pensions

Old Mar 26th 2007, 3:13 pm
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Default pensions

Hello, i'm Ed, i'm new here. I am planning on moving to america to marry my girlfriend and live there, i have been with her for about 3 years now and i fly out there as often as possible. I'm as sure as i possibly can be that this is the right choice but all that aside i have a finacial question:

Basically i have a private pension scheme with my employer here in the UK which i am pretty sure i will be able to either continue using when i live in america. Or at least be entitled to whats already been paid into it upon my retirement age - if anyone has looked into this and cares to share any info i would be very happy to hear it. However my question is more about my state pension and my contributions to it, it seems odd that i would be entitled to a state pension when i no longer live there and further more if i cease to pay contributions for whatever reason i will get a reduced pension anyway right? So i am kind of playing with the idea of opting out of the N.I. pension contributions in order to make better use of the money right now.

Has anyone else opted out of paying contributions before leaving for another country? Does anyone know what happens about state pensions once you have left the UK?

Thanks for your time in reading this and i look forward to hearing the replies.
My appologies if it seems like a dumb question also, but its something i am looking to learn about right now so please be forcomming with your knowledge
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Old Mar 26th 2007, 3:53 pm
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Default Re: pensions

Originally Posted by ed209 View Post
Hello, i'm Ed, i'm new here. I am planning on moving to america to marry my girlfriend and live there, i have been with her for about 3 years now and i fly out there as often as possible. I'm as sure as i possibly can be that this is the right choice but all that aside i have a finacial question:

Basically i have a private pension scheme with my employer here in the UK which i am pretty sure i will be able to either continue using when i live in america. Or at least be entitled to whats already been paid into it upon my retirement age - if anyone has looked into this and cares to share any info i would be very happy to hear it. However my question is more about my state pension and my contributions to it, it seems odd that i would be entitled to a state pension when i no longer live there and further more if i cease to pay contributions for whatever reason i will get a reduced pension anyway right? So i am kind of playing with the idea of opting out of the N.I. pension contributions in order to make better use of the money right now.

Has anyone else opted out of paying contributions before leaving for another country? Does anyone know what happens about state pensions once you have left the UK?

Thanks for your time in reading this and i look forward to hearing the replies.
My appologies if it seems like a dumb question also, but its something i am looking to learn about right now so please be forcomming with your knowledge
You cannot contribute to your employer's pension scheme after you leave. Check with the scheme's administrators re. your options.

For information about continuing your NI contributions and entitlement to a UK state pension see here:

http://www.direct.gov.uk/en/MoneyTax...nt/DG_10021384

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Old Mar 26th 2007, 4:07 pm
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Or here ....
http://www.thepensionservice.gov.uk/home.asp
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Old Mar 26th 2007, 4:39 pm
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Default Re: pensions

Originally Posted by Elvira View Post
You cannot contribute to your employer's pension scheme after you leave. Check with the scheme's administrators re. your options.
Are you sure, is there a reason why? So i just need to transfer it to an american pension scheme, right?


Originally Posted by Elvira View Post
For information about continuing your NI contributions and entitlement to a UK state pension see here:

http://www.direct.gov.uk/en/MoneyTax...nt/DG_10021384

Thanks, i'm only 29 now so i have no where near the 44 years required for a full benefit and maybe entitled to nothing whatsoever. Also there was something on there about paying tax on the state pension once you have left the country? What do most people do regarding the state pension when planning to move abroad?
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Old Mar 26th 2007, 5:08 pm
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Default Re: pensions

Originally Posted by ed209 View Post
Are you sure, is there a reason why? So i just need to transfer it to an american pension scheme, right?




Thanks, i'm only 29 now so i have no where near the 44 years required for a full benefit and maybe entitled to nothing whatsoever. Also there was something on there about paying tax on the state pension once you have left the country? What do most people do regarding the state pension when planning to move abroad?
you have to be resident for most private schemes...

As for state, search the forums....it might be worth contributing, it might not be, it's your call....you can contribute in the US if you've paid into the UK 3 years before leaving....but also reciprical tax agreement means you can use the US SS contributions to count as NI payment if you need the extra credit.
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Old Mar 26th 2007, 5:59 pm
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Default Re: pensions

Originally Posted by ed209 View Post
Are you sure, is there a reason why? So i just need to transfer it to an american pension scheme, right?




Thanks, i'm only 29 now so i have no where near the 44 years required for a full benefit and maybe entitled to nothing whatsoever. Also there was something on there about paying tax on the state pension once you have left the country? What do most people do regarding the state pension when planning to move abroad?
All I can add is: do not burn your bridges. You do not know what the future holds. You may think of this move as a one-way trip but ...
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Old Mar 26th 2007, 6:04 pm
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Default Re: pensions

Originally Posted by Elvira View Post
All I can add is: do not burn your bridges. You do not know what the future holds. You may think of this move as a one-way trip but ...
Thanks, thats a good point i was just seeing it as a possible way to get a bit more income right now but its true things could change so i will probably keep contributing until i leave.
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Old Mar 26th 2007, 6:06 pm
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Default Re: pensions

Originally Posted by Bob View Post
you have to be resident for most private schemes...

As for state, search the forums....it might be worth contributing, it might not be, it's your call....you can contribute in the US if you've paid into the UK 3 years before leaving....but also reciprical tax agreement means you can use the US SS contributions to count as NI payment if you need the extra credit.
I need to ged my head around the whole reciprical tax agreement/ss contributions thing but thanks for the info, at least i have a better idea of what to look at now
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Old Mar 26th 2007, 6:13 pm
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Default Re: pensions

Originally Posted by ed209 View Post
Thanks, thats a good point i was just seeing it as a possible way to get a bit more income right now but its true things could change so i will probably keep contributing until i leave.
Assuming that you are coming here on an H1b or L1, the best way to maximise your income would be to squeeze the best possible deal out of your (future) employer.

And that includes sponsorship for PR and VACATION TIME - not just $$$ and relocation package...
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Old Mar 26th 2007, 6:38 pm
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Default Re: pensions

Originally Posted by Elvira View Post
Assuming that you are coming here on an H1b or L1, the best way to maximise your income would be to squeeze the best possible deal out of your (future) employer.

And that includes sponsorship for PR and VACATION TIME - not just $$$ and relocation package...

I was looking at coming over on K1 actually i haven't properly looked into H1b or L1
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Old Mar 26th 2007, 6:40 pm
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Originally Posted by ed209 View Post
I was looking at coming over on K1 actually i haven't properly looked into H1b or L1
Ah, if your getting hitched there's no point in looking into employment-based visas.

You'll have zero bargaining power though - welcome to America...
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Old Mar 26th 2007, 6:46 pm
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Originally Posted by Elvira View Post
Ah, if your getting hitched there's no point in looking into employment-based visas.

You'll have zero bargaining power though - welcome to America...
Theres always room to haggle!
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Old Mar 27th 2007, 1:33 am
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What I did when I moved to the US 20 years ago was to keep paying annual NI contributions. Now I pay Class II contributions and it costs just over GBP100 per year, its a good deal. As its so cheap I'd keep paying it at least until you're settled and can look at it again. Also you can pay retrocatively for 5 years of contributions.

You won't be able to transfer an UK pension to the US, I'd just leave it where it is.

If you plan to work in the US you'll have to pay US FICA wihich is the US equivalent of NI. If you pay enough of this you'll be entiltled to a US state pension (social security) when you retire. There is a reciprocal agreement for social security between the US and the UK so if you don't have enough credits
in either scheme to get full benefit you can use one to top the other up. If you have enough credits in both schemes you can get both benefits, although there are some decuctions that occur.

If you get a US job you'll probably have access to the US retirement savings schemes like 401ks. These are like stakeholder pensions where you put money in tax free and your employer also puts some in. You'll also be able to contribute to other retirement savings like Individual Retiremnet Accounts (IRA) and the ROTH IRA. Good thing about the UK and the US is that the tax treaty between them now recognises retirement funds so while it isn't simple retirement funds are generally taxed in the same way by both countries.
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Old Mar 27th 2007, 2:03 pm
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Originally Posted by nun View Post
What I did when I moved to the US 20 years ago was to keep paying annual NI contributions. Now I pay Class II contributions and it costs just over GBP100 per year, its a good deal. As its so cheap I'd keep paying it at least until you're settled and can look at it again. Also you can pay retrocatively for 5 years of contributions.
Thanks thats really helpful, it sounds like the smart move would be to keep the state pension contributions going.

Originally Posted by nun View Post
You won't be able to transfer an UK pension to the US, I'd just leave it where it is.
Since making this thread i have heard that i can transfer my pension although it needs to be approved by the inland revenue. Obviously the fund i transfer it too has to be checked out to ensure its a bonafide pension and not a way to scam tax free cash. However it is stressed that there is no benifit in transferring it and that its unlikely that the tax benifits will be as good. So i believe i am able to transfer this but its just not really worth it.

Originally Posted by nun View Post
If you plan to work in the US you'll have to pay US FICA wihich is the US equivalent of NI. If you pay enough of this you'll be entiltled to a US state pension (social security) when you retire. There is a reciprocal agreement for social security between the US and the UK so if you don't have enough credits
in either scheme to get full benefit you can use one to top the other up. If you have enough credits in both schemes you can get both benefits, although there are some decuctions that occur.
Having both sounds good.

Originally Posted by nun View Post
If you get a US job you'll probably have access to the US retirement savings schemes like 401ks. These are like stakeholder pensions where you put money in tax free and your employer also puts some in. You'll also be able to contribute to other retirement savings like Individual Retiremnet Accounts (IRA) and the ROTH IRA. Good thing about the UK and the US is that the tax treaty between them now recognises retirement funds so while it isn't simple retirement funds are generally taxed in the same way by both countries.
This brings me to another question on finance, does the US have an equivelent of ISA's or any other high interest saving scheme with tax benifits?

Thank you very much for the info, theres a fair bit i have to learn and i am really appreciative of the willigness to help that i have found here
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Old Mar 27th 2007, 2:12 pm
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Sorry - nothing like ISAs in the US... (You can keep yours after you move, though you cannot add to them)

Investing in the US is infinitely more complicated as capital gains and dividends from mutual funds (= unit trusts/investment trusts) and equities have to be accounted for each year on the tax return (not just when you sell and realise the gain, as in the UK).

The only tax efficient ways of saving in the US that I know (though I am *not* an expert, so DYOR!!!) are retirement accounts - employer-based (401k/403b), traditional IRA, Roth IRA.

Good companies for IRAs are Vanguard and Fidelity - vast choice of funds and much lower charges than some of the others.

Advice: keep UK bank accounts, including saving accounts, open AND active (ie avoid closure through lack of use). Make sure you are set up for internet banking. Start unit trusts before you leave as you won't be able to do so once you are no longer resident. Open a brokerage account.

HTH!
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