www.gov.uk/voluntary-nationa...-contributions
https://www.gov.uk/government/public...ty-abroad-ni38
Finally, if you have a private pension in the UK (such as a SIPP) when you leave, you can continue to pay £2,880 into it for 5 UK tax years and you'll get £720 in "tax relief" even if you no longer live or pay tax in the UK. https://www.gov.uk/hmrc-internal-man...44100#overseas
Jan 11th 2019, 12:49 pm
#17
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Re: First time expat move from London to NY
Curious as to the benefits of continuing NI payments once you've left the UK?
Jan 11th 2019, 1:06 pm
#18
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Joined: Apr 2010
Location: The Boonies, GA
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Re: First time expat move from London to NY
So you can claim your full state pension at retirement age (currently 68) - this can be paid to a foreign bank account.
Jan 11th 2019, 1:18 pm
#19
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Re: First time expat move from London to NY
Jan 11th 2019, 1:35 pm
#20
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Re: First time expat move from London to NY
You need 35 qualifying years to get the full UK state pension. If you work abroad, you're likely able to pay voluntary class 2 contributions, which is a really cheap way of building up more years. For about £155 each year, you get another qualifying year. The new state pension is around £8,500 per year, so you basically pay £150 now to get around £240 (8500/35) each year of retirement.
Jan 11th 2019, 1:38 pm
#21
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Re: First time expat move from London to NY
However, class 2 contributions are likely to be abolished in the near future (it was supposed to happen this year). The alternative (class 3 contributions) are more expensive and may not be worth it. So it's a bit of a gamble.
Last edited by tbm; Jan 11th 2019 at 1:40 pm.
Jan 11th 2019, 7:08 pm
#22
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Re: First time expat move from London to NY
I think you have to have paid into UK NI for three years before you are eligible to pay Class 2/3 voluntary contributions whilst living abroad.
Jan 11th 2019, 7:19 pm
#23
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Re: First time expat move from London to NY
Oh yes! Sorry I wasn't thinking when I wrote my reply. "you have lived in the UK for a continuous 3-year period at any time before the period for which NICs are to be paid." (from NI38)
Jan 12th 2019, 2:42 pm
#24
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 52,448
Re: First time expat move from London to NY
Possibly if you qualify for class 2 contributions. Note that you need at least 10 qualifying years to get a UK state pension. (I think years in the US may count towards that 10 year requirement, but the US years won't count towards how much you get from the UK. I'm not 100% sure on this though.)
However, class 2 contributions are likely to be abolished in the near future (it was supposed to happen this year). The alternative (class 3 contributions) are more expensive and may not be worth it. So it's a bit of a gamble.
However, class 2 contributions are likely to be abolished in the near future (it was supposed to happen this year). The alternative (class 3 contributions) are more expensive and may not be worth it. So it's a bit of a gamble.
Jan 12th 2019, 3:40 pm
#25
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Re: First time expat move from London to NY
the shift from payback period of about 7 months to around 2.5-3 years clearly makes Class 3 contributions less advantageous, though I would argue still a very good deal. Not only is the investment return pretty good, I would also argue that having a UK state pension is very good diversification in your pension savings portfolio of investments, i.e. it's a good hedge along side 401k/ personal pensions, maybe employment-based pension(s), and US social security. If there is a long term depression, that would affect stock market and credit-based (bond) investments, then you may be very glad you have a British state pension.
However, you're buying additional years in something which may change between now and when you retire. There are a number of uncertainties, e.g.
- Will the state pension become means tested?
- Will it will be uprated (i.e. inflation adjusted) in the country you're in? I think that's a big one.
- How much will voluntary contributions be in the future? (Ok, if they go up a lot, you can just stop paying.)
Jan 12th 2019, 5:20 pm
#26
Joined: Dec 2001
Location: Dixie, ex UK
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Re: First time expat move from London to NY
Well re means testing, the way I see it is that the cost to me now is very modest (especially so long as I can continue to pay Class 2), and if they make the state pension means tested, either I will (if everything continues to go according to plan), retire with a healthy income and savings and not particularly care that I have lost out on an income stream that didn't actually cost me much in the first place. Or, if I fall on hard times and retire with low income, I will be dämñ glad that I paid in a little more to secure the maximum British state pension. And if, God forbid, that is my ultimate fate, then I would probably return to the UK because of the cost of healthcare in the US, so the annual increase issue would go away too (FWIW pensioners in the US currently get the annual increase.)
Jan 12th 2019, 8:56 pm
#27
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Re: First time expat move from London to NY
To get a measure of how good value Class 2 and 3 are, consider that even Class 3A, which is 5 times more than 3 and 25 times more than 2, beats the market. I think the only case not to pay even Class 3 is if you can't afford it.
Jan 12th 2019, 10:03 pm
#28
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Location: Dallas, Tx
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Re: First time expat move from London to NY
Mate - move to Dallas in July with ballpark same salary, L1 and wife not working (awaiting now EAD).
I cannot comment on areas to live but rest;
- car: if you are keen to pay 9% APR at a cost of not having credit records go for it. I managed instead to save some money first months and give 30% cash and rest 0% APR. Many brands offer now 0% and if you give a good down payment and provide contract with salary they will give you.
- bank; they will gove you an account once you have SSN. Go to Bank of America or Chase, if no SSN yet prob BofA or Wells Fargo to start. Negotiate to have a credit card based on your income.
I kept my Amex BA and my Barclays for a few months until all credit was set in US.
- Get your SSN 1 or 2 weeks after you arrive on your visa.
- Health Insurance; with the kind of salary you prob will work in a multinational company, they have good schemes.
there is something called PPO which basically covers you all with thr lower excess, this is what I went for.
Rest of the plans cover normally the same but the excess is a more.
- Start putting money in your pension from day 1, I guess your firm will match up to a %.
Maximize it until you hit the max.
This is only if you plan to stay long time, for 2 or 3 years in US do not bother, better get the money and you invest.
any Qs, let me know.
cheers!!
I cannot comment on areas to live but rest;
- car: if you are keen to pay 9% APR at a cost of not having credit records go for it. I managed instead to save some money first months and give 30% cash and rest 0% APR. Many brands offer now 0% and if you give a good down payment and provide contract with salary they will give you.
- bank; they will gove you an account once you have SSN. Go to Bank of America or Chase, if no SSN yet prob BofA or Wells Fargo to start. Negotiate to have a credit card based on your income.
I kept my Amex BA and my Barclays for a few months until all credit was set in US.
- Get your SSN 1 or 2 weeks after you arrive on your visa.
- Health Insurance; with the kind of salary you prob will work in a multinational company, they have good schemes.
there is something called PPO which basically covers you all with thr lower excess, this is what I went for.
Rest of the plans cover normally the same but the excess is a more.
- Start putting money in your pension from day 1, I guess your firm will match up to a %.
Maximize it until you hit the max.
This is only if you plan to stay long time, for 2 or 3 years in US do not bother, better get the money and you invest.
any Qs, let me know.
cheers!!
Jan 13th 2019, 2:20 pm
#29
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Posts: 80
Re: First time expat move from London to NY
Jan 13th 2019, 2:59 pm
#30
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Joined: Mar 2018
Location: Dallas, Tx
Posts: 142
Re: First time expat move from London to NY
AMEX may also allow global transfers: https://www.americanexpress.com/global-card-transfers/